Legislative authority for President Trump's new executive orders is being questioned in court
Late on Thursday, July 31, 2025, with just hours to go before his self-imposed deadline, President Trump issued executive orders setting forth new tariff rates to apply to most goods imported to the United States from around the world, effective August 7, 2025.
President Trump's Tariff Action Since April 2
On April 2, 2025—a date the President proclaimed "Liberation Day"—he issued Executive Order 14257, prescribing a list of so-called "reciprocal" tariffs to be charged on most imported goods, citing as justification the United States's persistent trade deficits with most foreign nations. Although the Constitution grants the tariff power to Congress, not the Executive Branch, President Trump invoked the International Emergency Economic Powers Act of 1977 (IEEPA), 50 U.S.C. §§ 1701 et seq., a law that authorizes the President to "regulate … importation" to deal with a foreign threat to the national security, foreign policy, or economy of the United States—marking the first time a president has done so to justify imposing tariffs. The extent of the presidential authority under IEEPA to impose these new tariffs is subject to an ongoing judicial challenge.
The order imposed a baseline 10 percent tariff worldwide and additional 57 country-specific rates of duty ranging from one to 40 percent based on the United States' respective deficits. Excepted from the baseline tariff were articles from Canada or Mexico, on which the President had earlier imposed a 10 or 25 percent tariff where the articles did not qualify for duty-free treatment under the United States–Mexico–Canada Agreement (USMCA), citing the countries' alleged roles in facilitating illegal immigration and fentanyl trafficking.
On April 9, the date that the country-specific rates were to take effect, the President announced a 90-day pause to allow those countries the opportunity to negotiate trade deals with the United States. Chinese goods, including those from Hong Kong and Macau, also had faced additional duties as high as 145 percent, but by May 12 this rate had settled to 20 percent above the baseline—10 percent reciprocal and 10 percent due to concerns over fentanyl.
New Rates Effective August 7
Over the course of the next few months, including an extension of the 90-day pause through August 1, the Administration engaged in furious trade negotiations, reaching what the President described as "deals" with trading partners including the European Union, the United Kingdom, Japan, South Korea, the Philippines, Indonesia, and Vietnam. The result on July 31 was Executive Order 14326, which set forth new country-specific tariff rates and eliminated the baseline rate for the specified countries. The new rates will be effective August 7, with an extension for goods in transit entered with U.S. Customs and Border Protection (CBP) before October 5. The order also introduced a 40 percent tariff for any goods found to be transshipped.
Canada, Mexico, and China—the United States' three largest trading partners—continue to present exceptions. Executive Order 14325, also issued July 31, raised the Canadian fentanyl tariff rate to 35 percent, effective August 1, while Mexico's tariff rate remains at 25 percent pending further negotiations; the provision affording duty-free treatment to USMCA-originating goods is still in effect. Meanwhile, the total additional rate on Chinese goods is scheduled to snap back into place as of August 12 unless the parties reach a new agreement. Under Executive Order 14323, Brazil too faces an additional 40 percent "free speech" tariff, effective August 6, explicitly in response to the country's trial of its former president.
Based on all executive orders issued as of the date of publication of this advisory, the following IEEPA-based tariffs will be effective by country as of August 7. Countries not listed maintain the baseline rate of 10 percent, for now.
Tariff Authority in Question
Looming over all of this, however, is the question of whether the president even has the power to impose any of these tariffs. Earlier on Thursday, July 31, the U.S. Court of Appeals for the Federal Circuit, with 11 judges sitting en banc, heard oral argument in V.O.S. Selections, Inc. v. Trump, a group of consolidated cases brought by several small businesses and a coalition of states to challenge President Trump's reliance on IEEPA to justify his imposition of tariffs. A three-judge panel of the U.S. Court of International Trade (CIT) below had struck down the reciprocal, fentanyl, and immigration tariffs, all issued pursuant to IEEPA, as exceeding the President's authority, a decision that was quickly stayed by the Federal Circuit. Unlike the CIT panel, the en banc circuit judges were split but like the CIT panel overall appeared highly skeptical that IEEPA authorizes these tariffs, seemingly embracing the plaintiffs' argument that the fact that the words "tariff" and "duty" do not appear in the statute suggests that Congress did not intend that IEEPA would provide authority for President Trump's actions. A ruling should come in the following weeks.
Applying the Tariffs to Your Business
Application of the reciprocal tariffs is not so straightforward. Companies should be mindful to be compliant but also seek to mitigate exposure where the opportunity is present.
Compliance. As noted, the tariffs contain country-specific duty rates and successive implementation and in-transit dates. Depending on the entry date and country of origin of the products, importers should be aware of their responsibility to pay the tariffs at entry or as arranged with CBP. We note that these tariffs exist in addition to the standing most-favored-nation (MFN) duty rates under the Harmonized Tariff Schedule of the United States (HTS), antidumping or countervailing duty orders, and any safeguard or unfair trade practice tariffs imposed under Section 201 or 301 of the Trade Act of 1974, 19 U.S.C. § 2251 or 2411.
Mitigation. Each tariff contains exclusions for certain products, commonly such as pharmaceuticals and semiconductors, but in some cases other goods such as Brazilian orange juice and civil aircraft. Moreover, these reciprocal tariffs exist in addition to sectoral tariffs levied under Section 232 of the Trade Expansion Act of 1962, 19 U.S.C. § 1862, which permits the president "to adjust imports" for national security reasons. Section 232 tariffs, which are not currently being challenged in court, are present on products including steel and aluminum, automobiles and auto parts, and copper, and may exempt those products from the reciprocal tariffs under certain rules limiting which tariffs may be cumulative, known as "stacking."
Monitoring. Although these are the latest IEEPA-related tariff announcements, the Administration continues to negotiate with trading partners, and the details of past deals have not all been memorialized in law as of yet. Moreover, CBP will be issuing guidance implementing the orders, which will undoubtedly contain further instruction.
[1] On August 6, the President issued an executive order targeting goods from India with an additional 25 percent tariff effective August 27, also under IEEPA, due to India's importation of Russian oil.
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