The United States Court of International Trade (USCIT) recently issued a significant opinion concerning the scope of the President’s authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA). This decision, arising from two consolidated cases (V.O.S. Selections, Inc. v. United States and The State of Oregon v. United States), directly impacts businesses engaged in international trade and highlights crucial limitations on executive power that tax professionals should understand for advising clients involved in import activities. The court ultimately granted the Plaintiffs’ Motions for Summary Judgment, declaring the challenged tariffs unlawful and vacating and permanently enjoining their operation.

Background: Presidential Emergency Tariffs Under Challenge

The case centers on several sets of tariffs imposed by the President since January 20, 2025, purportedly under the authority granted by IEEPA, codified at 50 U.S.C. §§ 1701–10. IEEPA grants the President certain powers to deal with an unusual and extraordinary threat to the national security, foreign policy, or economy of the United States, provided a national emergency is declared with respect to that threat.

Specifically, the challenged tariffs included:

Trafficking Tariffs: Imposed starting February 4, 2025 (March 4 for Canada/Mexico, following a pause). These included a 25% ad valorem duty on products from Canada and Mexico and initially a 10% ad valorem duty on products from China (later raised to 20%). The declared emergencies related to international cartels, the southern border situation, and failures by Canada and China to intercept drug traffickers and precursor suppliers. Modifications included lowering rates on Canadian/Mexican potash and implementing/removing duty-free de minimis treatment.
Worldwide and Retaliatory Tariffs: Imposed starting April 2, 2025. This involved a general 10% ad valorem duty on all imports from all trading partners, with higher rates (11% to 50%) for a list of 57 countries. The declared emergency cited a lack of reciprocity in trade relationships, disparate tariff rates, non-tariff barriers, foreign economic policies suppressing wages/consumption, and large/persistent annual U.S. goods trade deficits as constituting an "unusual and extraordinary threat". Retaliatory tariffs against China reached as high as 125% before being lowered to 10% (in addition to the 20% trafficking tariff) effective until August 12, 2025. Implementation of the higher country-specific rates was paused for 90 days for most countries.

Plaintiffs and Requested Relief

Two sets of plaintiffs brought actions challenging these tariffs before the USCIT.

The V.O.S. Plaintiffs, consisting of five businesses, challenged the Worldwide and Retaliatory Tariffs. They alleged economic injuries including difficulties with sourcing and pricing, reduced cash flow impacting inventory and business levels, increased costs of raw materials/equipment, potential business closure, delays in shipments, paused production, and direct payments of unplanned tariffs.
The State Plaintiffs, comprising twelve states including Oregon, Arizona, Colorado, and Connecticut, challenged both the Worldwide and Retaliatory Tariffs and the Trafficking Tariffs. They alleged "direct financial harm" due to the impact on the cost of essential imported goods used for public services and effects on their ability to procure goods, budget, and audit. Some states demonstrated standing as importers who paid duties.

Both sets of Plaintiffs sought summary judgment and a preliminary injunction to halt the application of the tariffs.

Court’s Jurisdiction and Standing Confirmation

The USCIT confirmed it had exclusive jurisdiction over the challenges under 28 U.S.C. § 1581(i), which covers civil actions against the U.S., its agencies, or officers arising out of laws providing for revenue from imports, tariffs, duties, fees, or other import taxes. The court found that challenges to tariffs imposed by presidential action under IEEPA fall within this jurisdiction. The court noted that while the President is dismissed as a defendant, the court retains jurisdiction over challenges to presidential actions in suits against subordinate officials charged with implementing the directives.

The court also found that both sets of Plaintiffs had Article III standing.

The V.O.S. Plaintiffs established economic injuries directly traceable to the tariffs, supporting standing even for non-importers based on "economic logic" showing downstream harm from the tariffs.
The State Plaintiffs demonstrated direct financial harm, including some states as importers who paid duties, which is sufficient for standing.

Legal Analysis: Statutory Authority and Constitutional Limits

The court’s analysis centered on whether IEEPA, specifically 50 U.S.C. §§ 1701 and 1702, provides the President with the authority to impose the challenged tariffs. The analysis was guided by the constitutional principle that the power to "lay and collect Taxes, Duties, Imposts and Excises," and to "regulate Commerce with foreign Nations" rests exclusively with Congress. While Congress can delegate authority to the executive, this delegation must provide an "intelligible principle" to guide the executive’s action. The court also considered the nondelegation doctrine and the major questions doctrine as interpretive tools to avoid readings that would raise serious constitutional doubts about excessive delegation.

1. Worldwide and Retaliatory Tariffs and the Scope of 50 U.S.C. § 1702

The Government argued that the authority in IEEPA, 50 U.S.C. § 1702(a)(1)(B), to "regulate . . . importation" permits the imposition of tariffs, citing the prior case United States v. Yoshida Int’l. Inc. (Yoshida II). The Yoshida II court interpreted similar language in the Trading with the Enemy Act (TWEA) to authorize a limited import duty surcharge imposed by President Nixon during a balance-of-payments crisis.

However, the USCIT noted that Yoshida II emphasized the limited nature of the tariffs upheld, stating that the decision did "not here sanction the exercise of an unlimited power". The court in Yoshida II warned that granting the President unlimited tariff power under emergency authority would "subvert the manifest Congressional intent to maintain control over its Constitutional powers to levy tariffs".

The USCIT found that the Worldwide and Retaliatory Tariffs in the current case lack any identifiable limits in duration or scope, unlike the tariffs upheld in Yoshida II. The court stated that such an unlimited delegation of tariff authority would create an unconstitutional delegation of power, regardless of whether viewed through the nondelegation or major questions doctrines.

Crucially, the court reviewed the legislative history of IEEPA, noting that it was enacted specifically to limit the broad executive authority that existed under TWEA, particularly in peacetime. Congress intended that authority for routine, non-emergency regulation of international economic transactions previously conducted under TWEA should be transferred to other legislation.

The court found that Section 122 of the Trade Act of 1974 is precisely such "other legislation". Section 122 grants the President specific, limited authority to impose temporary import surcharges (capped at 15% for a maximum of 150 days) to address "fundamental international payments problems," including "large and serious balance-of-payments deficits". A trade deficit is a type of balance-of-payments deficit.

By enacting Section 122, Congress cabined the President’s authority to impose tariffs in response to balance-of-payments deficits to this narrower, non-emergency statute with specific limitations. This indicated Congress’s intent that IEEPA’s general authority to "regulate . . . importation" does not permit the President to impose tariffs in response to balance-of-payments deficits.

Applying this to the facts, the court noted that the Worldwide and Retaliatory Tariffs were explicitly imposed in response to "large and persistent annual U.S. goods trade deficits". Because these tariffs address a balance-of-payments deficit and do not comply with the specific limitations in Section 122, the President’s action exceeded any authority delegated under IEEPA. Therefore, the court concluded these tariffs were ultra vires and contrary to law.

2. Trafficking Tariffs and the Condition in 50 U.S.C. § 1701

The court next analyzed the Trafficking Tariffs under the conditions imposed by IEEPA itself, specifically 50 U.S.C. § 1701(b), which states that IEEPA authorities "may only be exercised to deal with an unusual and extraordinary threat . . . and may not be exercised for any other purpose". The State Plaintiffs argued that the Trafficking Tariffs did not "deal with" the specific threats invoked (failures by Canada, Mexico, and China to intercept traffickers/drugs).

The Government argued that this question was nonjusticiable under the political question doctrine, asserting a lack of judicially manageable standards and that the President’s threat assessment was a policy determination for nonjudicial discretion. The court rejected this, stating that interpreting the statutory language "deal with an unusual and extraordinary threat" is a justiciable question of statutory construction within the judiciary’s role, even if it touches upon foreign relations. The court noted that Section 1701 is not a mere formality but a statutory constraint on executive action.

Interpreting "deal with," the court found it connotes a direct link between the executive action and the problem it addresses. The court found no such direct link between imposing tariffs on lawful imports and the stated threats of foreign governments failing to intercept traffickers or drugs. The Government’s argument that the tariffs were intended to create "pressure" or "leverage" on these countries to change behavior was unpersuasive. The court reasoned that if "deal with" simply meant "impose a burden until someone else deals with," it would effectively allow any action to be justified as leverage, rendering the statutory limitation meaningless.

The court concluded that the Trafficking Tariffs, aiming to create leverage rather than directly addressing the stated threats, do not meet the "deal with" condition of 50 U.S.C. § 1701. This represents a "clear misconstruction" of the statute, rendering the actions outside the President’s delegated authority.

Conclusions and Relief

Based on its analysis, the court held that IEEPA does not authorize any of the challenged tariffs.

The Worldwide and Retaliatory Tariff Orders exceeded any delegated authority under 50 U.S.C. § 1702 by imposing unbounded tariffs in response to balance-of-payments deficits, an area regulated by the more specific and limited Section 122 of the Trade Act of 1974.
The Trafficking Tariffs failed to satisfy the conditions of 50 U.S.C. § 1701 because they did not "deal with" the declared threats in the manner required by the statute, instead relying on a theory of indirect pressure or leverage.

Finding no genuine dispute of material fact, the court granted the Plaintiffs’ Motions for Summary Judgment. Consequently, the challenged Tariff Orders were vacated, and their operation was permanently enjoined. The Plaintiffs’ Motions for Preliminary Injunction were denied as moot. The court noted that due to the Uniformity Clause of the Constitution, which requires duties to be uniform throughout the United States, if the orders are unlawful as to the plaintiffs, they are unlawful as to all.

Prepared with assistance from NotebookLM.