In a significant ruling for the import and e-commerce community, the United States Court of International Trade (CIT) has invalidated several major tariff programs implemented by the Trump administration under the International Emergency Economic Powers Act (IEEPA). The decision, dated May 28, 2025, was issued by a unanimous 3-judge panel, which found that the President exceeded the authority granted by Congress in imposing widespread “Trafficking Tariffs” and “Worldwide and Retaliatory Tariffs”. The CIT’s order has been temporarily stayed pending further review by the United States Court of Appeals for the Federal Circuit.

The Ecommerce Innovation Alliance has been closely monitoring these cases, recognizing the profound impact such tariffs have on supply chains, consumer prices, and the overall health of the ecommerce sector.

Which Tariffs Were Struck Down?

The court’s decision targets two broad categories of tariffs:

1. The “Worldwide and Retaliatory Tariffs”:

• This began with a general 10% ad valorem duty on all imports from all trading partners.
• It also included provisions for higher, country-specific tariffs (ranging from 11% to 50%) for 57 nations, which were largely paused but set to take effect July 9, 2025.
• Notably, tariffs on Chinese goods under this program saw significant fluctuation, at one point reaching 125% in retaliation before being temporarily lowered back to 10% (effective until August 12, 2025). This 10% is in addition to the 20% Trafficking Tariff on Chinese goods.
• The administration justified these tariffs by declaring a national emergency concerning large and persistent U.S. goods trade deficits and non-reciprocal trade practices.
  

2. The “Trafficking Tariffs”:

• These include 25% ad valorem duties on products from Canada and Mexico, and a 20% ad valorem duty on products from China (with a 10% rate for Canadian energy and energy resources).
• These tariffs were initially imposed in response to declared national emergencies related to international cartels, drug trafficking, and the perceived failure of these countries to curb such activities.

Why the Court Invalidated the Worldwide and Retaliatory Tariffs

The CIT’s opinion hinges on the fundamental principle that Congress, not the President, holds the constitutional power to lay taxes and regulate foreign commerce. The U.S. Constitution grants Congress the exclusive power to regulate foreign commerce, including the ability to set tariffs and negotiate trade agreements.  U.S. Const., Article I, Section 8.  While Congress can delegate some of this authority to the President, such delegations must be within clear limits.

The court found that IEEPA’s authority for the President to “regulate… importation” does not grant an unbounded power to impose tariffs. Such an unlimited delegation would raise serious constitutional concerns under the non-delegation and major questions doctrines. The court distinguished this from a previous case (Yoshida II) by noting that the tariffs upheld previously were more limited and temporary, unlike the current administration’s broader actions. 

Furthermore, the court reasoned that Congress intended IEEPA to be more restrictive than its predecessor, the Trading with the Enemy Act (TWEA). Crucially, tariffs responding to balance-of-payments deficits (like the trade deficits cited for these worldwide tariffs ) are more appropriately addressed under Section 122 of the Trade Act of 1974, which has specific limitations on rates and duration that these tariffs did not adhere to.

Why the Court Invalidated the Trafficking Tariffs

With regard to the Trafficking Tariffs, the court observed that IEEPA stipulates that presidential authorities under the act “may only be exercised to deal with an unusual and extraordinary threat with respect to which a national emergency has been declared”. The court determined that the Trafficking Tariffs did not directly “deal with” the declared threats, such as the alleged failure of Canada, Mexico, and China to combat drug trafficking. The administration’s argument that the tariffs were intended to create “pressure” or “leverage” for these countries to change their behavior was deemed insufficient. The court stated that “deal with” requires a more direct connection than simply imposing a burden to exact concessions on an unrelated issue.

What This Means for Businesses

If the CIT’s order stands, the invalidated tariffs would be vacated and permanently enjoined. The court made clear that this relief would apply uniformly across the United States, as duties must be uniform. This would mean a significant reduction in import costs for businesses sourcing goods from the affected countries.

The Road Ahead: Appeal and Stay

This is a major victory, but the legal battle is not over. The Trump Administration has already filed a notice of appeal with the U.S. Court of Appeals for the Federal Circuit and has asked the CIT to stay the injunction pending resolution of that appeal. The administration also sought and received an emergency stay of the order pending review by the United States Court of Appeals for the Federal Circuit.  The current stay is temporary, but if it is extended, the tariffs would remain in effect pending the outcome of the appeal process.

The Ecommerce Innovation Alliance will continue to provide updates as this critical case progresses. This ruling underscores the importance of judicial review in maintaining the balance of powers and ensuring that executive actions remain within the bounds set by Congress, which is a principle vital for a stable and predictable trade environment and essential for e-commerce growth.