Federal Courts Strike Down Trump’s Global Tariffs

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On May 28, 2025, in a landmark decision, the U.S. Court of International Trade (New York) struck down President Donald Trump’s sweeping new tariffs on imports from nearly every country, ruling that the President exceeded his authority under the International Emergency Economic Powers Act (“IEEPA”). The court also grounded its decision on Congress’s exclusive constitutional power to impose duties and regulate foreign commerce. As of today, the court’s decision has been stayed pending further briefing by the parties, and the challenged tariffs remain in effect.

This case arose out of an action brought by V.O.S. Selections, Inc. and several other businesses challenging tariffs imposed by President Trump. The action was consolidated with a similar lawsuit filed by 12 states led by Oregon.

Worldwide and Retaliatory Tariffs

The first set of challenged tariffs stemmed from President Trump’s national emergency declaration relating to a supposed lack of reciprocity in U.S. trade relations and resulting trade deficit (the “Worldwide and Retaliatory Tariffs”). Under this emergency declaration, President Trump imposed a general 10% tariff on all U.S. trade partners, which took effect on April 5, 2025. The executive order also established individualized tariff rates ranging from 11% to 50% for certain countries. These higher rates were suspended until July 9, 2025. China reciprocal tariff rates were also lowered from 125% to the 10% baseline until August 12, 2025.

The court determined that the IEEPA does not authorize the President to impose “unbounded tariffs.” The court emphasized that interpreting the IEEPA as an unlimited delegation of power to impose tariffs would violate the constitutional separation of powers, as Congress may not “abdicate or transfer to others its essential legislative functions.” Because the Worldwide and Retaliatory Tariffs were intended to address a “balance-of-payments deficit,” they had to conform to narrower limitations for non-emergencies under a different statute. In the court’s view, the Worldwide and Retaliatory Tariffs did not comply with those limitations and were therefore unlawful.

Trafficking Tariffs

The second set of challenged tariffs was based on President Trump’s national emergency declaration concerning threats posed by drug cartels and the importation of illicit narcotics into the United States (the “Trafficking Tariffs”). These tariffs targeted Canada and Mexico (25%), as well as China (20%). The Trafficking Tariffs took effect earlier this year on February 4 for China and March 4 for Canada and Mexico, and were subsequently modified by additional executive orders.

The IEEPA grants the President authority to “deal with” threats to national security in certain emergency situations. The court interpreted the statutory phrase “deal with” as requiring a “direct link” between the President’s actions and the identified threat. It concluded that the President had not articulated any such link between the Trafficking Tariffs and the President’s stated purpose of countering drug trafficking and related illegal activities.

What’s Next?

The Court of International Trade declared both sets of tariffs (the Worldwide and Retaliatory Tariffs and the Trafficking Tariffs) unlawful as to all importers, and permanently enjoined the collection of these tariffs. It gave the administration ten days to comply with its order.

Immediately after the Court of International Trade decision, the U.S. government appealed to the U.S. Court of Appeals for the Federal Circuit. The Federal Circuit has temporarily stayed the lower court’s decision while it decides whether to stay the decision for the duration of the appeal. A motion to stay the decision is also pending before the Court of International Trade.

For now, the challenged tariffs remain in effect.

On May 29, 2025, a day after the Court of International Trade decision, the U.S. District Court for the District of Columbia preliminarily enjoined the Worldwide and Retaliatory Tariffs in a separate case brought by two small U.S. businesses. The D.C. District Court concluded that the IEEPA likely did not authorize the President to impose tariffs at all. However, this preliminary injunction applies only to the plaintiffs in that case.

Relevant Considerations for Importers

Importers subject to the challenged tariffs should monitor the appeal and consult U.S. counsel for advice regarding their imports. If the Court of International Trade decision is affirmed, importers may be able to get refunds for duties paid under the challenged tariffs.

The Court of International Trade decision did not address existing tariffs and pending investigations pursuant to Section 232 of the Trade Expansion Act of 1962 (Section 232) or Section 301 of the Trade Act of 1974 (Section 301).

Curtis, in strategic alliance with Appleton Luff, has extensive experience counseling companies in a wide range of industries on complying with tariffs and optimizing their supply chains to maintain U.S. market access.