The Court of International Trade ruled May 28 that the tariffs President Trump has imposed under the authority of the International Emergency Economic Powers Act are unlawful. While that ruling has since been temporarily stayed, importers should take immediate action to preserve their rights to potential refunds of IEEPA tariffs they have paid.
The CIT ruled that IEEPA’s delegation to the president of a power to regulate imports “at the very least does not authorize the president to impose unbounded tariffs,” which the court said would be unconstitutional. In particular, the court said the “reciprocal” tariffs President Trump imposed on imports from all countries on the grounds that the U.S. runs trade deficits with most of them “lack any identifiable limits” and therefore fall outside the scope of allowable actions under IEEPA. The court indicated that this interpretation is consistent with previous delegations of trade authority from Congress to the president that have all “included clear limitations that retain legislative power over the imposition of duties and over foreign commerce.”
Also with respect to the reciprocal tariffs, the CIT determined that IEEPA may not be used to impose tariffs in response to trade deficits because authority for such tariffs is specifically given under Section 122 of the 1974 Trade Act, which restricts such tariffs to 15 percent and a maximum of 150 days.
With respect to tariffs imposed under IEEPA on imports from China, Canada, and Mexico due to concerns about illegal immigration and shipments of fentanyl, the CIT ruled that IEEPA’s limited authorities may be exercised only to deal with an unusual and extraordinary threat with respect to which a national emergency has been declared and these tariffs do not meet that condition because they do not directly deal with the identified threat but instead merely aim to create leverage to do so.
The CIT therefore concluded that the tariffs imposed under IEEPA are contrary to law and gave the federal government ten days to stop collecting them. However, the CIT decision has been appealed to the Court of Appeals for the Federal Circuit, which issued May 29 a temporary stay of that decision pending further proceedings.
As a result, it appears that the IEEPA tariffs will continue to be collected for the present time. These include the reciprocal tariffs currently set at 10 percent but potentially increasing to as high as 50 percent on July 9, as well as the fentanyl-related tariffs currently set at 10 to 25 percent depending on the product and country of origin.
In the meantime, it is critical for importers affected by any of the IEEPA tariffs to monitor the liquidation of entries on which such tariffs were paid so that protests may be timely filed. Post-summary corrections are not yet available due to constraints within the Automated Commercial Environment. ST&R has years of experience helping importers file protests to preserve and protect their rights to refunds if the CIT’s decision is ultimately upheld. For more information, please contact us at tariffs@strtrade.com.
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