On August 28, 2025, federal appellate courts are evaluating whether former President Trump exceeded constitutional authority by using emergency powers to impose broad import taxes. The legal challenges focus on the application of the International Emergency Economic Powers Act (IEEPA), a law enacted in 1977 that allows the president to respond to foreign threats by restricting economic activity. Historically, IEEPA has supported measures like asset freezes or trade bans, but not import duties, which are typically governed by statutes such as Section 232 or Section 301 of U.S. trade law.
During Trump’s first administration, companies could apply for exemptions from tariffs on goods not produced domestically. However, in his second term, such relief was discontinued. Instead, entire nations were required to negotiate tariff reductions directly with U.S. officials. This shift left importers searching for alternatives, including supply chain diversification and domestic production, especially after April 2, 2025—labeled “Liberation Day”—when reciprocal tariffs were imposed globally via executive order under IEEPA.
On May 28, 2025, the Court of International Trade (CIT) ruled in V.O.S. Selections v. United States that these tariffs were unlawful, stating that Congress did not authorize the executive branch to levy import taxes through IEEPA. The three-judge panel unanimously ordered the halt of tariff collections by June 7, 2025. The administration responded by appealing to the Federal Circuit, which paused the CIT’s directive, allowing U.S. Customs to continue collecting the duties during the appeal.
A separate case, Learning Resources, Inc. v. Trump, is progressing through the District Court for the District of Columbia. Unlike the CIT, which handles statutory trade disputes, this case raises constitutional concerns. Two small businesses argued that IEEPA does not permit unilateral tariff imposition. District Judge Rudolph Contreras agreed, issuing a broad ruling that limits presidential authority under the act. The government has appealed to the D.C. Circuit, with oral arguments scheduled for September 30, 2025.
The plaintiffs in Learning Resources also petitioned the Supreme Court for immediate review, seeking a writ of certiorari. While the Court declined expedited consideration, it will review the petition during its September 29, 2025, conference. Legal experts note that the Supreme Court typically waits for lower courts to finalize rulings before intervening, but the divergence between judicial interpretations may prompt earlier involvement.
These cases highlight a fundamental debate over the scope of executive power in trade policy. If upheld, the broader use of IEEPA could set a precedent for future administrations to bypass Congress in enacting import taxes. Conversely, a reversal would reinforce legislative oversight and potentially recalibrate the balance of power in economic governance.
For businesses, the uncertainty affects long-term planning and international operations. The outcomes will shape how trade regulations are implemented and challenged, influencing global commerce and regulatory frameworks. With rulings pending, stakeholders are advised to monitor developments closely, as the decisions could redefine the legal foundations of U.S. trade authority.
— news from Reuters
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U.S. courts weigh Trump’s tariff powers: a critical examination of IEEPA appeals
August 28, 2025 – As the United States grapples with the implications of trade policy, a pivotal question looms: Did President Trump overstep his bounds by invoking emergency powers to impose significant tariffs? This inquiry is now under scrutiny in federal appeals courts, as well as the District of Columbia U.S. Circuit Court of Appeals, and holds the potential to reshape executive authority in trade matters. n nDuring President Trump ‘s first term, the Administration permitted tariff exclusion requests for certain imported products that were not produced in the United States. Many importers took advantage of those exclusions to obtain temporary relief from tariffs imposed under Section 232 of the Trade Expansion Act, and Section 301 of the Trade Act of 1974. n nSign up here. n nHowever, during Trump ‘s second term, such exclusions have no longer been available to importers for any tariffs directed at U.S. trading partners. Since product-specific exclusions were no longer available to individual companies, it was up to countries to negotiate directly with the Administration to lower tariffs on their country ‘s exports to the United States. n nU.S. importers were left scrambling, trying to find a “tariff VPN” of sorts in navigating the tariffs, by diversifying supply chains and reshoring to the United States where possible. But this was increasingly difficult since on April 2, 2025 — coined by Trump as “Liberation Day” — the administration announced global reciprocal tariffs against key U.S. trading partners. n nThese reciprocal, or “Liberation Day” tariffs, were applied by President Trump through executive orders, using as a legal basis the International Emergency Economic Powers Act (“IEEPA”). IEEPA is a U.S. federal law that grants the President broad powers to regulate international commerce after declaring a national emergency in response to any unusual and extraordinary threat to the United States that originates from abroad. n nWhile the President has broad power concerning tariffs, those powers come from specific trade statutes such as Section 232 or Section 301, and legal scholars debate whether such powers could extend to tariffs under IEEPA, which is limited to national security emergencies. Since its enactment in 1977, IEEPA has been mainly used for economic sanctions, such as freezing of foreign assets (e.g., Iranian assets during the 1979 hostage crisis), or restricting trade in specific goods (e.g., Iraqi oil in the 1990s). Those actions, however, were aimed at regulating transactions or trade flows, but were not structured as tariffs, which are in effect taxes on imports. n nPrior uses of IEEPA have not involved tariff rates but rather served as prohibitions or trade licensing restrictions on export/imports tied to national security threats. Due to this distinction, presidents have turned to Section 232 or Section 301 when imposing tariffs. n nOn May 28, 2025, responding to a legal challenge of IEEPA tariffs, the Court of International Trade (“CIT”), which has jurisdiction in trade matters, in V.O.S. Selections v. United States, decisively struck down the reciprocal and fentanyl tariffs imposed under IEEPA. This unanimous decision by a three-judge panel declared the IEEPA tariffs unlawful, citing overreach in the executive authority sanctioned by Congress. The CIT ‘s ruling ordered a cessation of IEEPA tariff collections by June 7, 2025. n nHowever, the Trump administration immediately appealed the decision to the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”), which paused the CIT order. This means that U.S. Customs and Border Protection will continue to collect the IEEPA tariffs while the Federal Circuit reviews the case. n nV.O.S. Selections v. United States is emblematic of the broader tensions between presidential power and legislative intent, spotlighting tariffs imposed under IEEPA which form a cornerstone of Trump ‘s trade strategy, aimed at rectifying perceived imbalances in international trade. n nWhile Trump ‘s second term has also seen additional tariffs on specific sectors (e.g., steel, aluminum, and auto parts) under Section 232, most of the tariffs so far are based on IEEPA. Until the appeals are resolved, the tariffs remain in effect, but a negative ruling is likely to be challenged at the Supreme Court, prolonging their implementation at least through the end of the year. n nWhile the Federal Circuit ‘s review focuses on nuances of executive authority within IEEPA, an intriguing parallel case is unfolding at the U.S. District Court for the District of Columbia. Although the CIT has exclusive jurisdiction over civil cases against the United States arising out of international trade laws, the case Learning Resources, Inc. v. Trump, a lesser-known challenge to the Trump administration ‘s use of IEEPA, is taking a different path through the courts and raising significant jurisdictional questions along the way. n nIn Learning Resources, Inc. v. Trump, two small businesses directly challenged the constitutionality of the Trump administration ‘s use of IEEPA in the District Court rather than the CIT. By opting to file in a district court, these plaintiffs argue that the core issues are constitutional and not strictly about trade laws. n nThe District Court agreed to hear the case, finding that the legal challenge arose out of constitutional questions and District Judge Rudolph Contreras ruled broadly that IEEPA does not authorize the President to impose tariffs unilaterally. The sweeping nature of the District Court ‘s decision in Learning Resources is in contrast to the more narrowly tailored decision from the CIT and the nuanced oral arguments at the Federal Circuit in V.O.S. Selections. n nThe Trump administration swiftly appealed the Learning Resources decision to the D.C. Circuit, which is where the case remains pending. The D.C. Circuit will hold oral argument in this case on Sept. 30, 2025. n nThe businesses involved in Learning Resources petitioned the Supreme Court for a writ of certiorari. This move bypasses the normal appellate process and allows a case to move to the Supreme Court in extraordinary circumstances. Plaintiffs requested an expedited review from the Supreme Court on the legality of the tariffs. The Court declined to take up an expedited review without an explanation for its reasoning, but the justices are typically reluctant to take up cases before the lower courts have issued a decision. Nonetheless, the Supreme Court is scheduled to consider the businesses ‘ petition for a writ of certiorari at its Sept. 29, 2025, conference. This scenario underscores the complex interplay of legal issues available to challenge executive orders in trade policy. n nIn the meantime, both IEEPA appeals V.O.S. Selections and Learning Resources continue through the normal appellate process before the Federal Circuit and the D.C. Circuit, respectively. Ultimately, the Supreme Court will likely need to resolve differences between the lower courts ‘ interpretations of presidential authority under IEEPA. n nThe divergence between the lower courts highlights a significant constitutional debate: To what extent can a President exercise emergency powers without legislative oversight, particularly in matters as consequential as international trade? n nThe stakes are high, not just for the Trump Administration, but for the entire framework of trade governance in the United States, and the ability of trading partners to continue shipping to this market. A ruling that limits presidential power could signal a shift toward greater congressional authority in trade decisions, reshaping the landscape for future administrations. Conversely, a ruling that upholds the President ‘s broad powers could embolden future executive actions under IEEPA and similar statutes. n nFor businesses, these developments serve as a critical reminder of the dynamic nature of trade law and the evolving interpretation of executive power. The outcomes of these cases will not only impact current tariffs but also set important precedents for how trade policies may be formulated and challenged in the future. n nAs decisions from the courts are pending, it is essential to stay informed and engaged with these proceedings. The implications extend far beyond the courtroom, influencing international relations, economic stability, and the regulatory landscape in which businesses operate. The resolution of these appeals will likely be a defining moment in the ongoing dialogue about the balance of power in U.S. governance, particularly in the realm of trade policy. n nMark Ludwikowski is a regular contributing columnist on international trade for Reuters Legal News and Westlaw Today. n nOpinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. Westlaw Today is owned by Thomson Reuters and operates independently of Reuters News.