On May 28, 2025, the U.S. Court of International Trade (CIT) delivered a significant ruling, striking down a series of tariffs imposed by the President Trump. The court determined that these tariffs, enacted under the International Emergency Economic Powers Act (IEEPA), exceeded presidential authority and violated constitutional principles. The Trump administration’s appeal of the CIT decision temporarily reinstated sweeping tariffs with ongoing legal battles expected.
This ruling relates to the “Liberation Day” reciprocal tariffs announced and subsequently paused on April 9, the baseline universal 10% tariff, and the 25% tariffs from Canada and Mexico that do not comply with the USMCA trade agreement. In addition, this includes the removal of the previously 145% China tariffs and removal of the de minimis tariffs on China imports of less than $800.
Importantly, this case does not involve the Section 232 tariffs on steel, aluminum or auto parts, which are subject to a separate legal and regulatory track.
The Court’s Rationale
The CIT’s decision centered on the following key points:
- Overreach of Executive Power: The court found that the tariffs, including the 10% global “reciprocal tariff” and higher duties on countries like China, Canada and Mexico, were not justified under IEEPA. The act requires an “unusual and extraordinary threat,” which the court concluded was not present in this case.
- Violation of the Nondelegation Doctrine: By imposing these tariffs without explicit congressional authorization, the executive branch was deemed to have overstepped their legislative power, violating the constitutional separation of powers.
Implications for Trade and the Economy
- International Trade Dynamics: The decision may influence global trade negotiations, particularly with countries like India, which could benefit from a more predictable U.S. trade policy.
- Market Reactions: Back-and-forth court orders that were initially voided and then reinstated tariffs have introduced a new level of uncertainty into the financial markets.
What’s Next?
The Trump administration immediately appealed the CIT decision, expressing confidence that the tariffs will ultimately be upheld. However, the ruling sets a precedent that may limit the executive branch’s ability to unilaterally impose tariffs without clear legislative backing.
A Federal appeals court temporarily reinstated the most sweeping tariffs on Thursday, May 29. Although these appellate rulings carry weight, the story isn’t over. The case is expected to move quickly through the appellate process and will likely reach the Supreme Court.
In the case that the tariffs are ultimately overturned, there is still uncertainty on whether refunds would be issued related to previously imposed tariffs and whether these refunds would apply universally or specifically to the plantiffs.
In the meantime, businesses should:
- Reassess their tariff exposure and compliance strategies
- Stay informed on new trade policy announcements
- Monitor how congress and future administrations respond to this precedent
RKL’s International Tax team stands ready to help you navigate the evolving international trade landscape. Stay in-the-know and subscribe to our Insights for What’s Next e-newsletter and check out our Insights and Events pages for related content.
