The United States Court of Appeals for the Federal Circuit issued a significant decision impacting the President’s authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. § 1701 et seq. This ruling, in V.O.S. Selections, Inc. v. Trump, clarifies the boundaries of presidential power in economic emergencies, a topic of critical importance for tax professionals. This article will detail the facts, the plaintiffs’ requests, the court’s legal analysis, and its conclusions.

Factual Background of the Tariff Orders

The case originated from five Executive Orders (Nos. 14193, 14194, 14195, 14257, and 14266), issued by President Donald J. Trump in 2025, which imposed tariffs of unlimited duration on nearly all goods from most countries globally. These orders were issued in response to declared national emergencies under the National Emergencies Act (NEA), Pub. L. No. 94-412.

Two main categories of tariffs were challenged:

Trafficking Tariffs: These tariffs were imposed in response to a declared national emergency concerning the trafficking of opioids and illicit drugs into the United States, exacerbated by the alleged failures of Mexico, Canada, and China to address this threat.
- Executive Order No. 14194 imposed 25 percent ad valorem duties on all articles from Mexico.
- Executive Order No. 14193 imposed 25 percent ad valorem duties on all articles from Canada, with energy and energy resources subjected to a 10 percent rate.
- Executive Order No. 14195 initially imposed 10 percent ad valorem duties on all articles from China, which were later increased to 20 percent.
- The President cited IEEPA section 1702(a)(1)(B) as authority, finding other tariff authorities inadequate. The Secretary of Homeland Security was directed to alter the Harmonized Tariff Schedule of the United States (HTSUS) to implement these tariffs.
Reciprocal Tariffs: These were imposed to address what the President deemed an "unusual and extraordinary threat to the national security and economy of the United States" caused by "underlying conditions, including a lack of reciprocity in our bilateral trade relationships, disparate tariff rates and non-tariff barriers, and U.S. trading partners’ economic policies that suppress domestic wages and consumption".
- Executive Order No. 14257 imposed baseline 10 percent ad valorem duties on imports from nearly every country with significant trade relationships with the U.S..
- Additional ad valorem duties, ranging from 11 percent to 50 percent, were to be imposed on a per-country basis shortly thereafter.
- The President invoked IEEPA, the NEA, section 604 of the Trade Act of 1974, and 3 U.S.C. § 301 for these tariffs, though the Government only contended IEEPA provided substantive authority.
- China-specific reciprocal tariff rates were adjusted multiple times, reaching as high as 125 percent, in response to China’s actions. Enforcement of other country-specific reciprocal tariffs was suspended until July 9, 2025, and then further paused before taking effect on August 7, 2025.

Taxpayers’ Request for Relief

The plaintiffs consisted of five small businesses (V.O.S. Selections, Inc., Plastic Services and Products, LLC, MicroKits, LLC, FishUSA Inc., and Terry Precision Cycling LLC, collectively the "Private Plaintiffs") and twelve states (Oregon, Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, Nevada, New Mexico, New York, and Vermont, collectively the "State Plaintiffs").

The Private Plaintiffs challenged the imposition of the Reciprocal Tariffs.
The State Plaintiffs challenged both the Reciprocal Tariffs and the Trafficking Tariffs.

They brought suit before the Court of International Trade (CIT), seeking summary judgment that the tariffs were unlawful and a permanent injunction against their enforcement.

Court of International Trade (CIT) Decision

On May 28, 2025, a three-judge panel of the CIT granted summary judgment to the Private and State Plaintiffs. The CIT held that both the Reciprocal and Trafficking Tariffs exceeded the President’s authority under IEEPA and permanently enjoined the Government from imposing them.

Regarding jurisdiction, the CIT found it had exclusive jurisdiction under 28 U.S.C. § 1581(i), as the challenged Executive Orders purported to modify the HTSUS, which has statutory status. The CIT also held that at least one private and one state plaintiff had constitutional standing due to potential harm from the tariffs.

On the merits, the CIT specifically ruled:

Reciprocal Tariffs: The CIT concluded that IEEPA authority for these tariffs was displaced by section 122 of the Trade Act of 1974 (19 U.S.C. § 2132). This section concerns balance-of-payments problems and contains specific limitations on tariff imposition.
Trafficking Tariffs: The CIT held these tariffs failed to meet IEEPA section 202(b)’s requirement that authority be "exercised to deal with" the stated threat and not "for any other purpose". The CIT found the tariffs lacked a "direct link" to the opioid and crime problems, applying to too many unrelated imports and primarily functioning as leverage.

Federal Circuit’s Analysis of the Law

The Government appealed the CIT’s decision, and the Federal Circuit consolidated the appeals, granted a stay of the injunction, and assigned the case for en banc consideration.

Jurisdiction

The Federal Circuit affirmed the CIT’s subject matter jurisdiction under 28 U.S.C. § 1581(i)(1)(B). This statute grants the CIT exclusive jurisdiction over civil actions against the U.S. arising from laws providing for tariffs, duties, fees, or other taxes on imported merchandise for non-revenue purposes. The court reasoned that the Challenged Executive Orders purported to modify the HTSUS, which Congress deemed "statutory provisions of law for all purposes" (19 U.S.C. § 3004(c)(1)). Therefore, a lawsuit challenging tariffs effectuated by such modifications "arises out of [a] law of the United States providing for . . . tariffs". The court emphasized that jurisdiction does not depend on the claim’s success on the merits.

Constitutional Framework for Tariffs

The court underscored that the Constitution grants Congress the power to "lay and collect Taxes, Duties, Imposts and Excises" and to "regulate Commerce with foreign Nations" (U.S. Const. art. I, § 8, cl. 1, 3). Historically, tariffs were the primary source of federal revenue, and setting tariff policy was a core Congressional function. While Congress has, over time, delegated limited authority to the Executive to adjust tariff rates, these delegations have consistently included "well-defined procedural and substantive limitations". Examples include:

Tariff Act of 1930, Section 338: Permits the President to "specify and declare new or additional duties" (19 U.S.C. § 1338(a)).
Trade Act of 1974, Section 122: Authorizes a temporary import surcharge "in the form of duties" for up to 15% and 150 days (19 U.S.C. § 2132(a)(A)).
Trade Act of 1974, Section 201: Allows the President to "proclaim an increase in, or the imposition of, any duty" or a "tariff-rate quota" (19 U.S.C. § 2253(a)(3)(A)–(B)).
Trade Act of 1974, Section 301: Authorizes the USTR to "impose duties or other import restrictions" to respond to unfair trade practices, but only after specific investigative and public comment procedures.
Trade Expansion Act of 1962, Section 232: Authorizes the President to "adjust the importation of certain articles" if they threaten national security, but requires a Secretary of Commerce finding, a presidential determination within 90 days, action within 15 days, and a written statement to Congress (19 U.S.C. § 1862(c)(1)(A)–(B), (c)(2)).

In contrast, the court noted that IEEPA, as interpreted by the Government, would impose no such limitations.

IEEPA and the "Regulate Importation" Clause

The core of the appeal centered on whether IEEPA’s grant of presidential authority "to regulate . . . importation" (50 U.S.C. § 1702(a)(1)(B)) authorizes the imposition of tariffs.

The Federal Circuit held that the IEEPA’s text does not explicitly include the power to impose tariffs, duties, or taxes. The court highlighted that when Congress intends to delegate tariff power, it uses "clear and precise terms," such as "duties" or its synonyms, which are absent in IEEPA. The term "regulate" must be understood in the context of the other verbs in the statute, such as "investigate, block... direct and compel, nullify, void, prevent or prohibit," none of which involve monetary actions or the power to tax.

The court further invoked the Major Questions Doctrine, which applies to cases of "vast economic and political significance" where there is a "reason to hesitate before concluding that Congress meant to confer such authority". In such cases, the Government must show "clear congressional authorization". The court found the tariffs in this case implicate the doctrine because they are:

Unheralded and transformative: No President has previously asserted IEEPA authority to impose tariffs of this magnitude.
Of vast economic and political significance: The tariffs are of unlimited duration, apply to nearly all goods from nearly every country, and were projected to generate between $2.3 trillion and $3.3 trillion, an economic impact many magnitudes greater than programs previously held to implicate the doctrine.
A core Congressional power: Taxation, including tariffs, is a legislative function vested exclusively in Congress.

The court rejected the Government’s argument that the power to "regulate" implicitly includes the power to "tax," citing Supreme Court precedent distinguishing these powers.

Yoshida II Precedent

The Government heavily relied on Yoshida Int’l v. United States (Yoshida II), 526 F.2d 560 (CCPA 1975), a decision by the Federal Circuit’s predecessor court. Yoshida II upheld President Nixon’s temporary 10 percent import surcharge imposed under IEEPA’s predecessor, the Trading with the Enemy Act (TWEA), which contained identical "regulate . . . importation" language. The Government argued that Congress ratified this interpretation by using the same language in IEEPA.

However, the Federal Circuit distinguished Yoshida II, noting that it upheld a tariff of a "Limited Nature" in time, scope, and amount. Specifically, President Nixon’s surcharge was:

Temporary: Lasted less than five months.
Limited in scope: Applied only to articles that were subject to prior tariff concessions and thus less than all U.S. imports.
Limited in amount: Subject to a maximum rate prescribed by Congress (not to exceed the amounts set in Congressionally-approved existing Tariff Schedules).

The Yoshida II court explicitly stated it would not approve "unlimited power" or "imposing whatever tariff rates [the President] deems desirable". The Federal Circuit concluded that even if Congress ratified Yoshida II, the Challenged Executive Orders, being "unbounded in scope, amount, and duration", applying to nearly all articles from almost all countries, with high and ever-changing rates exceeding HTSUS, and not limited in duration, exceed the authority recognized in Yoshida II. The legislative history of IEEPA further indicated Congress’s intent to "revise and delimit" presidential authority compared to TWEA.

Dissenting View on IEEPA Authority

A dissenting opinion, joined by Chief Judge Moore and Circuit Judges Prost and Chen, disagreed with the majority’s conclusion on the tariffs’ legality. The dissent argued that IEEPA’s "regulate . . . importation" clause does authorize tariffs, citing:

Plain Meaning of "Regulate": Definitions include "control" and "adjust," which naturally encompass tariffs as a means of controlling imports.
Taxes as Regulation: Long-standing judicial recognition that taxes, including tariffs, are often a form of regulation aimed at altering conduct (e.g., National Federation of Independent Business v. Sebelius, 567 U.S. 519, 567 (2012); Gibbons v. Ogden, 22 U.S. 1, 202 (1824)).
Congressional Usage: Other statutes, like the Tariff Act of 1930, explicitly define duties as a form of "regulation" of imports.
Algonquin Precedent: Federal Energy Administration v. Algonquin SNG, Inc., 426 U.S. 548 (1976), interpreted "adjust imports" to include monetary exactions (license fees and duties), even without explicit mention of "duties" in the relevant subsection.
Emergency Context and Foreign Affairs: Emergency statutes require flexibility, and statutes concerning foreign affairs are generally construed broadly (B-West Imports, Inc. v. United States, 75 F.3d 633, 636 (Fed. Cir. 1996)).
Yoshida II Ratification: Yoshida CCPA specifically held TWEA’s "regulate . . . importation" language authorized import surcharges, and Congress enacted IEEPA with identical language and awareness of Yoshida CCPA, suggesting ratification of this interpretation. The dissent rejected the majority’s imposed limits as not being explicit in IEEPA’s text or required by Yoshida CCPA.

The dissent also rejected the CIT’s finding that section 122 of the Trade Act of 1974 displaced IEEPA, arguing that section 122 primarily addresses "fundamental international payments problems" not necessarily covered by the reciprocal tariffs, and it addresses "non-emergency" situations, thus not contradicting or displacing IEEPA’s emergency authority.

Regarding the Major Questions Doctrine, the dissent argued it should not apply in national security or foreign policy contexts, where Congress typically intends to grant the President substantial authority and flexibility. They viewed IEEPA as a "very clear" broad delegation.

Finally, the dissent contended that IEEPA meets the constitutional "intelligible principle" test for nondelegation, even for taxation authority (Federal Communications Commission v. Consumers’ Research, 145 S. Ct. 2482, 2497 (2025)). The requirements of an "unusual and extraordinary threat" and that presidential action must be "to deal with" that threat provide sufficient boundaries. They noted that delegations in foreign affairs allow for greater leeway (Zemel v. Rusk, 381 U.S. 1, 17 (1965); United States v. Curtiss-Wright Export Corp., 299 U.S. 304, 319–20 (1936)).

Concerning the Trafficking Tariffs, the dissent disagreed with the CIT’s "direct link" requirement, arguing that IEEPA only requires action "to deal with" the threat, and tariffs can serve as a legitimate "bargaining chip" to induce foreign governments to address the problem, consistent with Dames & Moore v. Regan, 453 U.S. 654 (1981).

Concurring Views on IEEPA Authority

Circuit Judge Cunningham, in additional views joined by Circuit Judges Lourie, Reyna, and Stark, concurred with the majority but stated that IEEPA does not authorize any tariffs. This view explicitly rejects the Government’s expansive interpretation of "regulate". Judge Cunningham highlighted three textual problems with the Government’s interpretation:

Inconsistent meanings of "regulate": If "regulate" includes taxation to adjust quantity, the President could tax bank withdrawals or transportation, requiring the same word to have different meanings in the same provision.
Superfluous statutory powers: An expansive reading of "regulate" would render other listed powers, such as "direct and compel" or "prevent or prohibit," redundant.
Lack of clear authorization for taxation: Congress must clearly indicate intent to delegate taxing authority (Skinner v. Mid-Am. Pipeline Co., 490 U.S. 212, 224 (1989)).

This concurring opinion also rejected the Yoshida II ratification argument, noting that Congress modified TWEA and that no "broad and unquestioned judicial consensus" existed around Yoshida II’s interpretation. Furthermore, Judge Cunningham argued that the Government’s interpretation of IEEPA would constitute an unconstitutional delegation of legislative taxation authority, lacking "intelligible principles" or quantitative/qualitative limits on the amount of money the executive branch could raise.

Federal Circuit’s Conclusions

The Federal Circuit ultimately reached the following conclusions:

Affirmed the CIT’s holding that the Trafficking and Reciprocal Tariffs imposed by the Challenged Executive Orders exceed the authority delegated to the President by IEEPA’s text.
Affirmed the CIT’s grant of declaratory relief that the orders are "invalid as contrary to law".
Vacated the CIT’s grant of a permanent injunction universally enjoining the enforcement of the tariffs. The case was remanded for the CIT to reevaluate the propriety and scope of injunctive relief, considering the four eBay Inc. v. MercExchange, L.L.C. factors (547 U.S. 388, 391 (2006)) and the Supreme Court’s guidance on universal injunctions in Trump v. CASA, Inc., 145 S. Ct. 2540 (2025).

Given the virtual certainty that the U.S. Supreme Court will ultimately decide this issue, advisors with clients or employers affected by the tariffs must stay informed of future developments.

Prepared with assistance from NotebookLM.