Last week, two federal courts struck down sweeping tariffs that the Trump Administration had recently imposed under the International Emergency Economic Powers Act (IEEPA). These decisions cover the “Liberation Day” reciprocal tariffs announced on April 2 on the vast majority of US trading partners as well as the earlier-imposed tariffs on products of Canada, China and Mexico related to immigration and fentanyl. The decisions do not cover the tariffs that the Trump Administration has imposed under Section 232 of the Trade Expansion Act of 1962 (Section 232) or Section 301 of the Trade Act of 1974 (Section 301).
Both decisions are currently stayed (or paused), meaning that importers will need to continue to pay the tariffs on their entries. The government has also appealed both decisions.
Below, we provide an overview of the federal court decisions, how they impact importers and what they mean for the Trump Administration’s tariff agenda.
International Emergency Economic Powers Act
IEEPA, 50 U.S.C. §§ 1701 et seq., is a national security statute that presidents have historically used as the legal authority for imposing economic sanctions and other national security measures, but not tariffs. IEEPA empowers the president to declare a national emergency with respect to “any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States.” IEEPA grants the president certain authorities to “deal with” the identified threat but states that these authorities “may not be exercised for any other purpose.” In short, as WilmerHale explained in a recent client alertthe authority granted by IEEPA is broad but not limitless.
On the day of his inauguration, President Donald Trump declared a national emergency under IEEPA with respect to criminal, terrorist, human trafficking and drug activity at the southern border. On February 1, Trump issued Executive Orders (EOs) 14193, 14194 and 14195 (Fentanyl/Migration Tariff Orders), expanding the national emergency to include the threat to Americans’ safety and security from an influx of illicit synthetic opioids into the United States from Canada, Mexico and China and imposing tariffs on products from these countries. As of March 2025, products imported from China were subject to a 20% tariff and non-United States–Mexico–Canada Agreement originating products of Canada and Mexico were subject to a 25% tariff (except certain energy and potash products of Canada, subject to a 10% tariff) under the IEEPA Fentanyl/Migration Tariff Orders.
On April 2, deemed “Liberation Day,” Trump issued EO 14257 (Reciprocal Tariff Order) declaring a national emergency with respect to the “large and persistent annual U.S. goods trade deficits” caused by tariffs and nontariff barriers maintained by US trading partners. The order imposed a 10% baseline tariff on all products from nearly all US trading partners and an additional country-specific reciprocal tariff on all products from 57 of those trading partners that was slated to be applied one week later. Amid turmoil in the financial markets and a flurry of bilateral negotiations with affected countries, Trump suspended the country-specific reciprocal tariff until July 9 for all countries except China, for which the tariff rate escalated to 125%. After meeting with Chinese officials in Switzerland in mid-May, however, the Trump Administration suspended all reciprocal tariffs on China except the 10% baseline for 90 days (until August 12) to allow for further negotiations.
Since the April suspension of tariffs, the Trump Administration has engaged in a host of trade negotiations with numerous trading partners that have sought reductions in their reciprocal tariff rates prior to the expiration of the temporary suspensions on July 9. Thus far, the US government has reached tentative deals with the United Kingdom and China, both of which contemplate further negotiations on tariffs and other trade commitments.
The Fentanyl/Migration Tariff Orders and the Reciprocal Tariff Order are the first and only instances in which a president has invoked IEEPA to impose tariffs. Importers have focused on the legal uncertainty surrounding the president’s authority to impose tariffs under IEEPA to challenge those actions. Altogether, there are 10 separate lawsuits1challenging one or more of these four tariff orders. Litigants have brought suits at the Court of International Trade (CIT)—the court with exclusive jurisdiction over matters arising from laws providing for tariffs—as well as in other federal district courts. Thus far, the US government has unsuccessfully sought to consolidate all cases at the CIT.2
V.O.S. Selections, Inc. v. Trump
On May 28, a three-judge panel at the CIT issued a decision in consolidated cases brought by several importers and state governments challenging the IEEPA tariffs. The CIT panel unanimously ruled that the president’s actions to impose tariffs under IEEPA are unlawful, and it granted a nationwide permanent injunction to legally bar the government from collecting the challenged tariffs.3
The CIT held that the IEEPA worldwide reciprocal tariff action is unlawful because IEEPA does not authorize the president to impose “unlimited tariffs.” The CIT concluded that interpreting IEEPA otherwise would amount to an unconstitutional delegation of legislative authority. The CIT also stated that if the president wants to address a trade deficit through tariffs, the president already has the tariff authority specific to balance-of-payment issues provided in Section 122 of the Trade Act of 1974 (Section 122)—not IEEPA.4 The CIT further held that the IEEPA tariff actions related to fentanyl and immigration are unlawful because IEEPA authorizes actions to “deal with” the unusual and extraordinary threat identified in the relevant order. The court found that the tariffs aim to create leverage to deal with the threats from fentanyl smuggling and illegal immigration tariffs but do not deal with these issues directly and are therefore unlawful. Importantly, the CIT did not conclude that the president lacks authority under IEEPA to impose tariffs as a general matter.
The CIT granted a nationwide permanent injunction barring the government from collecting tariffs under the four IEEPA tariff actions with respect to all importers, and it ordered the government to take all the steps necessary to effectuate the injunction. However, immediately after the CIT issued its decision, the government filed a notice of appeal at the US Court of Appeals for the Federal Circuit and motions to stay the enforcement of the injunction at both the CIT and Federal Circuit. On May 29, the Federal Circuit granted an immediate administrative stay of the CIT order while it considers the government’s motion for a longer-term stay pending appeal.5 On June 3, the CIT ordered that the government’s motions to stay the enforcement of the injunction will be held in abeyance pending the Federal Circuit’s consideration of the government’s stay motion.
The effect of the Federal Circuit’s immediate administrative stay is that the government will continue to collect IEEPA tariffs for the time being. US Customs and Border Protection (CBP), the agency responsible for collecting the tariffs, has not issued any new instructions regarding entries of goods subject to IEEPA tariffs but said that additional guidance is forthcoming.6 Absent any action from the government, the tariffs will continue to apply while the Federal Circuit stay is in place.
Learning Resources, Inc. v. Trump
On May 29, the US District Court for the District of Columbia (DDC) issued a decision in a case brought by two small businesses selling children’s educational products. The DDC found that the IEEPA tariffs are unlawful and granted the plaintiffs’ motion for a preliminary injunction to prevent the government from enforcing the tariffs against the plaintiffs.7
The DDC held that the IEEPA tariffs are unlawful on different grounds from the CIT. Specifically, the DDC ruled that IEEPA “does not authorize the President to impose tariffs” at all, which is a much broader holding than that of the CIT.8 The DDC also agreed that the tariffs pose an existential threat to the plaintiffs’ businesses and issued a preliminary injunction to protect the named plaintiffs from irreparable injury in the event that the CIT order is stayed or reversed. Unlike the CIT order, however, the injunction that the DDC issued is not universal and does not prevent the government from continuing to collect the tariffs from other importers.
The government has appealed the DDC decision to the US Court of Appeals for the DC Circuit. On June 3, the DDC stayed its preliminary injunction pending appeal.9 On June 5, the plaintiffs filed an unopposed motion to expedite the appeal over the next few months.10
Impact on Importers
As explained above, because the decisions finding the IEEPA tariffs to be unlawful are currently stayed, all importers are required to continue paying tariffs.11 Importers should continue to monitor the litigation closely, as Federal Circuit briefing on the government’s request for a stay pending appeal is ongoing and the Federal Circuit will likely rule on the request in the near term. It is also possible that the government will ask the Supreme Court to rule on its request for a stay pending appeal, which would be a crucial decision for importers.
If the CIT’s nationwide injunction is ultimately affirmed, importers may be able to seek refunds of IEEPA tariffs already paid. The CIT’s judgment does not explicitly direct the government to issue refunds, but CBP may institute a process for obtaining refunds in effectuating the injunction. CBP could allow importers to file Post-Summary Corrections on any unliquidated entries or protests on any liquidated entries that were subject to IEEPA tariffs to request refunds on the grounds that the IEEPA tariffs were unlawful. CBP suggested these options for obtaining duty refunds following the president’s issuance of the de-stacking order that precluded the application of multiple additional tariffs on a single article.12 If, for any reason, CBP were to deny the protests, importers could appeal to the CIT.13 Seeking refunds in this manner could be a lengthy process given the number of importers that would be requesting refunds and the amount of time that it might take CBP to process refunds following the conclusion of the litigation. If CBP is slow to act, importers filing protests could consider requesting accelerated disposition pursuant to 19 C.F.R. § 174.22 to ensure their right to seek judicial review within 30 days.14
As an alternative, importers could also consider filing a lawsuit to challenge the validity of the IEEPA Fentanyl/Migration Tariff Orders and/or IEEPA Reciprocal Tariff Order. This would give plaintiff importers the opportunity to request that the court order the US government to provide a remedy with respect to their specific entries at the same time that it renders a decision on the validity of the tariffs. That is, plaintiff importers could ask that the court order the US government to issue duty refunds if the court decides to invalidate the tariffs. This could result in plaintiff importers obtaining refunds faster than importers that seek refunds from CBP through an administrative process given that there will likely be a large backlog of claims.
Consequences for Trump Tariff Agenda
The Trump Administration’s battle to uphold the IEEPA tariffs is far from over. Regardless of how the Federal Circuit and the DC Circuit rule on appeal, we expect that the decisions will be ultimately appealed to the Supreme Court. Indeed, Trump has publicly called on the Supreme Court to reverse the CIT’s decision “quickly and decisively.”15 The CIT’s and DDC’s competing interpretations about whether IEEPA can be used to impose tariffs may also result in a split between the Federal Circuit and the DC Circuit. This split could widen even further now that the Ninth Circuit will be weighing in on the question of whether IEEPA is a law providing for tariffs.16 A circuit split would provide the litigants with additional arguments for seeking an expedited ruling from the Supreme Court.
Even if the Supreme Court ultimately blocks the president’s use of IEEPA to impose tariffs or finds that the president’s particular use of IEEPA was unlawful, the Trump Administration may turn to other legal authorities to advance its tariff agenda. It may expand the use of authorities that it is already using to impose tariffs (such as Section 232 and Section 301) or turn to new authorities (such as Section 122, as suggested by the CIT, or Section 338). Here is a brief summary of these legal authorities:
- Section 232 allows the president to take action to adjust imports of articles that the Commerce Department has investigated and determined are being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.17 Trump has used Section 232 to impose broad sectoral tariffs.
- Section 301 authorizes the president to direct the US Trade Representative (USTR) to investigate whether any foreign country’s act, policy or practice is, for example, unreasonable or discriminatory and burdens or restricts US commerce. In such case, the USTR shall take action, which may include imposing tariffs, to eliminate such act, policy or practice.18 Trump has used Section 301 to impose tariffs against China.19
- Section 122 authorizes the president to proclaim a temporary import surcharge (i.e., a tariff) of up to 15% for a maximum period of 150 days to deal with “large and serious” balance-of-payment deficits.20 The surcharge can be applied broadly on a nondiscriminatory basis or selectively to countries with large balance-of-payment surpluses. Congressional approval would be required to extend the period for more than 150 days.21
- After an investigation, the US International Trade Commission determined that Section 338 authorizes the president to proclaim duties of up to 50% on imports from a foreign country that has imposed on US products an “unreasonable charge, exaction, regulation, or limitation which is not equally enforced upon the like articles of every foreign country” or “[d]iscriminated[d] in fact against the commerce of the United States . . . in respect to customs, tonnage, or port duty, fee, charge, exaction, classification, regulation, condition, restriction or prohibition” so as to “disadvantage” US commerce. If a foreign country continues to discriminate against US products after duties have been imposed, Section 338 gives the president the authority to block imports from that country or even subject the good to forfeiture if not imported in accordance with the provision.
The Trump Administration also continues to negotiate with trading partners ahead of the July 9 expiration of the suspension of the country-specific reciprocal tariff rates. The Administration insists that the IEEPA litigation will not affect these negotiations. Indeed, on June 1, Commerce Secretary Howard Lutnick publicly stated that the “tariffs are not going away.”22 The Administration can be expected to signal to US trading partners that it believes it will prevail in the litigation and, if necessary, has alternative legal tools at its disposal to continue to impose tariffs. Time will tell how US trading partners respond and whether the evolving IEEPA litigation undercuts the Administration’s leverage to achieve its objectives in the negotiations.
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WilmerHale is closely monitoring the 10 legal actions that have been filed in US federal courts challenging the IEEPA tariffs and the effect of these actions on the Trump Administration’s tariff agenda. We stand ready to advise clients regarding the complex legal, policy and business-planning implications of these developments.
