What Happened

On May 28, 2025, the US Court of International Trade (“CIT”) issued a major decision in V.O.S. Selections, Inc. v. United States invalidating two sweeping tariff programs imposed under the International Emergency Economic Powers Act (“IEEPA”) earlier this year. The decision strikes down the legal basis for key executive orders imposing tariffs on China, Canada, Mexico and dozens of other trading partners, reshaping the legal framework for future emergency-based trade actions. The court granted summary judgment in favor of both private-sector plaintiffs and a coalition of state governments, concluding that the tariff actions exceeded statutory authority under IEEPA and intruded upon Congress’s exclusive constitutional role in regulating trade.

However, less than 24 hours later, the Federal Circuit Court of Appeals issued an order administratively staying the CIT injunction while it considered an appeal on the case. Thus, notwithstanding the CIT order, the IEEPA tariffs remain in effect.

Background

IEEPA is a federal law that grants the President broad powers to regulate international commerce after declaring a national emergency in response to an unusual and extraordinary threat to the national security, foreign policy or economy of the United States. Typically, IEEPA has been used to impose sanctions on foreign states or individuals, control assets or restrict financial transactions in response to specific foreign threats. IEEPA’s authority traditionally has not been used to impose broad tariffs simply based on general economic concerns.

Since taking office in January 2025, President Trump has implemented a series of tariffs under IEEPA rather than by using traditional trade enforcement statutes such as Section 301 or Section 232 of the Trade Expansion Act of 1962.

These IEEPA tariffs include:

• Trafficking tariffs: A 25 percent ad valorem duty on goods from Mexico and Canada and a 20 percent duty on goods from China, justified on grounds of transnational criminal threats and border security (see previous alert here).
• Worldwide and retaliatory tariffs: A 10 percent baseline duty on all imports, with increased rates up to 50 percent for certain US trading partners, based on allegations of non-reciprocal trade policies and structural global imbalances (see previous alerts here and here).

Both types of tariffs were implemented via executive orders invoking national emergency declarations under IEEPA.

Key Legal Holdings

The CIT ruled that:

• IEEPA does not authorize boundless tariff authority. The court narrowly interpreted IEEPA’s grant of power to “regulate . . . importation,” holding that it does not encompass the imposition of broad, discretionary tariffs absent a defined emergency directly tied to foreign threats.
• The tariffs were ultra vires. The court found that the President’s actions exceeded the legal authority granted by Congress under IEEPA, effectively encroaching upon powers specifically reserved for Congress under Article I of the US Constitution to regulate trade.
• IEEPA requires a foreign emergency nexus. The court concluded that generalized economic concerns—such as trade deficits, wage suppression abroad or retaliatory trade practices—do not meet IEEPA’s strict requirement of an “unusual and extraordinary threat” arising, outside the United States. This holding significantly narrows the executive’s discretion in declaring emergencies for trade purposes, emphasizing that the threat must be directly tied to foreign actions impacting national security or foreign policy, not merely economic competition.
• Private and state plaintiffs had standing. The court recognized downstream economic harm (e.g., increased procurement costs, disrupted supply chains) as sufficient to establish standing, even for non-importers.

Impact and Effective Scope of the Ruling

The CIT’s judgment is nationwide in scope and normally would be immediately effective. Because the CIT invalidated the relevant executive orders and related Harmonized Tariff Schedule of the United States (HTSUS) modifications, the ruling would have had the practical effect of nullifying the challenged tariffs as a matter of law. However, the Federal Circuit’s administrative stay of the CIT injunction means that:

• The tariffs remain in effect for now, pending further action by the appellate court.
• The administrative stay is temporary and does not decide the appeal itself, but it preserves the status quo while the court considers the government’s full motion for a stay pending appeal.
• Plaintiffs must respond to the government’s stay motion by June 5, 2025, with a reply due June 9, 2025.
• Parties have been instructed to notify the Federal Circuit of any ruling on the parallel stay motion still pending before the CIT.

Unless and until the Federal Circuit denies the government’s stay request or the CIT separately lifts the stay, businesses should treat the tariffs as still in force.

Importantly, neither the CIT nor the Federal Circuit order affect product-specific tariffs imposed under other authorities, such as Section 232 of the Trade Expansion Act of 1962. Tariffs on imports of aluminum, steel and certain automotive goods remain in force and are unaffected by these rulings.

Issues Potentially to Be Raised on Appeal

The government is widely expected to appeal the CIT’s decision to the Federal Circuit. Key legal questions likely to be raised on appeal include:

• Scope of IEEPA authority: Whether the phrase “regulate . . . importation” authorizes tariff actions, particularly considering precedent under the Trading with the Enemy Act. The government is likely to argue that “regulate . . . importation” within IEEPA is a broad grant of power that includes the imposition of tariffs, citing historical precedent under the Trading with the Enemy Act (e.g., United States v. Yoshida Int'l, Inc., 526 F.2d 560 (C.C.P.A. 1975)) to support a more expansive view of presidential authority during emergencies.
• Use of constitutional avoidance: Whether the CIT erred by interpreting IEEPA narrowly based on the nondelegation and major questions doctrines, rather than on plain statutory text.
• Justiciability of emergency declarations: Whether the judiciary may review the President’s determination that a national emergency exists for IEEPA purposes. The government may contend that the President’s determination of a national emergency for IEEPA purposes is a political question and thus generally not subject to judicial review, arguing that the CIT overstepped its bounds in scrutinizing this executive determination.
• APA applicability: Whether the CIT improperly imported Administrative Procedure Act (APA) standards in reviewing executive action not subject to the APA.
• Standing of non-importers: Whether downstream purchasers without direct duty liability can challenge tariff actions under 28 U.S.C. § 1581(i).

The Federal Circuit’s treatment of these issues could have long-term effects on the balance of power between Congress and the executive branch in trade law and emergency economic policy.

Next Steps for Businesses

Businesses affected by the invalidated tariffs should:

• Monitor for further court action, including whether the CIT grants or denies the pending stay motion, and any orders from the Federal Circuit on the full stay request.
• Adjust forward-looking import planning to reflect the possibility of the tariffs being rolled back if the stay is lifted or the appeal is denied.
• Monitor CBP implementation guidance. Companies should pay close attention to forthcoming communications from US Customs and Border Protection (CBP), particularly via Cargo Systems Messaging Service (CSMS) announcements, which are typically published on the CBP website. CBP has used CSMS in the past to communicate implementation steps in response to major litigation.
• Importers should proactively review their Automated Commercial Environment (ACE) accounts and coordinate closely with their customs brokers to identify affected entries, assess potential refund claims and remain responsive to any agency developments or requests for information.