Landmark Court Rulings: Trump’s Novel IEEPA Tariffs Invalidated, Appeal Filed, and Stay Granted

The decision permanently enjoined the tariffs imposed by President Trump pursuant to the International Emergency Economic Powers Act (IEEPA), (i.e., the IEEPA Fentanyl tariffs imposed on Canada, Mexico, and China and the IEEPA reciprocal/universal tariffs imposed globally, with certain exceptions). The reasoning underlying the CIT’s decision may have far reaching implications for US importers of goods who have been navigating the plethora of tariffs imposed to date under Trump’s second term, as well as the foreign and domestic manufacturers, suppliers, and distributors with a nexus to such US imports.

At a high-level, in a lengthy decision, the CIT held that the reciprocal tariffs imposed by Trump under the IEEPA exceeded the authority granted to the Executive Branch. The court further found that the IEEPA tariffs imposed on goods from China, Canada, and Mexico to address fentanyl and immigration concerns were also improper as they do not properly address those national security concerns.

According to the CIT ruling, the government must rescind IEEPA tariffs by June 7, within 10 calendar days of the court’s decision. The government has already filed a notice of appeal with the US Court of Appeals for the Federal Circuit (CAFC). The government has also filed a motion to stay the injunction. The Federal Circuit Court of Appeals issued an order granting an immediate administrative stay of the CIT ruling on May 29. This means that IEEPA duties will continue to be collected at least until mid-June, when a decision regarding a longer stay of the CIT’s ruling will be made.

Given the potential and wide-ranging implications resulting from last night’s CIT decision, the questions and answers below are meant to address some immediate questions while the case continues to develop at the CAFC and potentially beyond.

What tariffs are impacted or invalidated by the CIT decision?

Only tariffs imposed under IEEPA were invalidated. These include:

• 10% IEEPA reciprocal tariffs.

• 25% IEEPA fentanyl tariffs imposed upon goods from Canada and Mexico.

• 20% IEEPA fentanyl tariffs imposed upon goods from China.

Does the CIT decision impact other tariffs?

No, all other tariffs, including those imposed pursuant to Section 232 and Section 301, remain in effect. The CIT’s decision was limited to the tariffs imposed under the IEEPA.

Does the government’s appeal automatically stay the permanent injunction? (i.e., does the appeal permit the government to continue to collect IEEPA tariffs during the appeal process)?

No, the injunction issued by the CIT is not automatically stayed by filing of a notice of appeal. The government must obtain a stay of execution from the CAFC. In fact, the government swiftly reacted and filed a motion to stay the injunction, arguing that without the stay, the order would create what it described as a “foreign policy disaster scenario.”

The CAFC stayed the CIT ruling on May 29 while the appellate court considers the government’s emergency stay motion, meaning the IEEPA tariffs are temporarily reimposed and will continue to be collected at least until mid-June and possibly during the remainder of the appeals process.

Can importers obtain refunds for duties already paid?

It is unlikely that refunds will be issued until all appeals are resolved. Given this, it is recommended that importers monitor their entry data to ensure that timely protests or other applicable customs entry mechanisms are filed following the appeals (e.g., liquidation extensions, post summary corrections, etc.).

Key Takeaways

• An order granting an immediate administrative stay was issued by the CAFC on May 29. This means that, at least until mid-June, and possibly during the entire appeals process, IEEPA duties will continue to be collected.
• Importers should monitor their entries, paying close attention to the expected liquidation date, and be prepared to file post summary corrections or protests where applicable following a decision on the government’s motion to stay the injunction and the appeals.
• Tariff mitigation strategies should continue to be employed, as the Trump Administration may invoke other authorities to support the tariff regime. These could include 19 U.S.C. § 2132 (Section 122), which allows for up to a 15% tariff for 150 days to address trade deficits (unless extended by US Congress), or 19 U.S.C. § 1338, which allows the president to impose tariffs on countries that discriminate against or disadvantage the commerce of the United States. Section 301 tariffs could also be expanded for China origin products.
• There are several other court cases pending to challenge the legality of the Trump 2.0 tariffs. On May 29, the DC District Court in Learning Resources Inc., et al, v. Donald J. Trump, et. al., also determined that the IEEPA tariffs are unlawful and denied the government’s motion to transfer the case to the CIT. The judge granted a preliminary injunction against the tariffs that is stayed for 14 days to allow the government to appeal. This parallel case raises other questions regarding jurisdiction.

We will continue to monitor the appeals process and status of the pending Trump tariff litigations. In the meantime, please contact the authors or any member of the AFS Customs & Import Compliance team for assistance in understanding the current tariff landscape. For more information on the IEEPA tariffs and other tariffs issued by the Trump Administration, please see the AFS Trump Tariffs 2.0 Tariff Tracker.