Tariff Update: Federal Court Blocks Sweeping “Liberation Day” Tariffs, but Appellate Court Issues Stay

Takeaway

• A federal court ruled the president does not have the power to use IEEPA to impose sweeping tariffs that do not directly address the declared emergency, but an appellate court has stayed the decision for now.

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On May 28, 2025, the U.S. Court of International Trade (CIT) struck down the administration’s globally sweeping “Liberation Day” tariffs. The court held that the worldwide tariffs exceeded the president’s power under the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. §§ 1701-1708.

IEEPA allows emergency economic measures to address “unusual and extraordinary threats” to the national security, foreign policy, or economy of the United States that originate outside the United States. However, those measures must directly respond to a specifically declared national emergency. The CIT concluded that these tariffs (and the stated emergency of a large and persistent trade deficit) did not meet that standard. The court found the tariffs unlawful because they exceeded the president’s statutory and constitutional authority. Under the Constitution, the power to impose tariffs rests with Congress.

The court also struck down separate IEEPA-based tariffs on China, Mexico, and Canada, which were imposed in response to the stated emergency of fentanyl and trafficking. It concluded that those measures, like the “Liberation Day” tariffs, did not directly address the emergency as required by IEEPA.

This ruling marks a major departure. Dykema was involved in the earlier Section 301 tariff litigation under the Trade Act of 1974, where the CIT upheld tariffs imposed by the prior administration. Here, the CIT took a drastically different approach, sweeping away the IEEPA-based tariffs in one stroke, knocking down a major executive policy initiative. The distinction is important: the Section 301 tariffs followed the established administrative process, while these IEEPA tariffs were imposed under emergency authority without that process.

The administration immediately appealed the CIT’s order. On the same day, May 28, 2025, the U.S. Court of Appeals for the Federal Circuit granted a stay, keeping the tariffs in place while the appeal process proceeds.

Despite the CIT’s ruling, more tariffs could be on the horizon. The administration may still move forward with Section 301 tariffs under the Trade Act or attempt new tariffs under IEEPA or other legal frameworks.

Finally, while the CIT’s ruling is significant. The pause of CIT’s ruling—and potential new tariffs—means continued uncertainty for companies. For more details on this uncertainty, here is an interesting video: Tariff Uncertainty Will Go On and On – Bloomberg Video.

We are continuing to monitor this litigation and related executive actions closely. If you have questions about this ruling or other tariff issues, please contact Laura Baucus, Director of Dykema’s Automotive Industry Group; Dykema Supply Chain Group attorneys Tina Toma, Tim McCarthy, or Darren Chen; or your Dykema attorney.