Federal Trade Court Strikes Down President Trump’s Tariffs

Background

On May 28, 2025, the CIT issued an opinion vacating and permanently enjoining several Trump Administration executive orders declaring national emergencies and imposing tariffs pursuant to the national emergencies. The three-judge panel found that the International Emergency Economic Powers Act of 1977 (“IEEPA”), the statutory authority that President Trump invoked in his executive orders, does not confer “unbounded authority” on the President to “impose unlimited tariffs on goods from nearly every country in the world.” The court’s ruling applies to all of President Trump’s IEEPA-based tariffs—those imposed on Canada, Mexico, and China in connection with drug trafficking threats, as well as the across-the-board tariffs referred to as the “Liberation Day” tariffs.

The Tariffs

Since his inauguration, President Trump has declared a slew of national emergencies and imposed broad tariffs on nearly every nation in the world in response.

On January 20, 2025, President Trump issued Executive Order 14157, which declared a national emergency under IEEPA to “deal with” drug cartel activities that “threaten the safety of the American people, the security of the United States, and the stability of the international order in the Western Hemisphere.”¹  President Trump buttressed this Order with Proclamation 10886, Executive Order 14193, Executive Order 14194, and Executive Order 14195 which declared a national emergency at the southern border, and then imposed tariffs on Canada, Mexico, and China, respectively, for their alleged failures to stop the flow of drugs into the United States.² The tariffs have since been modified several times but remained in place.³

In addition to the President’s tariffs related to drug-trafficking national emergencies, President Trump issued his sweeping “Liberation Day” tariffs on April 2, 2025. These tariffs were justified by a national emergency declaration under IEEPA to address “structural imbalances in the global trading system.”⁴ President Trump’s “Liberation Day” tariffs placed an across-the-board 10 percent import duty on all imports, as well as increased rates for a list of 57 other countries.⁵  The increased tariffs on the 57 other countries were later paused.⁶

Tariff Litigation

In response to these tariffs, a host of lawsuits were filed against the Trump Administration, challenging the President’s authority to issue such sweeping import duties unilaterally. These challenges included a suit brought by members of the Blackfeet Nation Native American tribe, groups of businesses who rely on international imports, the State of California and Governor Gavin Newsom, and twelve states including Oregon, New York, and Minnesota.

The Court’s Decision

On May 28, 2025, the Court of International Trade—the federal court granted exclusive jurisdiction to hear cases related to tariffs—issued the first decision on the merits in any of the cases challenging President Trump’s tariffs in the combined cases V.O.S. Selections, Inc. v. Trump and Oregon, et al. v. Trump.⁷

Plaintiffs in both cases argued that the President’s tariffs violated the constitutional principle of the separation of powers, exceeded the authorities delegated by IEEPA to the President, and constituted an improper, unlimited delegation of a legislative power to the executive branch. In its defense, the Trump Administration argued that IEEPA granted broad powers to the President to impose tariffs to deal with the threats arising from national emergencies, and that determining what constitutes a national emergency is a “political question” unreviewable by the judicial branch.

On a motion for summary judgment, the CIT ruled for the plaintiffs, vacating the tariffs and enjoining the challenged tariffs imposed pursuant to IEEPA. In doing so, the court held that IEEPA cannot plausibly be read to allow for the President to have practically unlimited authority to impose sweeping tariffs, especially informed by the “separation-of-powers underpinnings of the nondelegation and major questions doctrines.”⁸ To hold otherwise would “transform[] IEEPA into an impermissible delegation of power.”⁹

Further, the court held that IEEPA only authorizes the President to impose tariffs in limited sets of circumstances—namely, where each of the following conditions are present: (1) a threat external to the United States “to the national security, foreign policy, or economy of the United States;” (2) the threat must be “unusual and extraordinary;” (3) a national emergency must be declared; and (4), the President’s actions must “deal with” the threat.¹⁰ Here, the court found that the drug-related tariffs did not “deal with” the identified threat.¹¹ Additionally, the court viewed the “Liberation Day” tariffs as beyond IEEPA’s scope because they were aimed at addressing the trade deficit—an objective Congress has addressed through other, more specific statutory tools such as Section 122 of the Trade Act of 1974, which imposes time and rate limits on tariffs tied to balance-of-payments concerns.

Finally, the court determined that it was not precluded from determining whether the President’s invocation of IEEPA was proper by the political question doctrine. The court concluded that because the text of the statute identifies the criteria that must be met before the President may exercise delegated authority under IEEPA, courts may review whether such criteria have been met.¹²

Notably, the court’s decision did not merely grant relief to the challengers in these cases but vacated the orders in their entirety and granted a permanent, nationwide injunction against enforcement of the tariffs. The CIT held that to limit the relief to just the parties involved would frustrate the Constitution’s requirement for uniform import duties.¹³ The case also arose under the scope of review provided by the Administrative Procedure Act (“APA”), which allows the Court to “hold unlawful and set aside” challenged administrative actions. See 28 U.S.C. § 2640(e) (incorporating 5 U.S.C. § 706). Yet, in both its briefing prior to this opinion and in its motion to stay, the Department of Justice had argued that any relief granted in this case should be limited to the parties alone, as a nationwide injunction would “grant relief to countless parties who are not before the court.”¹⁴ DOJ’s argument here parallels the argument it made to the Supreme Court recently at oral argument in a trio of cases challenging district court nationwide injunctions.¹⁵ The Court’s resolution of those cases could potentially impact the relief to be granted to the challengers in this case.

A day later, on May 29, 2025, a federal district court granted a separate injunction against the Trump Administration’s tariffs under IEEPA and denied DOJ’s motion to transfer the case to the CIT.¹⁶ There, Judge Contreras of the U.S. District Court for the District of Columbia went a step beyond the CIT and held that IEEPA’s statutory delegation permitting the President to “regulate . . . importation” did not authorize the President to impose tariffs at all. Rather, the court held that IEEPA’s text, structure, legislative history, and practice indicated that the term “regulate” was cabined to “establish[ing] rules governing conduct” and not an independent power to levy and collect taxes, like tariffs.¹⁷ The district court’s ruling represents another blow to the Trump Administration’s tariff orders, although the injunction applies solely to the two plaintiffs in that proceeding. DOJ has argued that the CIT has exclusive jurisdiction for challenges involving IEEPA tariffs, and other district courts have agreed. Therefore, that jurisdictional issue may be a key issue that prevents the D.C. Circuit from reaching the merits on appeal.¹⁸

Conclusion

The CIT’s decision in V.O.S. Selections represents the first judicial opinion reviewing President Trump’s broad assertions of tariff authority under IEEPA. Consistent with Supreme Court decisions cabining executive powers during the Biden Administration, the CIT’s decision turns upon a close reading of IEEPA to comport with the nondelegation and major questions doctrines and underscores the potential separation of powers issues involved. In the early months, the Trump Administration has asserted a muscular view of executive power, yet the lower federal courts have signaled a willingness to push back in the name of textualism and the separation of powers.

The CIT’s decision is the first word, not the last. The DOJ has appealed the CIT decision and was granted an administrative stay by the Federal Circuit, pausing the CIT’s ruling until the Federal Circuit can decide the case. If the United States Court of Appeals for the Federal Circuit upholds the CIT’s decision, importers may ultimately be entitled to refunds of tariffs paid under the enjoined orders, although such refunds may be delayed until the appellate process concludes. We will continue to closely monitor any developments in these cases.