Highlights:
|
The Court of International Trade (CIT) issued a unanimous decision on May 28, 2025 ruling both IEEPA and reciprocal tariffs exceeded the President’s authority under the law. The judges concluded that these IEEPA tariffs should be declared unlawful for all importers to ensure uniformity, not just for the plaintiffs who brought the case. Below, we address common questions arising from this development.
All three judges found that the IEEPA tariffs were illegal and further concluded that the IEEPA tariffs should be declared unlawful to all importers, not just the Plaintiffs in order to ensure uniformity.
The Trump Administration immediately appealed to the Federal Circuit (CAFC) to argue that it maintains authority to continue collecting the tariff revenue.
Which tariffs does this ruling affect?
The CIT’s decision specifically targets two sets of IEEPA tariffs:
- The fentanyl-related tariffs implemented in February of this year. These included a 20% tariff on Chinese products and a 25% tariff on non-originating Canadian and Mexican products (with a 10% rate for energy products and potash).
- The reciprocal tariffs that began in April of this year. These are currently at 10% for most countries until July 9 and for China until August 12, but had previously reached as high as 125% for China.
What happens next?
The government has already filed an appeal with the U.S. Court of Appeals for the Federal Circuit (CAFC). Simultaneously, it requested a “stay of execution.” This legal maneuver asks the CIT to pause its ruling and keep the tariffs in place while the appeals process unfolds. Plaintiffs have until June 18th to respond to this request, though a response could arrive sooner.
Late on May 28, the U.S. Court of Appeals for the Federal Circuit lifted the initial block imposed by the CIT. The new order read “The judgments and the permanent injunctions entered by the Court of International Trade in these cases are temporarily stayed until further notice while this court considers the motions papers.”
The appeals bench also set a briefing schedule through June 9 for the parties to lay out their arguments. The court will then rule whether to grant a longer pause.
How long might this legal process take?
Unless the CAFC or the Supreme Court decides to “fast-track” the appeal, the entire appeals process could be lengthy. This timeline means businesses may face a prolonged period of uncertainty regarding these specific tariffs.
What happens if the CIT issues a “stay”?
If the CIT grants the government’s request for a “stay,” the current situation will be maintained. This means the government would continue to collect the IEEPA tariffs for the duration of the appeals process, which could be lengthy. Importers would need to continue paying these tariffs during that time.
What else did the CIT order?
The CIT also instructed the government to implement administrative measures, such as issuing Cargo Systems Messaging Service (CSMS) messages, to carry out the court’s decision to terminate the tariffs within ten days. However, U.S. Customs and Border Protection (CBP) is unlikely to cease requiring tariff payments soon, unless the CIT denies the government’s request for a stay.
What about tariff refunds?
The CIT’s ruling declared the IEEPA tariffs illegal for all importers but did not explicitly order the government to issue refunds. While the plaintiffs in this case did request refunds, the court did not grant them in this ruling, an issue the plaintiffs will likely follow up on.
Given the significant revenue at stake, CBP may not voluntarily refund tariffs to all importers, either now or even if the government loses all its appeals. One possible scenario is that importers might need to file individual lawsuits to seek refunds.
Importers should consult with customs counsel to understand how best to preserve their rights to a potential refund. Mechanisms like protests or Post-Summary Corrections (PSCs) are potential refund vehicles, should the CIT’s decision be upheld. Regardless, importers should monitor associated entries and have a process in place to collect relevant commercial and entry documents, should using IEEAP ultimately be found unconstitutional.
What about the other tariffs?
This CIT decision does not affect any tariffs other than those specifically imposed under IEEPA as detailed above. Tariffs under Section 232 (which includes those on automobiles, auto parts, aluminum, and steel, etc. ) and Section 301 tariffs remain in place.
What steps should importers take now?
Currently, all provisions of HTSUS Chapter 99 that impose these tariffs are still in effect. Imports should be declared under the applicable tariff provisions with duty payments pending the outcome of the appeal, unless a future court order says otherwise.
Additionally, it is expected that the restrictions preventing the use of the de minimis provision for goods subject to IEEPA tariffs will remain in effect during the appeals process.
At a minimum, importers should identify all entries where IEEPA duties were paid, track their liquidation status, and ensure that they have an audit trail of applicable documentation for those transactions.
Navigating the complexities of global trade
This ruling underscores the dynamic and often unpredictable nature of international trade regulations. Tariff policies can shift, creating significant operational and financial challenges for businesses involved in global commerce.
On May 29, A D.C. District Court invalidated President Trump’s blanket tariffs, including those under IEEPA, ruling he exceeded his authority. The court found IEEPA doesn’t permit such broad tariffs, halted them for two plaintiffs via a permanent injunction, and required a government response within 10 days; the Administration has appealed. This is one of several tariff cases under judicial review, including a CIT case.
In this environment, staying informed and proactively managing trade-related risks is crucial. Resources such as the Thomson Reuters “Corporate Tariffs Survey: Mitigating Global Trade Challenges” report can provide valuable insights. This report examines how corporations are navigating and mitigating the impacts of tariffs and other global trade hurdles. Understanding the strategies and experiences detailed in such surveys can equip businesses to better anticipate challenges, adapt their operations, and make more informed decisions in the complex world of international trade.
