On August 29, the US Court of Appeals for the Federal Circuit (CAFC) issued a 7-4 en banc opinion in VOS Selections, Inc v. Trump, holding that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose broad, indefinite tariffs.
The case was initially brought in the Court of International Trade (CIT) by private businesses and US state attorneys general. The President invoked IEEPA on various grounds, including concerns about drug enforcement, border security , and trade deficits. In a May decision granting summary judgment to the VOS Selections plaintiffs, the CIT found that IEEPA does not authorize the President to impose the tariffs at issue, which the US Government appealed.
IEEPA Tariffs Remain in Place, For Now
While the CAFC decision struck down the Trump Administration’s “reciprocal” and “fentanyl” tariffs, the CAFC vacated the injunction issued by the CIT and remanded the case back for further consideration of injunctive relief in light of the Supreme Court’s decision in Trump v. CASA. The tariffs remain in effect until October 14, to give the Administration time to seek Supreme Court review.
A number of other lawsuits challenging the IEEPA tariffs have already been filed, adding another layer of complexity. In Learning Resources, Inc., et al v. Donald Trump, et al, the District Court for the District of Columbia, ruled in May that IEEPA does not confer any tariff authority at all. This goes further than the CIT and CAFC decisions that IEEPA does not authorize the tariffs at issue. The US Government has appealed the ruling and the plaintiffs have sought immediate Supreme Court review of the decision,. The Supreme Court is expected to decide whether to take the case when it reconvenes in late September. A number of other cases filed challenged the IEEPA tariffs, but these have been stayed pending resolution of certain jurisdictional questions at play in VOS Selections and Learning Resources.
On a Fast Track to the Supreme Court?
On September 3, the Trump Administration petitioned the Supreme Court to review the CAFC decision and has requested expedited consideration, proposing oral arguments in early November. Both sides agreed with the expedited schedule because the stakes are high: the government argues the tariffs are essential to national security and trade negotiations, while plaintiffs contend they are unconstitutional and pose an existential risk to American businesses.
The Supreme Court’s decision on whether to hear the case and its response to the expedition request will be significant. If the Court declines to hear it quickly, the October 14 stay could expire, triggering immediate changes in tariff enforcement and trade negotiations.
Impact on Trade Negotiations
The ruling casts uncertainty over the Administration’s use of tariffs as leverage in trade discussions. Since the imposition of the IEEPA tariffs, the Administration has announced bilateral agreements with certain trading partners, including the European Union, the United Kingdom, and Japan, while imposing new tariffs on dozens of others. The President has commented that restrictions on the use of IEEPA tariffs could compromise the Administration’s leverage in trade negotiations and force the US to “unwind” trade deals it has already struck.
What Comes Next?
If IEEPA is deemed to be improper support for the reciprocal and fentanyl tariffs, the Administration has hinted that it may pivot to other statutory authorities to buttress its trade agenda, including Section 301 of the Trade Act of 1974 (which authorizes tariffs after investigation of unfair trade practices), and Section 232 of the Trade Expansion Act of 1962 (which authorizes tariffs for national security purposes and has already been invoked used for steel and aluminum tariffs). The Trump Administration has already imposed tariffs under Section 232 on steel, aluminum, automobiles and autoparts, and copper and announced Section 232 investigations on lumber and paper products, pharmaceutical products, semiconductors, and more, and recently initiated a Section 301 investigation on certain practices in Brazil.
Over the coming months it will be essential for businesses to remain apprised of developments and be prepared to adjust their sourcing and supply chain arrangements to reflect changes in the law. Importers should be monitoring their imports for which IEEPA tariffs were paid and closely reviewing liquidation dates to ensure that they do not potentially lose the ability to claim refunds.
