‘The Game is Afoot’: Federal Appeals Court Strikes Down the President’s IEEPA-Based Tariffs

What you need to know:

• The Federal Circuit decision is a significant setback to President Trump’s ability to issue tariffs based on authority given him by Congress under the International Emergency Economic Powers Act (IEEPA), but it is not a final decision.
• The Supreme Court will weigh in and it may not agree with the lower courts.
• That said, even if the Supreme Court does not rule in favor of the administration, President Trump will still retain significant statutory authority to issue tariffs, though an adverse decision would limit his tariff power.
• While a Supreme Court decision is still pending, President Trump still has the power to issue tariffs, so trade negotiations with other countries are expected to continue progressing.
• If the administration’s appeal to the Supreme Court is unsuccessful, the U.S. Treasury Department may need to find a way to “give back” more than $210 billion in IEEPA-based tariffs.This could result in large scale litigation similar to the court challenge to the Section 301 tariffs imposed by President Trump in his first term.
• The Trump administration has requested expedited Supreme Court review due to the case’s enormous economic impact and because numerous trade agreements are premised on the idea that the president has authority to issue tariffs under IEEPA. This puts a lot of political pressure on the Supreme Court to rule in favor of the president.

In the latest episode of the ongoing legal challenges to President Trump’s tariff policies, on Aug. 29, the U.S. Court of Appeals for the Federal Circuit (CAFC) ruled that the International Emergency Economic Powers Act (IEEPA) does not authorize President Trump’s reciprocal or trafficking tariffs. If upheld, the 7-4 ruling in V.O.S. Selections, Inc., et al v. Trump, would significantly disrupt President Trump’s IEEPA-based tariff strategy. The ruling follows two separate decisions issued in late May from the U.S. Court International Trade (CIT) and the U.S. District Court for the District of Columbia, which held that President Trump exceeded his delegated authority under IEEPA when imposing the trafficking and reciprocal tariffs. The two cases were consolidated for appeal before the CAFC, and the consolidated case was argued before the full court in a move to expedite the appeals process.

The majority found that IEEPA does not confer the broad authority claimed by the administration for issuing the reciprocal and trafficking tariffs. The court affirmed the CIT’s holding that the challenged tariffs exceeded the authority IEEPA granted to the president, and it remanded the case to the CIT to reevaluate the proper scope of relief for the plaintiffs. In a separate order issued alongside the decision, the court stayed its ruling until Oct. 14, 2025, allowing the U.S. government time to file an appeal with the U.S. Supreme Court for review. The administration quickly filed an appeal on Sept. 3, setting the stage for final judicial resolution before the Supreme Court over a central pillar of president’s trade agenda.

This alert provides an overview of the CAFC’s decision, as well as issues for interested parties to consider while the appeals process continues.

CIT Decision Recap

Previously, the CIT held that President Trump exceeded his delegated authority under IEEPA while also finding that the president may invoke IEEPA to impose tariffs with specific limitations. According to the CIT, tariffs imposed under IEEPA must be limited in scope and duration, and they must be directly tied to the specific “unusual and extraordinary threat” for which the national emergency was declared. The CIT found no direct link between the tariffs and the trade deficits or illicit trafficking that were identified as national emergencies.

Additionally, the CIT held that when tariffs are geared towards correcting trade imbalances, the proper statutory regime is the Trade Act of 1974 (Pub. L. No. 93-618, § 122), rather than IEEPA. Section 122 specifically authorizes the president to impose temporary tariffs or quotas of up to 15% and for a maximum of 150 days when the United States faces “large and serious” balance-of-payments deficits or other fundamental international payments problems. This authority is far narrower than IEEPA, both in terms of the size of the tariffs and the limited duration for which they can be imposed. Importantly, the CIT noted that any excessively broad delegation of tariff authority to the president would be unconstitutional under the non-delegation doctrine, as the Constitution delegates tariff authority exclusively to Congress.

CAFC Decision Overview

The appellate court upheld much of the CIT’s decision, finding that IEEPA does not grant President Trump the broad authority he has asserted to impose the trafficking and reciprocal tariffs. The court’s decision is outlined below.

Statutory Interpretation

The government argued that IEEPA authorizes the president to “regulate … importation” upon declaration of an emergency. The majority opinion questions this interpretation by noting IEEPA does not contain the words “tariff” or “duty,” and by comparing IEEPA to other trade statutes that explicitly authorize the president to modify or impose tariffs on imports. They cite several examples, including:

• Section 338 of the Tariff Act of 1930, which permits the president to “specify and declare new or additional duties”;
• Section 201 of the Trade Act, which authorizes the president to “proclaim an increase in, or the imposition of, any duty on the imported article,” or to, “proclaim a tariff-rate quota”; and
• Section 301 of the Trade Act, which allows the president to, “impose duties or other import restrictions.”

The majority opinion notes that while IEEPA grants the president significant powers during a declared national emergency, the power to impose tariffs is not included among those powers. The court disputes the government’s reading of the statute, stating, “it is far from plain that ‘regulate … importation,’ in this context, includes the power to impose the tariffs at issue in this case.” According to the majority, the president’s authority to “regulate” under IEEPA does not imply the authority to impose tariffs. The court suggests the authority to regulate granted by IEEPA is comparable to the regulatory authority granted to the executive branch by the Securities and Exchange Act of 1934 or the Communications Act of 1934. While both acts grant their respective regulatory commissions the ability to regulate their industries, neither act authorizes the regulatory body to levy a tax or tariff as part of that regulation.

Major Questions Doctrine

The majority also found that the government’s interpretation of IEEPA violates the major questions doctrine. During oral arguments, the government asserted, “there is no limit on the cap of the tariff in IEEPA itself.” The majority argues that such a broad grant of authority over a significant economic question implicates the major questions doctrine, which requires clear congressional authorization for the asserted power. The court notes that while presidents have frequently invoked IEEPA, none have claimed that IEEPA grants the president the authority to impose tariffs. This unprecedented assertion, coupled with the breadth of authority claimed, underscores the need for explicit congressional approval.

Non-Delegation Doctrine

In a concurring opinion, four judges found the government’s interpretation of IEEPA would also violate the non-delegation doctrine. The concurrence states, “the government’s interpretation of IEEPA would be a functionally limitless delegation of congressional taxation authority.” The concurring judges would go further than the majority opinion, holding that IEEPA does not allow for tariffs at all.

Dissent

The four dissenting judges included two Obama appointees and two George W. Bush appointees. The dissent argues that the phrase “regulate … importation” broadly allows the president to impose tariffs. They cited longstanding judicial precedent recognizing taxes as a form of regulation aimed at altering conduct. Echoing the dissent, Solicitor General John Sauer argued in his brief appealing the case to the Supreme Court that “when the broad term ‘regulate’ is paired with ‘importation,’ the term is best read to include the power to impose duties because that is a traditional way to regulate importation.” In other words, tariffs are an important tool you use to regulate imports, so when Congress granted the president authority to regulate imports under IEEPA they meant to give him authority to impose tariffs.

Projected Timelines and Implications for Future and Existing Tariffs

The challenged tariffs will remain in place throughout the appeals process. The government’s filing requests an expedited hearing for the case, noting that “delaying a ruling until June 2026 could result in a scenario in which $750 billion—$1 trillion in tariffs have already been collected, and unwinding them could cause significant disruption.” Should the Supreme Court accept the case, the reciprocal and trafficking tariffs will remain effective until a final ruling is issued. Meanwhile, other non-IEEPA tariffs falling under other authorities like Section 232 or Section 301, as outlined in our previous alert, remain unaffected.

What Clients Should Do

The government is pushing for an expedited review of the CAFC decision, but the appeals process could stretch into June 2026. In the meantime, impacted parties should:

• Continuously evaluate contract terms and pricing for current imports subject to IEEPA tariffs and potentially consider a contingency clause for possible refunds or increased duties.
• Review tariffs on goods subject to Sections 232, 301, 122, etc., for IEEPA-based components to such tariffs, and adjust risk assessments accordingly.

For example, the current 10% “baseline” tariff on U.K. imports partially relies on IEEPA, while other tariff components in the U.S.-UK Economic Prosperity Deal were based on legal authorities, such as Section 232 of the Trade Expansion Act of 1962. Companies affected by the terms of the U.S.-U.K. bilateral trade agreement should closely determine how further affirmation of the CAFC decision might eliminate certain components of tariffs impacting their imports.

Impacted parties may also want to consider changes to supply chains to mitigate the affect of tariffs, including possible incorporation of a “First Sale” concept under U.S. customs law, which is a legally complex transaction structure that can result in tariff savings. Finally, interested parties should continue to monitor the Supreme Court for legal filings and argument scheduling, as well as keeping an eye out for administration statements and executive actions that might further alter the tariffs.

Political Ramifications

The court’s rejection of the administration’s novel use of IEEPA marks a significant attempt to limit the tariff authority Congress has delegated to the executive branch. By emphasizing the absence of tariff-specific terms in IEEPA—especially when contrasted with the more explicit delegations in statutes like Section 301 or Section 232—the court implicitly invited Congress to revisit and clarify the boundaries of presidential trade powers This move creates complex dynamics within the Republican conference, where support for robust executive trade authority is at odds with growing demands for legislative reassertion of Article I powers.

Democrats will renew efforts to advance privileged resolutions to terminate the national emergency declared under IEEPA to impose tariffs. While Democrats have previously succeeded in moving such a resolution through the Senate—most notably targeting an emergency related to Canadian goods—House Republicans remain shielded by a March rule that blocks tariff-related resolutions from reaching the floor.

The legal battle over the IEEPA tariffs will have ripple effects for the administration’s ongoing trade negotiations. The tariffs are a powerful tool in bringing impacted countries to the table, and uncertainty around their future application could incentivize negotiators to slow down or restructure discussions. However, a final decision on the matter is months away, and the tariffs will continue to serve as a major pressure point for trading partners as they remain in effect while legal proceedings continue. The White House’s swift vow to pivot to Section 301 or Section 232 underscores an effort to reassure domestic allies and foreign counterparts that U.S. tariff power remains intact regardless of the pending litigation.

Alternative Legislative Authorities for Tariffs

With the fate of the IEEPA tariffs uncertain, one thing remains certain—the administration remains committed to using tariffs as a major tool in readjusting the relationships with the United States’ key trading partners. The administration is already preparing to utilize alternative authorities to further the president’s trade goals. Of the four most relevant authorities, two are routinely used to impose tariffs:

• Section 232 of the Trade Expansion Act of 1962
  Limits: Tariffs are dependent on the completion of a Commerce Department investigation.This statute empowers the Department of Commerce’s Bureau of Industry and Security (BIS) (in consultation with the Department of Defense) to determine if the importation of a product threatens the national security of the United States.^[1] The statute does not define the term “national security,” giving the agency some latitude in making the determination. The issuance of tariffs under Section 232 requires a Department of Commerce investigation to determine if the particular commodity is “being imported into the United States in such quantities or under such circumstances as to threaten to impair national security.” The Secretary of Commerce will then make a recommendation to the president, who will need to determine the “nature and duration” of the controls necessary within 90 days of receiving the report. Fifteen days later, the president must decide whether to implement corresponding tariffs.^[2]
  
  For most of its history, Section 232 was a bureaucratic authority that empowered investigations by relatively minor government officials.^[3] This changed in 2017 with the first Trump administration’s imposition of Section 232 tariffs on imported steel and imported aluminum. The president has continued to wield Section 232 for tariffs in his second term; 10 Section 232 investigations are currently pending, with targeted items ranging from copper to wind turbines.
• Section 301 of the Trade Act of 1974
  Limits: Tariffs issued under this authority are country-specific.
  This language grants expansive authority to the Office of the U.S. Trade Representative (USTR) to investigate and then remedy “unfair” trade practices, including by way of tariffs.^[4] Section 301 tariff authorities can only be utilized when USTR investigates and finds unfair or discriminatory practices (such as violations of free trade agreements or other unfair practices). This investigation can be triggered by USTR itself or by petitions from outside parties. Importantly, Section 301 investigations and subsequent tariffs are country-specific. Section 301 investigations have three potential outcomes: (1) the investigated practices are unfair, (2) the investigated practices are unreasonable or discriminatory and burden commerce, or (3) the investigated practices do not create a Section 301 violation. If the investigation reveals unfair trade practices, Section 301 requires mandatory U.S. trade restrictions that are equivalent in value to the burden being imposed by the other country. If the investigation reveals merely unreasonable or discriminatory practices that burden commerce, Section 301 allows—but does not require—“all appropriate and feasible action, subject to the specific direction of the president, to obtain the elimination of the act, policy, or practice.”^[5] If the investigation reveals no Section 301 violations, then Section 301 delegates no tariff or trade restriction authority.
  
  While Section 301 requires certain requests for consultation with the targeted countries, Section 301 lacks any significant procedural or substantive limits. As long as USTR determines a country has engaged in unfair or unreasonable practices, the president has the broad authority to impose tariffs and other import controls for an open-ended period of time. Section 301 offers a promising route for an administration seeking to impose tariffs. However, USTR would need to individually investigate countries, and the tariff USTR imposed would be limited to the value of the burden being imposed on U.S. industry.

The president could also use two other statutory authorities to impose tariffs, though these are largely untested, legally speaking.

• Section 338 of the Tariff Act of 1930
  Limits: Tariffs are capped at 50% and require proof of discrimination against U.S. commerce.
  This authorizes the president to impose new and additional tariffs of up to 50% ad valorem on foreign imports from countries “discriminating” against U.S. commerce.^[6] Section 338 requires an investigation, which can be initiated by the U.S. government or by a private petition to the International Trade Commission. The president can then impose new tariffs by proclamation. Secretary Bessent has pointed to this authority as a key alternative for IEEPA.
• Section 122 of the Trade Act of 1974
  Limits: Tariffs issued under this authority are capped at 15% and 150 days.
  This statute enables the president to impose import quotas and surcharges of up to 15% on any country or group of countries with whom the United States has a “large and serious” trade deficit. Section 122 has never been used to impose tariffs or other trade restrictions and is limited to 150 days (unless expanded by Congress).

If the courts uphold challenges to the president’s use of IEEPA to impose tariffs, the administration will likely pursue a suite of the authorities listed above to continue rebalancing the trade scales. Secretary Bessent told reporters that the other authorities are “not as efficient, not as powerful” as IEEPA, though the administration is already deploying tariffs under Section 232 and Section 301.

In addition, the administration has active Section 232 investigations into the following products. The administration may conclude these investigations and impose additional sector-based tariffs before year-end in many cases:

• copper
• timber, lumber and their derivative products
• semiconductors and semiconductor manufacturing equipment
• pharmaceuticals and pharmaceutical ingredients
• trucks
• processed critical minerals and derivative products
• commercial aircraft and jet engines
• polysilicon and its derivatives
• unmanned aircraft systems and their parts and components
• wind turbines

Next Steps and Strategic Recommendations

The tariff landscape will continue to fluctuate for the foreseeable future, and both the executive and judicial branches should be closely monitored for sudden shifts. The White House may announce tariffs under alternative authorities to shore up pressure on trading partners while the IEEPA-focused legal challenges play out, and the timeline for Supreme Court review of the case is uncertain at present. If the process is significantly expedited, the court could hear the case as early as December. However, consideration in 2026 is more likely.

Impacted entities should prepare a strategy for possible refund claims in the event that the use of IEEPA to levy tariffs is ruled unconstitutional, including administrative and court litigation. Documenting import histories and filing necessary paperwork promptly will be key. While the future of the IEEPA tariffs is uncertain, the administration’s trade agenda will proceed regardless as it seeks to reset relationships with the United States’ key trading partners. Entities should continue to evaluate supply chains and explore alternative sources for affected goods.

Consistent engagement with policymakers is necessary to assess and respond to tariff activity across the federal government.

[1] 19 U.S.C. § 1862.

[2] 19 U.S.C. §§ 1862(b)(1)–(3), (c).

[3] See Scott Lincicome and Inu Manak, Protectionism or National Security? The Use and Abuse of Section 232, Cato Institute Policy Analysis no. 912, March 9, 2021.

[4] 19 U.S.C. § 2411.

[5] 19 U.S.C. § 2411(b)(2).

[6] 19 U.S.C. § 1338.es here…