Late yesterday a majority of the U.S. Court of Appeals for the Federal Circuit en banc panel held that the Trump Administration’s “Reciprocal” and “Trafficking” tariff regimes are unlawful, affirming the conclusion of the U.S. Court of International Trade that these tariff regimes are not authorized by the International Emergency Economic Powers Act, or IEEPA.
In a separate order, the Federal Circuit provided the government until October 14 to petition for Supreme Court review and confirmed the current tariffs remain in effect at least until then. Questions of relief will be addressed, if at all, only after the conclusion of any such proceedings.
A Narrow Opinion Addressing Broad Tariffs
In May, the U.S. Court of International Trade (“CIT”) held that the Trump Administration’s Reciprocal and Trafficking tariff regimes were unlawful, and issued a permanent injunction against the operation of those tariffs. (The Reciprocal tariffs are near-global in their reach, whereas the three Trafficking tariff regimes affect products of Canada, China, and Mexico, respectively.) The government appealed the CIT’s Judgment to the Federal Circuit almost immediately, and secured a stay of the CIT’s injunction pending appeal. The Federal Circuit established a highly expedited schedule for briefing and oral argument, which was held on July 31, 2025. Yesterday’s Federal Circuit opinion follows less than a month later.
Although the tariff regimes before the courts are broad, the court’s analysis is nevertheless limited to those specific regimes. Thus, neither the CIT’s decision nor that of the Federal Circuit addresses more recent tariff actions taken under IEEPA, including those with respect to Brazil or India. Nor do these opinions address recent tariffs imposed pursuant to other statutory authorities, such as Section 232 of the Trade Expansion Act of 1962 (“Section 232”) or Section 301 of the Trade Act of 1972 (“Section 301”), other than in dicta to explain that both more explicitly contemplate tariffs as a lawful action.
Split Decision on the Merits
The Federal Circuit Judges split seven-to-four in their assessment of the legality of the tariff regimes presented for review. The majority found that the President’s power to “regulate…importation” under 50 U.S.C. § 1702 does not encompass the power to impose the Reciprocal or Trafficking tariff regimes. While the majority did not find it necessary to go further and address whether IEEPA may in theory authorize some tariff-making, its statutory analysis leaves that in doubt. Moreover, four of the majority Judges wrote separately to assert that IEEPA confers no tariff-making authority.
The majority began by contrasting the text of IEEPA with other statutes, i.e., Section 338, Section 122, Section 201, or Section 301, that empower the President to impose tariffs using the term “tariff” or “duty” or “tax.” It noted that none of the verbs in the IEEPA statute involve monetary actions. Recognizing that the Supreme Court held Section 232’s grant of authority to “adjust…imports” extended to the assessment of import license fees in Algonquin, the majority distinguished Section 232 from IEEPA. Unlike IEEPA, Section 232’s authority to “adjust…imports” appears in a provision dealing with imports and duties (and mentioning them by name), whereas those terms are absent from the text of IEEPA. The majority also found it significant that IEEPA was codified in title 50 of the United States Code, entitled “War and National Defense,” as opposed to title 19, where other tariff and trade statutes appear.
The Court also invoked Constitutional considerations. Noting that the U.S. Constitution vests the power to impose taxes — including tariffs — exclusively in the Legislative Branch, the majority found that IEEPA’s power to “regulate” was not an express delegation of a core Legislative Branch authority. The majority also noted that the Constitution separately confers power to “regulate” and power to “tax,” and that Congress has elsewhere granted power to “regulate” without delegating tariff-making authority.
The majority also found that the sheer scale and scope of the tariffs implicated the “major questions doctrine,” insofar as these represented the first tariff actions under IEEPA and the dollar amounts implicated by these actions were severalfold larger than actions that the Supreme Court had elsewhere found to trigger this doctrine. Yet, in the majority’s view, the statute itself lacks any express or obvious conferral of such authority.
Finally, the majority addressed Yoshida, an appellate-level interpretation of materially identical language in the predecessor Trading with the Enemy Act (TWEA) which has been central to both parties’ arguments here. Sidestepping the question of whether Congress had in fact ratified Yoshida’s interpretation in promulgating IEEPA, the majority concluded that the Reciprocal and Trafficking tariffs fell outside the bounds of what Yoshida had found lawful. In contrast to the surcharges considered in Yoshida, the majority found the Reciprocal and Trafficking tariffs to be unbounded, and in conflict with Congressionally-set tariff levels.
Separate Dissent Issued
In a dissenting opinion, a four-Judge minority concluded that summary judgment against the government was unwarranted. The main point of departure from the majority opinion concerns the implication of the “foreign affairs doctrine.” The dissent placed significant weight on this as a basis for reading IEEPA broadly. The majority, by contrast, treated the matter succinctly, reasoning that the power to tax belongs to Congress and the President’s authority in the realm of foreign affairs does not confer tariff-making authority absent Congressional imprimatur.
Unanimity on Jurisdiction
All eleven participating Judges were aligned on points of procedure (standing, jurisdiction, remedy). In particular, all agreed that the CIT properly exercised subject matter jurisdiction over the case, with the majority essentially adopting the CIT’s rationale that implementation of these tariffs through modification of the Harmonized Tariff Schedule of the United States (“HTSUS”), made this case “arising out of” a law providing for tariffs, i.e., the HTSUS, within the meaning of the Court’s jurisdictional statute.
The majority also spoke directly to the recent opinion of the U.S. District Court for the District of Columbia, which found that it — not the CIT — had jurisdiction because IEEPA does not provide for tariffs. The majority rejected this analytical framework, stating:
A claim “arises out of” a tariff law “for reasons other than the raising of revenue,” 28 U.S.C. § 1581(i)(1)(B), if the law in question is invoked as the authority to impose a tariff for such a non-revenue raising purpose. To determine jurisdiction pursuant to an “arising out of” provision, we do not have to decide whether the statute does in fact confer such authority. That question goes to the merits of the claim.
Now that the D.C. District Court case has been appealed to the U.S. Court of Appeals for the D.C. Circuit, that Court will need to address this conflict. A circuit split with respect to jurisdiction will increase the impetus for the Supreme Court to take up the case.
Next Stop: The Supreme Court?
By separate order, the Federal Circuit provided the Government until October 14, 2025, to file a petition for a writ of certiorari in the Supreme Court. Shortly after the Opinion was released, the President and other officials stated the Government’s intention to do so, and the Federal Circuit provides that it will not hand proceedings back to the CIT until the Supreme Court’s proceedings have concluded. The Supreme Court may decide to take the case on and address it in its upcoming term, which begins October 6, 2025.
No Changes on the Ground but a Remedy Redesign
In May, the CIT ordered that the Reciprocal and Trafficking tariff regimes be permanently enjoined. Yesterday’s Federal Circuit opinion vacated that injunction, ordering that the CIT reconsider its approach in light of the standards established by the Supreme Court in CASA. It is unsurprising that the Federal Circuit would instruct the CIT to consider this intervening decision, which did not exist at the time of the CIT’s original order. However, the majority specifically states that it is “neither affirming nor reversing the CIT’s holding that any relief short of a universal injunction would be unconstitutional as violative of the Uniformity Clause.” The possibility remains, therefore, that if the government loses on the merits, the ultimate remedy may look much the same as what the CIT originally ordered. Further proceedings will be necessary to determine which configuration the CIT may ultimately adopt. If a universal injunction were maintained, further appellate proceedings may follow.
In the meantime, the tariffs remain in place.
Impact on Trade Dealmaking
The Trump Administration and U.S. trading partners have been busily negotiating trade deals over the past several months. One consistent component of each deal announced to date has been a U.S. concession with respect to a given country’s Reciprocal tariff rate. Were the regime as a whole to be unlawful, one could expect a collateral impact on future dealmaking as well as the terms of existing deals, all of which remain in varying degrees of flux.
But the practical effect should not be overstated. Notwithstanding the findings concerning the legality of the IEEPA-based approach to tariff-making, the President can pivot administratively and invoke other statutory authority — including the provisions cited by the Federal Circuit majority as counterexamples to IEEPA. None would be a perfect 1:1 replacement and the procedures may result in a transitional period, but over the medium term there may be viable pathways under different authority to recreate a system of tariffs largely similar to the Reciprocal tariff regime. Clear-eyed negotiators may account for this possibility.
Moreover, for certain countries, the Section 232 tariffs that are also subject to negotiation and dealmaking are as important, or even more important, than the Reciprocal tariffs. This dynamic is presumably unchanged by the Federal Circuit’s decision and the ultimate disposition of the Reciprocal tariffs.
Reacting to Changes in the Tariff Landscape
Importers may want to monitor recent entries to ascertain which may be eligible to benefit from any implementation of the CIT’s injunction of the IEEPA tariffs. The attorneys, licensed customs brokers, compliance specialists, and economists of Cassidy Levy Kent have extensive experience counseling companies in a wide range of industries on tariff matters as well as how to optimize their supply chains for tariff considerations and maintain U.S. market access.