US court rules Trump tariffs invalid (full text of ruling attached)

Trump speaks in the Oval Office of the White House in Washington, D.C., May 28, 2025Andrew Harnik/Getty Images

On May 28, 2025, the U.S. Court of International Trade (CIT) made an important ruling on the U.S. president's power to unilaterally impose tariffs. The ruling clearly stated that the president's global and retaliatory tariffs on goods from many countries, including China, under the International Emergency Economic Powers Act (IEEPA) were "illegal." If this ruling takes effect, all tariffs imposed on Chinese goods based on IEEPA will lose their legal basis and should be revoked in theory, directly reducing the tariff burden on Chinese goods exported to the United States, which is good for relevant Chinese exporters. The White House has stated that it will appeal the ruling, and the effectiveness of the original executive order may become complicated.

I. Case Background and Core Disputes

This lawsuit stems from a series of tariff measures recently taken by Trump. Among them, the most representative is the global tariff measure announced by the President through an executive order on April 2, 2025, which is aimed at responding to the so-called national emergency. The measure imposes general tariffs on imports from almost all trading partners and sets higher retaliatory tariffs for specific countries (including China) (hereinafter referred to as "global and retaliatory tariffs"). In addition, the President has previously implemented specific tariff measures against Canada, Mexico, China and other countries on the grounds of combating the flow of illegal immigrants and the cross-border transportation of synthetic opioids (hereinafter referred to as "trafficking-related tariffs").

The Trump administration claims that its power to impose these tariffs comes from IEEPA, believing that the US trade deficit and the actions of specific countries constitute an "unusual and extraordinary threat", thereby triggering a national emergency and giving the President the power to take corresponding economic measures. The government also cited the court's recognition of emergency tariffs during President Nixon's administration in 1971 (United States v. Yoshida Int'l. Inc., hereinafter referred to as Yoshida II) as a precedent, and believed that whether the president's reasons for declaring a state of emergency were in accordance with the law was a "political issue" and the court should not intervene.

However, a group of small businesses, including wine importer V.O.S. Selections, and twelve state governments led by Oregon filed a lawsuit. The plaintiffs believed that the president's actions exceeded the authority granted by IEEPA, which did not grant the president such broad and unrestricted tariff-setting power, and that the current trade situation and specific national behavior did not meet the strict standards of "unusual and extraordinary threats" stipulated in IEEPA. They pointed out that the U.S. Constitution mainly gives the power to impose tariffs to Congress.

Second, the Court’s Key Decisions and Legal Basis

In its opinion (Slip Op. 25-66) issued on May 28, 2025, the U.S. Court of International Trade conducted an in-depth legal analysis of the President’s tariff power and ultimately supported the plaintiff’s main arguments.

Excerpt from the “Conclusion” section of the original opinion

1. The scope of IEEPA’s authority and the legality of “global and retaliatory tariffs”

The court first examined the scope of IEEPA’s authority. The judgment clearly stated that IEEPA does not grant the President “unlimited” or “unfettered” authority to impose tariffs. The court held that the tariff-setting authority asserted by the president in this case was "unlimited in duration or scope" and was "beyond any tariff authority granted to the president by IEEPA." Therefore, the court ruled that the "global and retaliatory tariffs" imposed by the president under IEEPA were "ultra vires and contrary to law."

The court specifically distinguished IEEPA from the Trading with the Enemy Act (TWEA). The court reviewed the legislative history of IEEPA, pointing out that when Congress passed IEEPA in 1977, its purpose was to limit the president's exercise of emergency economic powers in peacetime, making it more limited in scope than TWEA and subject to more procedural constraints. Although the Yoshida II case supported President Nixon's imposition of a temporary 10% import surcharge under the TWEA framework in response to the balance of payments crisis, the court emphasized that the tariffs in the Yoshida II case were clearly temporary and limited, and the legal context at the time was different from the legislative intent of IEEPA. The court held that the global tariffs imposed by President Trump lack such inherent limitations, and their extensiveness and potential indefiniteness are inconsistent with the legislative spirit of IEEPA.

2. The relevance of the "unusual and extraordinary threat" clause to "trafficking-related tariffs"

For "trafficking-related tariffs", the court focused on analyzing the provisions of Section 1701(b) of IEEPA. This provision requires that the President's exercise of the powers granted by IEEPA must be "to deal with" a declared national emergency that poses an "unusual and extraordinary threat" and may not be used for other purposes.

The court held that the "trafficking-related tariffs" imposed by the President on Canada, Mexico, China and other countries, although claiming to be aimed at dealing with the threats posed by these countries' failure to effectively prevent drug trafficking, illegal immigration and other issues, lack a direct and substantial connection between the tariff measures taken and the threats to be dealt with. The court pointed out that the act of imposing tariffs itself cannot directly "deal with" the inaction of foreign governments at the law enforcement level. The ruling held that using tariffs as a means of "pressure" or "leverage" in order to force other countries to change their domestic policies or strengthen law enforcement is not equivalent to directly "responding" to identified threats as required by IEEPA. This indirect, strategic form of pressure goes beyond the limitations on the purpose of the exercise of power in Section 1701(b) of IEEPA.

3. Constitutional Powers of Congress

In its ruling, the court reiterated the basic principle of separation of powers in the U.S. Constitution. According to Article I, Section 8 of the U.S. Constitution, the power to set and levy tariffs belongs primarily to Congress. Although Congress can grant some power to the executive branch through legislation, such authorization must be clear and limited. The court held that the president's interpretation and application of IEEPA in this case constituted an erosion of Congress' core legislative power.

*Full text of the judgment is available at: https://www.cit.uscourts.gov/sites/cit/files/25-66.pdf

III. Subsequent Impact

If this ruling of the U.S. International Trade Court is ultimately upheld, it will have a direct and far-reaching impact on the tariff structure between China and the United States, especially the multiple tariffs previously imposed by the Trump administration on Chinese goods under IEEPA.

1. Existing IEEPA tariffs on Chinese goods face expiration

According to the ruling, the two main types of tariffs imposed by the President on Chinese goods under IEEPA were both deemed illegal:

• “Trafficking-related tariffs”: Court documents show that the President issued an executive order (Executive Order 14195) on February 1, 2025, imposing a 10% ad valorem tariff on Chinese goods in response to China’s failure to adequately stop the flow of fentanyl precursor chemicals, and then raised the tariff rate to 20% on March 3, 2025 (Executive Order 14228). The court held that such tariffs failed to meet the requirement of Section 1701(b) of IEEPA that measures must be “designed to address” a specific threat.

• “Global and retaliatory tariffs”: The Executive Order (Executive Order 14257) issued by Trump on April 2, 2025, imposed a general tariff of 10% on almost all trading countries, including China. Targeting China, the order and subsequent adjustments (such as Executive Order 14259 on April 8, 2025 and Executive Order 14266 on April 10) once soared the specific tariff rate from 34% to 84% and even 125%. Although on May 12, 2025 (Executive Order 14298), this targeted high tariff was temporarily reduced to 10% (for a period of 90 days, based on the original 10% general tariff and 20% “trafficking-related tariff”) due to consultations with China, its legal basis was also questioned by the court. The court believed that such tariffs exceeded the scope of IEEPA’s authorization because they lacked clear scope and duration limits.

If this ruling takes effect, the above-mentioned tariffs imposed on Chinese goods based on IEEPA (whether it is a general 10%, a targeted 20%, or a retaliatory tariff of up to 125%) will lose their legal basis and should be revoked in theory. This will directly reduce the tariff burden of Chinese goods exported to the United States and benefit relevant Chinese export companies.

2. Restrict the use of unilateral US tariff tools against China

The core of this ruling is to impose strict judicial restrictions on the president's power to unilaterally initiate overly broad tariff measures based on IEEPA:

•   "National emergency" reasons are limited: If the US administration wants to impose large-scale tariffs on Chinese goods through IEEPA on the grounds of broad "national emergency" (such as trade deficit, specific industrial policies, etc.) in the future, it will face higher legal thresholds and stricter judicial review. The court made it clear that the trade deficit issue is more suitable for non-emergency authorizations with specific procedures and restrictions, such as Section 122 of the Trade Act of 1974.

•  Legal basis for "pressure" strategy weakened: The court questioned the use of tariffs as a "pressure" or "leverage" tool to force China to change its policies in non-trade areas (such as the fentanyl issue), believing that this does not meet the directness requirement of IEEPA to "designed to respond to" threats, limiting the US government's use of IEEPA as a tool for comprehensive pressure on China. Nevertheless, the following points should be noted:

The White House has stated that it will appeal the ruling. The decision of the appellate court will be final and decisive. During the appeal, the validity of the original executive order may become complicated. Even if the IEEPA path is blocked, the US government may still seek other legal grounds to take trade restrictive measures against China, such as through congressional legislation, more strictly applying Section 301 under the Trade Act of 1974 (although it itself faces compliance questions), Section 232 (national security investigations) or trade relief measures such as anti-dumping and anti-subsidy.

To sum up, the direct consequence of the ruling of the U.S. Court of International Trade on May 28, 2025 may be to reduce the tariff pressure on Chinese goods. The more important issue is the legal constraints on the U.S. President's unilateral use of IEEPA as a tool in the trade war against China. However, considering subsequent issues such as the appeal process, the direction of tariffs remains uncertain.