Trump's tariff tsunami has rocked global markets with unprecedented force. The constant shifts in tariff policies under Trump's administration have stirred legal battles and reshaped global trade dynamics. But even within our country’s borders, there’s a battle waging about the legality of it all.
A New Tariff in Town
Since retaking office, President Trump has declared several national emergencies, leading to various tariff impositions. On Inauguration Day, Trump signed Executive Order 14157, invoking the International Emergency Economic Powers Act to combat what he described as threats from international cartels. Simultaneously, he issued Proclamation 10886, declaring a southern border emergency, citing dangers from "cartels, gangs, terrorists, and unvetted military-age males from foreign adversaries."
By February, the administration had widened its focus. Executive Order 14193 targeted Canada for allegedly failing to intercept drug trafficking organizations, while Order 14195 accused China of inadequately controlling chemical precursors used in synthetic opioid production. These declarations provided the legal foundation for imposing substantial tariffs: 25% on Mexican and Canadian goods (with a lower 10% rate on Canadian energy resources) and initially 10% on Chinese products, later increased to 20%. These were known as the “Trafficking Tariffs.”
In April, the country saw the most sweeping measures yet with the implementation of "Worldwide and Retaliatory Tariffs." Citing "unusual and extraordinary threats" to national security and economic stability, the administration imposed blanket 10% duties across all trading partners, escalating to 11% and 50% for 57 countries accused of maintaining "disparate tariff and non-tariff barriers."
Critics have argued that these emergency declarations represent an unprecedented expansion of presidential power, while supporters maintain they provide necessary leverage to address longstanding trade imbalances and border security concerns. Either way, the rapid succession of tariff actions signals a fundamental shift in American trade policy that continues to reverberate through global markets. And whether or not you’re a fan of said tariffs, one thing that’s been clear is that they are pushing legal boundaries.
Limits on Presidential Power
While a president can impose tariffs under certain circumstances, such actions must comply with statutory requirements.
Among these is the Trade Expansion Act of 1962, which allows the President to adjust imports threatening national security, requiring an investigation by the Secretary of Commerce. The Trade Act of 1974 has procedural requirements like investigations and public comments and addresses balance-of-payments deficits with specific limits on temporary import surcharges and quotas. The Trading with the Enemy Act (TWEA) historically granted broad powers during wartime but is now limited to such contexts.
Most relevant is the International Emergency Economic Powers Act (IEEPA). This grants the President authority to regulate international economic transactions during national emergencies. Under IEEPA, the President can investigate, block, or regulate transactions involving foreign countries or nationals if there is an unusual and extraordinary threat to U.S. national security, foreign policy, or economy. This authority is contingent upon declaring a national emergency related to the threat. However, IEEPA powers must address the identified threat directly and cannot be used for unrelated purposes. Congress enacted IEEPA to limit presidential power compared to broader wartime authorities under previous legislation like TWEA.
Trump had a unique take on these laws when deciding to impose tariffs unilaterally, so it was only to be expected that someone would challenge his policies sooner or later.
Hit Hard by Tariffs
Many people—and companies—are affected by any given tariff; the lawsuits only represent the tip of the iceberg.
One group of companies that dealt with a lot of imported goods from China to run its processes consisted of V.O.S. Selections, Genova Pipe, MicroKits, FishUSA, and Terry Cycling—it’s not essential to know the details of what each of them did, but we’ll collectively call them “V.O.S.” Due to the tariffs, the V.O.S. companies faced sourcing issues, increased costs, operational risks, shipment delays, and significant unplanned tariff expenses. This impacted their cash flow, inventory, production, and business growth.
But it wasn’t just private corporations affected; state governments were, too. States including Oregon, Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, Nevada, New Mexico, New York, and Vermont, alleged they were affected by the tariffs through direct financial harm. This harm was due to increased costs of imported goods essential for providing public services and the impact on their ability to procure goods and services. Additionally, the tariffs affected their capacity to budget for and audit price adjustments.
The V.O.S. companies and the states sued back in April. The lawsuits were brought to a court you might not have heard much about before: the U.S. Court of International Trade (CIT). This court has exclusive jurisdiction over civil actions against the United States, its agencies, or officers that arise out of laws providing for revenue from imports or tariffs, duties, fees, or other taxes. The Cit, and not federal courts, is designated to handle cases involving tariffs and other import-related issues.
Although each brought their lawsuit about a week apart, they were pretty similar in arguing that President Trump's tariffs exceeded his authority under the IEEPA. They argued that IEEPA does not authorize unbounded tariff powers without identifiable limits or direct relation to an unusual and extraordinary threat as required by the statute. So, the two lawsuits were combined for consideration by CIT.
CIT Stops the Tariffs …
The court granted summary judgment for the plaintiffs, ruling that Trump's tariffs exceeded his authority under the IEEPA.
The court found that the tariffs violated the statute for two main reasons. First, regarding the Trafficking Tariffs, the court concluded that they did not "deal with" an unusual and extraordinary threat directly as required by IEEPA. Instead, they aimed to create leverage or pressure on other countries to act, which does not satisfy the statutory condition of dealing directly with a specified threat. Second, the Worldwide and Retaliatory Tariffs were not limited in scope or duration and did not address a specific "unusual and extraordinary threat" as required by the IEEPA. The court determined that these tariffs were essentially unbounded and lacked identifiable limits, which is inconsistent with the statute’s provisions.
As the court found that the tariffs did not meet statutory conditions, it found them unlawful. Consequently, the court vacated these tariffs and issued a permanent injunction against their operation.
…But Appellate Court Brings Them Back
Unsurprisingly, the Trump administration immediately appealed that ruling to the Federal Circuit. Only one day after the CIT’s ruling, the appeals court put the injunction on hold. The Federal Circuit implemented an immediate administrative stay, which temporarily paused the enforcement of the judgments and permanent injunctions from the lower court until further notice while it reviews related motions.
If you’re getting judicial whiplash, you’re not alone: the back-to-back rulings have already created uncertainty in global trade talks. Countries like India and Canada are now questioning the durability of U.S. tariffs as a bargaining tool, which could well impact negotiations with those international players. The appeals court's decision maintains pressure on trading partners and complicates ongoing discussions, potentially reducing U.S. leverage in securing deals. Countries are reassessing their strategies, considering whether to slow negotiations or seek alternative trade partners due to the volatile situation surrounding Trump's tariff policies and their legality under international economic laws.
Domestically, the legal battle is far from over. The Trump Admin and the plaintiffs' parties have been given fast-approaching deadlines for the beginning of June to have their motions in before the Federal Circuit. Until then, there’s bound to be plenty of anxiety around the stability of American economics.
Related Resources:
- Judge Finds Trump Admin May Have Violated Court Order Over Deportations of Sudanese (FindLaw's Federal Courts)
- Understanding Proposed Tariffs From a Small Business Perspective (FindLaw's Law and Daily Life)
- Tariff Laws and the Tariff Exemption Process (FindLaw's Learn About the Law)
