Judicial Decision on Exercise of “Unrestricted Emergency Powers”

On May 28, 2025, the United States Court of International Trade (the “CIT”) (Note 1) ruled that reciprocal tariffs imposed by President Trump on all imports under the International Emergency Economic Powers Act (the “IEEPA”), along with additional tariff measures purportedly aimed at preventing the influx of drugs and illegal immigrants, constituted illegal actions exceeding the legal framework of the IEEPA (Note 2). 

The CIT judgment nullified all tariff measures imposed on Canada, Mexico, China, and almost all other countries on the grounds of the IEEPA by President Trump since his return to office earlier this year, for being invalid for lack of legal basis, and ordered a permanent suspension of the tariffs within 10 days.

The following day, on May 29, the US Department of Justice filed an appeal to the US Court of Appeals for the Federal Circuit, an appellate court, and simultaneously petitioned for a stay of the order, and a stay was granted on that same day for the time being (until at least June 9, 2025). Reportedly, the US Department of Justice has also indicated its intention to seek emergency relief from the US Supreme Court for a longer stay.

The following is an overview of the CIT judgment and some comments on its implications.

 

The IEEPA does not grant unlimited tariff authority, and reciprocal tariffs are illegal.

Firstly, the CIT held that, since all legislative power is vested in Congress (Article 1, Section 1 of the Constitution), the IEEPA could not be interpreted as giving the President unlimited authority to impose tariffs (p. 28 of the CIT judgment). In addition, the CIT pointed out that the IEEPA, which replaced the Trading with the Enemy Act, had been enacted with the aim of restricting the President's broad authority (p. 28 -31 of the CIT judgment).

In addition, regarding the background to such legislation, it is considered that the IEEPA does not grant presidential authority over matters falling within the purview of other laws, and the CIT ruled that the reciprocal tariffs fell outside the scope of the IEEPA’s delegation because they were imposed as measures addressing trade imbalances in non-emergency situations and therefore fell within the purview of Section 122 of the Trade Act of 1974.

Section 122 of the Trade Act allows for the imposition of 15% taxation for a limited period of 150 days in the event of a serious balance-of-payments deficit, and the CIT ruled that the reciprocal tariffs in the present case did not fall within such framework (p. 34 -36 of the CIT judgment).

 

The tariffs which were imposed on Mexico, Canada and China as purported countermeasures against illicit drugs and illegal immigrants were also held to be illegal

While the Trump administration also imposed tariffs on Mexico, Canada, and China based on the IEEPA to address illicit drugs and illegal immigrants, the CIT held that such tariffs exceeded the tariff authority delegated to the President under the IEEPA (p. 48 of the CIT judgment).

The CIT judgment held that, although the IEEPA is an act aimed at “dealing with” “unusual and extraordinary threats” related to a state of emergency declared by the nation (U.S.C. § 1701), the tariffs in question did not “deal with” a state of emergency, but were instead measures to create leverage to deal with such a state of emergency. The CIT also ruled that, if imposing a burden in order to obtain concessions from other countries was deemed fall under “dealing with” in the above context, then any and all measures would be permissible, and that it was inconceivable that the Congress intended such an interpretation (p. 45 – 46 of the CIT judgment).

In particular, the fact that the CIT has concluded that “creating ‘pressure’ is unlikely to be acceptable under the IEEPA,” indicating that “Even if it is a measure reasonably conceived as a diplomatic strategy, it will not qualify as ‘dealing with’ under the IEEPA” (p. 46 of the CIT judgment), may have the effect of preventing the Trump administration from easily relying upon the IEEPA as a basis for taking measures in such manner as will be favorable to his deals in the future.

 

Government Appeals, Concerns About Impact on Trade Negotiations

Just before the ruling was rendered, Mr. Jamieson Greer of the United States Trade Representative (USTR) stated that the removal of IEEPA tariffs would have a devastating impact on a number of ongoing trade negotiations (see the statement dated May 23, 2025). Therefore, the impact on the Free Trade Agreement (FTA) already being negotiated with the United Kingdom, the loss of the bargaining chip in the tariff negotiations with China, and the impact on negotiations with the Japanese government cannot be ignored.

In addition, according to the US Department of Justice, although not explicitly stated in the CIT judgment, by prohibiting the administration of the Executive Order imposing tariffs under the IEEPA, the Executive Order (effective May 2, 2025) abolishing the tax exemption for small-value imports of up to US $800 from China (the so-called “de minimis rule”) issued based on the same IEEPA and any subsequent amendments thereto will also be nullified (Note 3), and such prohibition has already had an impact on other measures and lawsuits commenced under the IEEPA.

Therefore, as stated above, it remains necessary to continue to pay close attention to how the proceedings will progress and how decisions will be made by the Federal Court of Appeals and other courts.

It should be noted that the scope of the present ruling is strictly limited to the measures taken under the IEEPA, and as the Trump administration’s trade policy, including tariff measures taken under other laws, such as Section 301 of the Trade Act and Section 232 of the Trade Expansion Act (for details, please see “Blog – Part (2) Legal Basis for Imposing Tariffs –“), will continue for the time being, further attention will need to be paid to this issue in the future (Note 4).

Note 1: The CIT is a United States federal court specializing in civil cases relating to the Customs Act and other international trade-related laws and is located in New York City. The CIT is a body that reviews objections from importers and state governments, etc. against the US government’s trade actions and determines the legality thereof. 

Note 2: The CIT judgment was rendered as a result of the combined consideration of the following two cases. Besides these matters, a number of other lawsuits have also been filed.
・V.O.S. Selections et al v. Trump (Lawsuit filed by sake and wine importers, etc.)
・State of Oregon et al v. Trump (Lawsuit filed by attorneys general from multiple states)

Note 3: As one of the reasons for seeking an injunction in Axle of Dearborn v. Trump (a lawsuit filed by an auto parts importer challenging the removal of the de minimis rules), the US Ministry of Justice stated that because the CIT judgment rendered the President’s imposition of tariffs under the IEEPA illegal, it was not necessary to proceed with the examination of more detailed measures taken under the IEEPA, – not exactly the de minimis rules – , at least until a decision was made on the emergency stay in this CIT judgment (Petition by the US Department of Justice, May 30, 2025).

Note 4: In preparing this blog article, we referred to the blog of Professor Yukina Fukunaga (School of Social Sciences, Faculty of Social Sciences, Waseda University) in addition to the CIT judgment.
https://researchmap.jp/blogs/blog_entries/view/514202/0451cd2b72db8d2760bd13745f402fa5?frame_id=1026212

*Disclaimer: The information above is current as of June 3, 2025. The content of this blog is provided for general informational purposes only and does not constitute legal advice or a legal opinion. Please note that the content may not reflect the most current legal or regulatory developments. Readers should not act or rely on any information in this blog without consulting qualified legal counsel. Transmission of this information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. TMI Associates disclaims all liability for actions taken or not taken based on any content on this site.

TMI Associates
Attorneys
Kazuhide Ueno, Ryoko Kondo, Shinichiro Ishihara, Shinya Sakuragi, Yu Tomii, Leo Yamada

■Please also see our past blogs regarding Trump 2.0 countermeasures. 
Series: Trends and Responses to Trump 2.0

Part (1) The Latest Developments in Reciprocal and Automotive Tariffs (February 21, 2025) 
Part (2) Legal Basis for Tariff Imposition (March 18, 2025) 
Part (3) Status and Dynamics of Reciprocal Tariffs under the Trump Administration (May 7, 2025)  

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