Federal Circuit Takes Center Stage in Trump’s Tariff Campaign

Patent

by Dennis Crouch

On May 28, 2025, the Court of International Trade issued a sweeping permanent injunction against President Trump’s unilateral global tariffs, only to have the Federal Circuit grant an immediate administrative stay in a rare en banc order.  The stay is likely to remain in place only for about two weeks as the Court considers (likely en banc) whether to allow the tariffs to remain in place while it considers the merits of the U.S. government’s appeal.  The dispute centers on fundamental questions about the scope of presidential emergency powers under the International Emergency Economic Powers Act (IEEPA) and represents one of the most significant judicial challenges to executive trade authority in decades.

The Court of International Trade’s decision in V.O.S. Selections, Inc. v. United States, Slip Op. 25-66 (Ct. Int’l Trade May 28, 2025) [CIT Decision], struck down both President Trump’s “Worldwide and Retaliatory Tariffs” and his “Trafficking Tariffs” as exceeding congressional delegation of authority.  The underlying legal framework is that the U.S. Constitution grants Congress, not the President, authority to set tariffs.  However, Congress has expressly delegated aspects of that authority to the President – most particularly under IEEPA, which authorizes the President to “regulate . . . importation” of foreign goods during declared national emergencies to address “unusual and extraordinary threat[s]” to national security, foreign policy, or the economy. 50 U.S.C. § 1702(a)(1)(B), § 1701(a). Congress enacted IEEPA in the 1970s after determining that President Nixon had abused a prior, more expansive delegation under the Trading with the Enemy Act (TWEA). See United States v. Yoshida Int’l, Inc., 526 F.2d 560 (C.C.P.A. 1975).

The three-judge panel of the Court of International Trade fundamentally rejected the government’s expansive interpretation of IEEPA’s scope — proceeding along two distinct tracks, rejecting the “Worldwide and Retaliatory Tariffs” and the “Trafficking Tariffs” on separate grounds.

The Worldwide and Retaliatory Tariffs impose a baseline 10% duty on imports from all trading partners with country-specific rates ranging as high as 125 percent for China, the court held that IEEPA’s authorization to “regulate . . . importation” does not delegate unlimited tariff authority: “declaration of a national emergency is not a talisman enabling the President to rewrite the tariff schedules.” The court reasoned that interpreting IEEPA to delegate unlimited tariff authority would violate both the nondelegation and the major questions doctrines.  Following the canon of constitutional avoidance, the court more narrowly construed the statute.   The court also looked to the Trade Act of 1974, which specifically addresses presidential authority to impose tariffs in response to balance-of-payments deficits, and concluded that statute implicitly limited IEEPA’s broader emergency authorities. Section 122 authorizes temporary import surcharges and quotas in response to “fundamental international payments problems,” but caps such tariffs at 15 percent and limits their duration to 150 days. 19 U.S.C. § 2132. Because Trump’s Worldwide and Retaliatory Tariffs were explicitly justified as responses to “large and persistent annual U.S. goods trade deficits,” the court held they fell within Section 122’s more restrictive framework rather than IEEPA’s broader emergency authorities.

The Trafficking Tariffs, imposed duties of 25 percent on Canadian and Mexican products and 20 percent on Chinese products to address failures by those countries to combat drug trafficking.  The Government offered a separate justification for these provisions — that 50 U.S.C. § 1701(b) permits presidential actions must “deal with an unusual and extraordinary threat.”

The government argued that these tariffs created “pressure” or “leverage” to induce the target countries to better combat trafficking within their jurisdictions.   But, court rejected this “leverage” theory, holding that “deal with” requires a more direct relationship between the presidential action and the stated threat. The court explained that while “a tax deals with a budget deficit by raising revenue” and “a dam deals with flooding by holding back a river,” there was no such direct association between tariffs on lawful imports and foreign governments’ efforts to combat trafficking. The court distinguished cases like Regan v. Wald, 468 U.S. 222 (1984), where travel restrictions directly “curtail[ed] the flow of hard currency to Cuba.”

Significantly, the court also held that whether the President’s chosen means “deal with” declared emergencies was judicially reviewable, rejecting the government’s political question doctrine arguments. The court reasoned that IEEPA’s text does not commit this determination to presidential discretion but instead creates judicially manageable standards for review. The court noted that IEEPA requires more than just a presidential declaration—it requires that actions actually “deal with” the identified threat and “may not be exercised for any other purpose.”

The Federal Circuit‘s response to the government’s emergency motion was swift. On May 29, 2025—just one day after the CIT’s decision and the government’s filing—the court issued an en banc administrative stay. Administrative stays are typically considered by three-judge panels, making the decision to have all participating judges consider this motion highly unusual. As the order notes, “Circuit Judge Newman did not participate.” The court established an extraordinarily compressed briefing schedule, requiring plaintiffs-appellees to respond to the government’s stay motion by June 5, 2025, with the government’s reply due June 9, 2025.

Although no announcement has been made, I expect that the court will remain en banc for this entire case.  The next decision will come in mid June, deciding whether or not to maintain the state for the remainder of the appeal.

The government’s emergency motion presents legal arguments about the merits and also delves into the question of whether injunction was proper.