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 administration has requested a stay of the injunction and appealed the decision to the Court of Appeals for the Federal Circuit (CAFC).

The CIT issued its decision in cases brought by a group of small businesses and attorneys general from the states of Oregon, Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, Nevada, New Mexico, New York, and Vermont.

The central issue in both cases is whether IEEPA authorizes the President to impose unlimited tariffs on goods from nearly every country. The CIT held it does not.

IEEPA Delegates Narrow Authority to the President

IEEPA authorizes the President to “regulate . . . importation . . . of . . . any property in which any foreign country or a national thereof has any interest by any person . . . subject to the jurisdiction of the United States . . . .” (see 50 U.S.C. § 1702(a)(1)(B)). The question before the court was whether the words “regulate….importation” confer unlimited tariff authority.

The language in IEEPA mirrors the language in a predecessor statute called the Trading with the Enemy Act (TWEA), which President Nixon had used to impose supplemental duty on imports. President Nixon’s reliance on TWEA was challenged in a case called Yoshida II. The CIT observed that the Yoshida II court recognized the importance of the separation of powers and acknowledged that a finding that the President has the power to impose whatever tariff rates he deems desirable simply by declaring a national emergency would subvert this principle. The CIT held that, like TWEA, the IEEPA does not sanction the exercise of unlimited power which would create an unconstitutional delegation of power.

Remedies for Trade Deficits are Regulated under Section 122 of the Trade Act of 1974

CIT observed that courts have consistently upheld statutory delegations as long as Congress “lays down by legislative act an intelligible principle to which the person or body authorized to exercise that authority is directed to conform.”  “A statute lays down an intelligible principle when it “meaningfully constrains” the President’s authority.” 

Importantly the CIT clarified that the IEEPA delegates narrower authority to the President over international economic transactions than the TWEA. Indeed, legislative history following President Nixon’s exercise of authority under TWEA, reveals that Section 122 of the Trade Act of 1974 was enacted to deal with remedies for balance-of-payments deficits. The CIT held that “Section 122 removes the President’s power to impose remedies in response to balance-of-payments deficits, and specifically trade deficits, from the broader powers granted to a president during a national emergency under IEEPA by establishing an explicit non-emergency statute with greater limitations.” The IEEPA Reciprocal tariffs were imposed to address “an imbalance in trade—a type of balance-of-payments deficit—and thus falls under the narrower non-emergency authorities in Section 122” and must conform to it. Section 122 imposes a 15% cap on tariffs and a maximum duration of 150 days.

The CIT held that because in this instance, the IEEPA Reciprocal tariffs are not limited in duration or scope and exceed delegated authority under IEEPA they are ultra vires and contrary to law.

IEEPA Fentanyl Tariffs do not “deal with an unusual or extraordinary threat”

The Court also ruled that the IEEPA Fentanyl tariffs on Canada, Mexico and China do not satisfy the four conditions imposed by that statute and are unlawful. Specifically, IEEPA requires that (i) there must be a “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”; (ii) this threat must be “unusual and extraordinary.”; (iii) a national emergency must be declared with respect to the threat; and (iv) the President’s exercise of IEEPA authority must “deal with” the threat.

The government appears to have taken the position that a court can never question a President’s assertion that his IEEPA authority deals with an unusual and extraordinary threat — also referred to as the political questions doctrine. The Court summarily rejected that argument. It held that although a court cannot substitute its decision for that of a President in the declaration of an emergency, the court has power to review whether the exercise of authority meets the factors outlined in the IEEPA statute. In the court’s words, the IEEPA is “not a symbolic festoon it is a meaningful restraint on the President’s discretion”.

In addressing whether the IEEPA Fentanyl tariff orders “deal with” an unusual or extraordinary threat, the CIT observed that the orders against Canada, Mexico and China cite the general problem of a failure of these governments to thwart trafficking and other crime as the “unusual and extraordinary threat.” The orders do not identify the specific problem of drugs smuggled within shipments of dutiable merchandise. The Trump administration’s position is that orders create leverage and “pressure” the countries to address the crisis and that they are reasonably related to the desired change in behavior the President seeks from Mexico, Canada, and China.

The CIT rejected the government’s interpretation noting that the phrase “deal with” connotes a direct link between an act and the problem it purports to address. But the court found no such connection here between the tariffs and the “threat”, i.e. the general problem of a failure to thwart trafficking and other crime in the three countries. The order observes that the “Government’s “pressure” argument effectively concedes that the direct effect of the country-specific tariffs is simply to burden the countries they target” and while that may be an effective diplomatic strategy it does not meet the statutory standard of “deal with” an emergency.

What comes next?

The government has filed a motion to stay the CIT’s order pending the appeal before the CAFC. The motion asserts that the stay is critical to the President’s conduct of ongoing, delicate diplomatic efforts with several countries. It asserts that a stay would not harm plaintiffs as it would issue refunds with interest if the government lost on appeal. The court has ordered the plaintiffs to reply to the motion for a stay by noon on May 30, 2025, and as such we expect a decision on the government’s stay within a week.

The government has also filed a motion for stay with the CAFC. The CAFC 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. It is unclear whether this will include refunds and interest for tariffs already paid. 

The Husch Blackwell team is continuing to monitor developments and will provide additional updates as they arise.