The Status of Recent Legal Challenges to the Trump IEEPA Tariffs and Implications for Importers

Over the past few months, there have been several legal challenges to President Trump’s imposition of tariffs under the International Emergency Economic Powers Act of 1977 (“IEEPA”). Three cases filed in the U.S. Court of International Trade (“CIT”) and the U.S. District Court for the District of Columbia (“DDC”) have resulted in decisions invalidating the IEEPA tariffs, and those decisions are now on appeal.

This alert summarizes the major legal challenges to tariff actions based on IEEPA and their implications for importers. The CIT’s decisions in V.O.S. Selections and State of Oregon challenge the scope of presidential authority under IEEPA—as does the DDC’s Learning Resources decision, which adds a distinct jurisdictional issue. Other cases targeting the IEEPA tariffs have yet to reach the merits. In the Northern District of California, an IEEPA challenge filed by the State of California was dismissed for lack of jurisdiction. Similarly, federal district courts in Florida and Montana transferred other IEEPA cases to the CIT.

We also discuss two additional cases before the CIT—one that challenges the termination of the de minimis exemption as to China, and a second that seeks IEEPA tariff refunds through a class action.

Of note, the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) could rule any day on whether U.S. Customs and Border Protection (“CBP”) can continue collecting IEEPA tariffs pending the Government’s appeal of the CIT’s ruling that the IEEPA tariffs are invalid. If a stay is granted, the CIT’s judgment will not affect the President’s actions throughout the pendency of the appeal, which could take a year or more. If a stay is denied, the CIT’s order would enter into force, with potentially significant repercussions—both for importers and for the Trump Administration’s tariff agenda.

CIT Cases: V.O.S. Selections v. U.S. and State of Oregon v. U.S.

On May 28, a three-judge panel of the CIT issued a landmark ruling in consolidated lawsuits brought by the plaintiffs in V.O.S. Selections and State of Oregon. In V.O.S. Selections, a group of importers challenged the President’s authority to unilaterally impose tariffs under IEEPA. In State of Oregon, a group of 12 U.S. states (with Oregon being the lead plaintiff) similarly challenged the legality of the IEEPA tariffs. Both complaints asserted that: (1) IEEPA does not give the president broad authority to impose the challenged tariffs, and (2) such broad authority, if statutorily delegated to the president, would be unconstitutional.

The CIT held that IEEPA does not provide the president with “unbounded authority” to lay and collect taxes and duties and to “regulate Commerce with foreign nations,” in part because the Constitution exclusively grants those powers to Congress. Specifically, the CIT reasoned that IEEPA’s reference to the power to “regulate” importation may authorize certain tariffs, but it does not grant the president unlimited tariff authority to impose sweeping tariffs, and the universal reciprocal tariffs went far beyond the delegation’s proper scope. In addition, the CIT held that the border security and fentanyl tariffs do not “deal with” the specific threats that the Executive Orders purport to address; rather they create leverage to deal with those issues. The Court held that merely creating leverage does not meet the statute’s “deal with” standard. The CIT permanently enjoined imposition of the reciprocal and border security tariffs. The Government immediately asked both the CIT and the CIT’s reviewing court, the Federal Circuit, to stay the CIT’s order pending appeal. A stay pending appeal—issued by either the CIT or the Federal Circuit—would prevent the CIT’s order from taking effect until the Federal Circuit rules on the merits of the appeal.

On May 29, the Federal Circuit entered an administrative stay in the consolidated V.O.S. Selections and State of Oregon appeals, which prevents the CIT’s order from taking effect until the Federal Circuit decides whether to grant the requested stay pending appeal. On June 3, the CIT announced that it would allow the Federal Circuit to decide whether to stay the CIT’s judgment. In the Federal Circuit, Plaintiffs responded to the Government’s motion for a stay pending appeal on June 5, and the Government filed its reply yesterday. Courts typically act quickly on stay motions, so the Federal Circuit may issue its decision on the stay soon.

The Federal Circuit has not yet scheduled briefing on the underlying appeal. If default rules apply, the Government’s merits brief would be due by approximately July 28. The Plaintiffs’ response brief would be due around September 8, with a reply from the Government by September 29. However, Plaintiffs will likely seek expedited proceedings.

There is no deadline for the Federal Circuit to issue a decision, but an appeal generally takes about one year. Parties can ask the U.S. Supreme Court to review the Federal Circuit’s decision by filing a petition for a writ of certiorari within 90 days of the appellate ruling. The Supreme Court will then decide whether to hear the case.

DDC Case: Learning Resources v. Trump

On May 29, a second federal court, the DDC, preliminarily enjoined the IEEPA tariffs for two small business plaintiffs, Learning Resources Inc. and hand2mind, Inc. Judge Rudolph Contreras declared the tariffs imposed under IEEPA to be “unlawful” but did not vacate the Executive Orders imposing those tariffs in their entirety, as did the CIT. Instead, the judge preliminarily enjoined collection of IEEPA tariffs from the two plaintiffs. In his decision, the judge also denied the Government’s request to transfer the case to the CIT, holding that because IEEPA does not authorize the imposition of tariffs at all, the CIT does not have exclusive jurisdiction over the case.

The Government appealed the DDC injunction to the U.S. Court of Appeals for the District of Columbia Circuit (“CADC”) and filed a motion asking the DDC judge to stay his injunction pending resolution of the CADC appeal. Judge Contreras granted the Government’s motion to stay on June 3, meaning the DDC’s preliminary injunction will not take effect until the CADC rules on the merits of the appeal.

The Government’s appeal has been assigned to an appellate panel consisting of three judges appointed by President Trump during his first term: Judge Gregory Katsas, Judge Neomi Rao, and Judge Justin Walker. On June 5, Plaintiffs requested an expedited briefing schedule. However, on June 9, Plaintiffs asked the CADC to defer ruling on its previous request to expedite, and instead to align merits briefing in the CADC case with the briefing schedule to be issued in V.O.S. Selections at the Federal Circuit.

IEEPA Tariff Challenges in Other Federal District Courts

Several additional challenges to the IEEPA tariffs have been filed in other federal district courts. These cases raise the question of whether the CIT has exclusive jurisdiction to hear judicial challenges to the IEEPA tariffs.

The State of California recently mounted a challenge to the IEEPA tariffs in the Northern District of California. The federal district court dismissed the lawsuit, determining that jurisdiction lies exclusively with the CIT, and California has appealed the court’s dismissal to the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”). California contends that its claims—specifically, its argument that IEEPA does not authorize the president to impose tariffs at all—warrant adjudication in federal district court rather than the CIT, which has exclusive jurisdiction over cases arising from statutes that provide for tariffs. On June 5, California requested expedited briefing at the Ninth Circuit, arguing that the lower court’s dismissal is causing ongoing harm from the tariffs that cannot be addressed until the Ninth Circuit resolves the jurisdictional question. If expedited briefing is granted, the State’s brief would be due on June 30, followed by the Federal Government’s response by July 28 and the State’s reply by August 18. The Ninth Circuit has not ruled on the motion to expedite, but it has ordered the parties to report on settlement potential by June 13.

IEEPA challenges were also filed in federal district courts in Florida (Emily Ley Paper Inc. v. Trump) and Montana (Webber v. U.S. Department of Homeland Security). Similar to the State of California case, both courts found that the CIT has exclusive jurisdiction over challenges to IEEPA tariffs. The Florida court transferred Emily Ley Paper to the CIT, which is currently pending in that court. The Montana court similarly transferred Webber to the CIT, though plaintiffs are appealing the transfer decision to the Ninth Circuit.

These cases highlight how threshold jurisdictional questions are central to cases challenging tariffs based on IEEPA.

De Minimis Case in the CIT: Axle of Dearborn v. U.S.

In addition, the President’s elimination of the de minimis exemption as to China in Executive Orders imposing IEEPA tariffs is being challenged at the CIT. Importers may use the de minimis process to enter qualifying shipments below a certain value threshold (currently set at $800) into the United States duty-free, without submitting the detailed data and documents that would typically be required for a formal entry. The availability of this exemption has been instrumental in the growth of e-commerce. The Executive Orders imposing border security tariffs on China based on IEEPA include provisions that ended de minimis eligibility for Chinese goods effective May 2.

On May 16, Detroit Axle, an importer, filed suit in the CIT challenging the President’s elimination of the de minimis exemption with respect to Chinese-origin goods. Detroit Axle asserts that the elimination of de minimis in those Executive Orders is unlawful because the President does not have statutory authority to eliminate the de minimis exemption.

The Plaintiff moved for a preliminary injunction barring the Government from implementing the Executive Orders at issue to the extent that they eliminate the de minimis exemption, and also moved for partial summary judgment on the de minimis claims. Despite efforts by the Government to stay the litigation, the case is moving forward. The Plaintiff has requested an expedited briefing and hearing schedule on the preliminary injunction—or, alternatively, on its partial summary judgment motion. This case is assigned to the same three-judge CIT panel that ruled in V.O.S. Selections v. U.S. and in State of Oregon v. U.S.

Class Action Case in the CIT: Chapter1 LLC v. U.S.

On May 29, Chapter1 LLC, an importer, filed a case in the CIT seeking class certification for all importers that have paid IEEPA tariffs. If successful in establishing class certification and challenging the tariffs, this lawsuit could provide refunds for all companies that paid IEEPA tariffs, regardless of whether those companies individually took steps to preserve their ability to seek refunds. The Government has not yet responded substantively. Its response to the motion for class certification is due by June 20, followed by a response to the motion for summary judgment by July 3, and an answer to the complaint by July 28. This case is assigned to Judge Joseph Laroski, who was appointed by President Biden in 2024.

Implications for Importers

Plaintiffs’ wins at the CIT and DDC raise the prospect that importers may eventually secure relief from IEEPA tariffs after the pending appeals run their course (including potential Supreme Court review)—or may see more immediate relief if the CIT’s judgment is not stayed pending appeal. Importers should take steps to protect their rights to collect tariff refunds from CBP in the event that federal courts ultimately invalidate the IEEPA tariffs.

During the first Trump Administration, federal courts considered legal challenges to tariffs imposed under various other statutory authorities. While some plaintiffs were successful in challenging tariffs at the CIT, the Government routinely prevailed on appeal in the Federal Circuit. Various claims were made under Section 201, Section 232, Section 301, the Administrative Procedure Act, and the Constitution. By contrast, the recent cases challenge the president’s authority to impose tariffs under IEEPA, limiting the precedential significance of litigation arising from actions during the prior Trump Administration. The broad scope of the IEEPA challenges creates opportunities for interested parties to file amicus briefs, and several parties have filed amicus briefs in the V.O.S. Selections case.

If higher courts ultimately strike down the tariff actions based on IEEPA, businesses that paid those duties may become eligible for refunds. In the meantime, companies must navigate legal and financial uncertainties while the fate of the IEEPA tariffs remains unresolved. In this environment, businesses should monitor litigation developments closely—and also remain mindful of the Trump Administration’s intention to aggressively penalize tariff evasion.

Covington’s tariff and customs experts can help importers ensure that they are acting in compliance with existing tariff regimes while at the same time securing their legal right to refunds in the event that the IEEPA tariffs are ultimately invalidated.

If you have any questions concerning the material discussed in this client alert, please contact the members of our Trade Policy practice.