Federal Circuit Strikes Down Most Emergency Tariffs, Sets Up Supreme Court Fight

(WASHINGTON, D.C.) In a sweeping 7–4 ruling issued on August 29, 2025, the U.S. Court of Appeals for the Federal Circuit held that most of President Trump’s “Liberation Day tariffs” were unlawful because they exceeded the IEEPA authority Congress granted in 1977. The decision, which affirms a May 28 order from the U.S. Court of International Trade in V.O.S. Selections, Inc. v. United States, says tariff-setting is a power Congress controls, not the President acting alone under emergency powers.

While the court struck down the bulk of these Emergency tariffs, it put its ruling on hold until October 14, 2025, giving the administration time to seek Supreme Court review. President Trump sharply criticized the decision as a “total disaster for the country” and vowed to appeal. For now, the tariffs remain in effect, keeping businesses, workers, and consumers in a holding pattern as a likely Supreme Court fight draws near.

What the Federal Circuit struck down

The Federal Circuit’s opinion targets Executive Order 14257, issued April 2, 2025, which announced a baseline 10% tariff on nearly all imports and higher duties of 11% to 50% for selected countries. The order labeled the measures “Liberation Day tariffs” and relied on a national emergency tied to persistent U.S. trade deficits.

• The appeals court held that Congress did not authorize presidents to impose broad, economy-wide tariffs by invoking the International Emergency Economic Powers Act (IEEPA).
• Judges described the scheme as “unbounded in scope, amount, and duration,” exceeding the emergency powers Congress intended to grant.
• The court concluded that IEEPA allows targeted emergency measures (for example, blocking transactions or freezing assets tied to hostile actors), but not a wholesale resetting of tariff levels across the economy.

What remains in place

The ruling left untouched a set of trade actions that rest on other statutes. Notably:

• Tariffs on steel and aluminum and certain automobile-related duties tied to national security laws (e.g., Section 232) remain in place.
• The court emphasized this distinction to avoid confusion: targeted national security measures are not affected by the ruling; the IEEPA-based universal surcharge is what the court rejected.

This line matters to importers, industry buyers, and consumers: it determines whether the administration can keep a universal surcharge on imports or must rely on narrower statutory tools.

Litigation timeline and immediate status

The litigation moved quickly:

1. April 2025 — Executive Order announced.
2. After the announcement — Trade groups and small businesses (represented by the Liberty Justice Center and joined by scholars including Neal Katyal and Judge Michael W. McConnell) filed suit, arguing IEEPA cannot rewrite tariff schedules.
3. May 28, 2025 — U.S. Court of International Trade permanently enjoined the program.
4. August 29, 2025 — Federal Circuit affirmed the lower court’s ruling but stayed enforcement until October 14, 2025.

Because of the stay, the Liberation Day tariffs remain in force for now. The stay allows the administration to petition the Supreme Court and request a stay that could extend the tariffs while the high court considers the case.

Important deadline: the panel delayed enforcement until October 14, 2025. Unless the Supreme Court acts earlier, tariffs remain in effect until then.

Core legal holding — why the court ruled this way

• The court’s core message: IEEPA is not a blank check. Congress wrote IEEPA to give presidents emergency tools to block or regulate transactions and freeze assets linked to foreign threats—not to create a general power to tax imports.
• The judges stressed that tariffs are taxes on imports and the Constitution assigns that power primarily to Congress, unless Congress explicitly says otherwise.
• The opinion relied on longstanding trade statutes (e.g., the Trade Act of 1974, Section 232 of the Trade Expansion Act) that set out specific procedures and findings for presidential tariff adjustments.

For importers and compliance teams, the ruling signals a hard stop on using IEEPA to impose catch-all tariffs; any future stretch of emergency powers in trade will likely face exacting judicial review.

Economic and business impacts while the stay remains

Many businesses are caught between planning cycles and court calendars:

• Importers with goods en route cannot assume the tariffs will end imminently.
• The original order carved out certain items (pharmaceuticals, semiconductors, lumber, bullion, some minerals) and excluded products already covered by national security tariffs.
• The 10% baseline touches deep retail categories; country-specific rates up to 50% hit some markets much harder.
• Companies with complex supply chains (electronics, car parts, home goods) face the choice to pass costs onto consumers or delay shipments.

Specific business effects:

• Some firms rushed orders in spring/summer to beat potential increases from country-specific layers.
• Others delayed purchases hoping courts would lift the 10% baseline.
• Small importers (wine distributors, specialty food shops, home furnishings stores) report thin margins and difficulty absorbing prolonged premiums.
• Freight forwarders and insurers note increased warehousing and insurance costs for delayed shipments.

The stay keeps these pressure points active at least until October 14.

Policy and legislative stakes

The ruling fuels debate on checks and balances:

• Several lawmakers have proposed tightening the National Emergencies Act and IEEPA — ideas include sunset rules for emergency actions, faster Congressional review, and stricter definitions of “trade emergency.”
• If Congress clarifies limits, future presidents would need to pursue tariff policy within explicit statutory lanes or seek congressional approval.

The decision may prompt renewed legislative activity, though bipartisan consensus on any fix is uncertain.

International and diplomatic consequences

Trading partners reacted pragmatically:

• Deals with the EU, Japan, and the UK — including investment pledges and energy purchases — may be affected depending on whether the tariffs remain.
• If the IEEPA-based tariffs end, partners could revisit concessions given under pressure.
• If the Supreme Court restores the program, partners might demand longer-term exemptions or resort to formal trade disputes.

Multinationals are likely to factor this legal uncertainty into locations and investment plans, as swingy tariff policy makes long-term commitments riskier.

What could happen after October 14

Two main paths:

• If the Supreme Court denies emergency relief, the Federal Circuit’s mandate would take effect, and ports would likely process entries without the IEEPA surcharge for covered goods. Importers would seek guidance from Customs and Border Protection on liquidation and refund procedures.
• If the Supreme Court grants a stay, the tariffs could continue while the high court decides whether to hear the case and, if so, until a final ruling—possibly extending into 2026.

Either outcome carries real-world consequences for inflation, inventories, and negotiating leverage with trading partners.

Practical steps for businesses during the wait

1. Review contracts for price-adjustment clauses tied to tariff changes.
2. Line up alternative sourcing where switching costs are low.
3. Track court filings and be ready for sudden emergency orders from the Supreme Court.
4. Prepare documentation for potential refund claims (entry summaries, proof of duty payments).
5. Consult customs brokers now to avoid a rush if the tariffs are rescinded.

These steps won’t remove uncertainty but can reduce disruption and speed recovery if the tariff layer is removed.

Where to follow primary documents and updates

• The Federal Circuit opinion and docket will be posted by the U.S. Court of Appeals for the Federal Circuit.
• Official statements from the administration and agencies will appear on federal sites.
• Trade groups will publish client alerts as events unfold.

Two courts have now said IEEPA-based, broad, economy-wide tariffs are impermissible; the final word may rest with the Supreme Court.

Broader implications and final takeaways

• The ruling sends a clear message: courts expect clear congressional authorization before allowing the executive to use emergency powers to effect major economic policy changes that look like taxes.
• Sector-specific tariffs under other statutes (e.g., steel and aluminum under Section 232) remain; the trade landscape will not revert entirely to a pre-2018 world even if the IEEPA-based layer is removed.
• The legal fight will shape the balance between the White House and Congress over tariff policy for years to come.

Key takeaway: the Liberation Day tariffs remain in force until at least October 14, 2025, while the Supreme Court considers whether to intervene. The case centers on whether IEEPA permits a president to impose broad, economy-wide tariffs—two federal courts have said no; the Supreme Court may now provide the final answer.