Week Seventeen
CIT Unequivocally Strikes Down IEEPA Tariffs as Invalid
On May 28, 2025, a three-judge panel of the U.S. Court of International Trade (CIT), in a unanimous decision, held tariffs imposed by the Trump Administration pursuant to the International Emergency Economic Powers Act of 1977 (IEEPA) to be unlawful and invalid. The CIT’s order covers IEEPA tariffs imposed against Canada, Mexico and China related to fentanyl trade (IEEPA Fentanyl tariffs) as well as IEEPA reciprocal tariffs of 10% imposed on imports from all trading partners (IEEPA Reciprocal tariffs). The Court vacated the Executive Orders imposing the various IEEPA tariffs, including all modifications and amendments thereto and permanently enjoined their operation. In a separate order, the CIT ordered the administration to issue necessary administrative orders within 10 calendar days to effectuate the permanent injunction.
The government has filed a motion to stay the CIT’s order pending the appeal which it filed before the Court of Appeals for the Federal Circuit (CAFC). The court has ordered the plaintiffs to reply to the motion for a stay by June 2, 2025.
The government also filed a motion for stay with the CAFC, which has for the moment paused implementation of the CIT’s order until it considers the government’s motion. The CAFC has ordered the plaintiffs to respond to the government’s motion by June 5 with the government having another opportunity to respond by June 9.
It is unclear whether either court will ultimately grant the government the stay it requests. Otherwise, the government will have 10 days to issue instructions implementing the permanent injunction.
District Court Rules IEEPA Does Not Grant Tariff Authority to The President
On May 29, 2025, US District Court for the District of Columbia in Learning Resources, Inc. et al v. Donald J. Trump et al granted a preliminary injunction staying the imposition of the IEEPA tariffs on the grounds that IEEPA does not grant tariff authority. The court also held that CIT did not have jurisdiction over the case because IEEPA is not a “law of the United States providing for . . … tariffs.”
The case was filed by Plaintiffs Learning Resources, Inc. and hand2mind, Inc. who are small businesses that develop educational toys and products for children.
The court reviewed Section 1702(a)(1)(B) and the phrase “regulate . . . importation.” which the government believes allows the imposition of tariffs. The Court however disagreed with that interpretation and concluded that the “power to regulate is not the power to tax.”
The court examined numerous other statutory provisions delegating authority to the President such as Sections 122 and 301 of the Trade Act of 1974 and Section 338 of the Tariff Act of 1930 where it noted Congress provided specific limitations on when the President may set or alter tariffs. The Court observed that “[i]t would be anomalous,” to say the least, “for Congress to have so painstakingly described the [President’s] limited authority” on tariffs in other statutes, “but to have given him, just by implication,” nearly unlimited tariffing authority in IEEPA.
The court also made the point that the President’s IEEPA powers extend only to “any property in which any foreign country or a national thereof has any interest.”, which could not be extended to tariffs which are typically assessed after U.S.-based importers have taken legal possession of imported goods.
The court agreed that plaintiffs had established irreparable harm because the tariffs pose an existential threat to their businesses. The Court issued a preliminary injunction and enjoined the collection of tariffs against the two plaintiffs. It also stayed operation of the preliminary injunction for 14 days. The government has appealed the decision to the U.S. Court of Appeals for the D.C. Circuit.
The ruling by the District Court opens the door for other plaintiffs to file cases in District Courts. For instance, the State of California has also filed a complaint in the District Court for the Northern District of California challenging the legality of the IEEPA tariffs although the outcome of that case is unknown at this time.
CBP Issues Updated Guidance for In-Transit Goods
On May 30, 2025 CBP issued CSMS Message # 65201773 updating its guidance for in-transit goods in CSMS # 64680374, “GUIDANCE – Reciprocal Tariffs, April 5 and April 9, 2025, Effective Dates”. The guidance is intended to be temporary while the stay of the CIT in the IEEPA tariffs case is in effect.
Previously, goods that were loaded onto a vessel at the port of loading and in-transit on the final mode of transport to the United States prior to April 5, 2025, April 9, 2025, or April 10, 2025, as applicable, could qualify for the in-transit exceptions, if the goods were entered prior to May 28, 2025. CBP has now extended the May 28, 2025 date to June 16, 2025.
The guidance clarifies that articles of countries subject to IEEPA Reciprocal tariffs that were (1) loaded onto a vessel at the port of loading and in-transit on the final mode of transport on or after April 5, 2025, and before April 9, 2025, and (2) are entered for consumption, or withdrawn from warehouse for consumption, before June 16, 2025, are subject to the 10% additional tariff rate.
Likewise products of China that are (1) loaded onto a vessel at the port of loading and in transit on the final mode of transport on or after April 9, 2025, and before April 10, 2025, and (2) are entered for consumption, or withdrawn from warehouse for consumption, before June 16, 2025, are subject to the 10% additional tariff rate.
OFAC issues General License to Partially Relax Syria Sanctions
On May 23, 2025, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) issued Syria General License 25 (“GL 25”) in order to authorize certain transactions which would otherwise be prohibited under existing OFAC Syrian sanctions. GL 25 generally authorizes U.S. persons to perform transactions with Syria provided that those transactions do not involve blocked persons listed on OFAC’s Specially Designated Nationals and Blocked Persons List (“SDN List”). Specifically, GL 25 authorizes U.S. persons to transact with the President Ahmed al-Sharaa regime of the Government of Syria as in existence on or after May 13, 2025. GL 25 also authorizes U.S. persons to transact with specific SDNs listed on its attached Annex A as well as entities in which those SDNs directly or indirectly hold a 50 percent or greater ownership interest. The SDNs listed on GL 25’s Annex A include (but are not limited to) the Commercial Bank of Syria, the Central Bank of Syria, the Syrian Petroleum Company and the Syrian Ministry of Petroleum and Mineral Resources. OFAC issued a FAQ Fact Sheet on May 28, 2025 to provide additional guidance on GL 25.
Notably, although GL 25 authorizes U.S. persons to engage in a wide variety of Syrian transactions without violating OFAC sanctions, the separate U.S. Export Administration Regulations (“EAR”) continue to impose a nearly complete prohibition on exports and reexports of all items “subject to the EAR” to Syria (subject to a narrow exception for food and medicine classified as EAR99). The U.S. Commerce Department’s Bureau of Industry and Security (“BIS”) has not yet taken any action to lift the EAR’s Syria embargo or issue any sort of License Exception equivalent to OFAC’s GL 25. As a result, persons looking to engage in export or reexport transactions with Syria should be aware that those transactions will require BIS licensing if they involve most U.S. origin items as well as foreign-produced items exceeding the EAR’s 10% de minimis limitation for incorporated export-controlled U.S. origin content.
Week Sixteen
Commerce Announces Process to Reduce Vehicle Section 232 Tariffs
On May 20, 2025, the Department of Commerce issued a Federal Register notice (“Notice”) detailing the process for car manufacturers eligible for preferential tariff treatment under the United States-Mexico-Canada Agreement (USMCA) to determine and report the percentage of U.S.-origin content in their vehicles to qualify for reduced Section 232 tariffs.
The Notice specifies that once the Department of Commerce completes its review and determines the U.S.-origin content, it will inform both the importer and U.S. Customs and Border Protection of the portion of the vehicle subject to tariffs. Additionally, the Notice clarifies that the submission process described does not cover subsequent adjustments under the Section 232 action, which allows for customs rebates on certain imported parts used in vehicles assembled in the United States.
Furthermore, the Notice states that public comments on this process will not be accepted, as the matter falls under foreign affairs and is therefore exempt from the requirements of the Administrative Procedure Act.
BIS Publishes Process for Requesting Inclusion of Section 232 Derivatives
On May 22, 2025, the Department of Commerce’s Bureau of Industry and Security (“BIS”) released a diverse list of 58 requests—covering a diverse list of steel and aluminum products ranging from forks and spoons to drones and auto parts—for new products proposed as derivatives subject to Section 232 of the Trade Expansion Act on steel and aluminum products.
[View source.]
