U.S. Court Sets Aside Certain Import Tariffs, but Court of Appeal Stays the Order

In a major ruling, the U.S. Court of International Trade (“CIT”) set aside a series of tariffs imposed by the President in early 2025, holding that the International Emergency Economic Powers Act (“IEEPA”) does not authorize the use of emergency powers to impose broad, indefinite tariffs on imports.

The CIT declared the tariffs imposed under Executive Orders, along with all their amendments and modifications, to be invalid as contrary to law, and permanently enjoined their operation.

The judgement sets aside the tariffs, making them no longer enforceable unless reinstated by a higher court on appeal.

The judgment does not affect tariffs imposed under other legal provisions, such as Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962 (including the 25% tariffs on steel and aluminum, and 25% tariffs on autos and auto parts).

The CIT concluded that the President’s actions targeting goods from China, Mexico, Canada, and many of other countries exceeded the statutory limits of IEEPA, and thus cannot be sustained. This was based on the following observations:

• IEEPA does not authorize open-ended tariff powers. The CIT held that IEEPA allows the President to regulate imports in narrow emergency contexts, not to impose open-ended tariffs across global trade.
• No valid emergency existed. The justifications provided for imposing the tariffs, ranging from border crime to trade imbalances, didn’t meet IEEPA’s threshold of a “specific and extraordinary threat”.
• IEEPA lacks the procedural safeguards of trade statutes. IEEPA lacks the procedural checks built into other trade laws like Section 232 or 301. The President’s use of IEEPA here sidestepped the frameworks that Congress has established for imposing duties, reinforcing that the statute was not intended as a general trade tool.
• CIT interprets IEEPA narrowly to avoid unconstitutional expansion of presidential power. If IEEPA were read to allow the President to impose sweeping tariffs without constraints, it would raise “serious constitutional concerns” under both the non-delegation doctrine and the major questions doctrine. CIT thus adopted a narrow construction of IEEPA to avoid these issues, limiting it to situations involving targeted, specific threats.
• The 2025 tariffs were unprecedented in scope and structure. Unlike past emergency actions upheld in cases like Yoshida II [526 F.2d 560, 584 (C.C.P.A. 1975)], these tariffs were broad, indefinite, and untethered from a real emergency.

The U.S. Government immediately appealed the CIT’s decision before the Court of Appeals for the Federal Court (“CAFC”), which stayed the CIT’s decision pending the appeal.

In view of the CAFC stay, the U.S. government is under no obligation to issue administrative orders to implement the CIT’s decision. The tariffs, including the reciprocal tariffs, that are subject matter of the dispute will continue to be in operation.

Considering that the CAFC has stayed the order, it is unclear if the developments will offer any material leverage to the Indian government in the ongoing negotiations with U.S. on the potential bilateral trade deal.

Businesses with interest in the U.S. market should closely monitor the developments, as the uncertainty on tariffs continues.

We trust you will find this an interesting read. For any queries or comments on this update, please feel free to contact us at insights@elp-in.com or write to our authors:

Sanjay Notani, Partner – Email – SanjayNotani@elp-in.com

Parthsarathi Jha, Partner – Email – ParthJha@elp-in.com

Aishani Pachauri, Associate – Email – aishanipachauri@elp-in.com