Reciprocal Tariffs Lose At Appeals Court, Battle Moves To Supreme Court

On Friday, the U.S. Court of Appeals for the Federal Circuit issued a major ruling on the scope of presidential tariff authority. In a 7–4 decision, the court found that former President Trump exceeded his powers under the International Emergency Economic Powers Act (IEEPA) when he declared trade deficits a “national emergency” and used that declaration to impose sweeping tariffs on imports from nearly every country.

The decision largely affirmed a May ruling from the U.S. Court of International Trade (CIT), which had also concluded that the so-called “Liberation Day” tariffs went beyond the authority Congress delegated in IEEPA. Those tariffs included a 10% baseline duty on most imports and “reciprocal” rates of up to 50% on countries running a trade surplus with the United States. The Court of Appeals, however, stopped short of striking the tariffs immediately, leaving them in place while the administration appeals to the U.S. Supreme Court.

Background

The litigation was brought by a coalition of states and small businesses, who argued that the tariffs imposed in April 2025 exceeded constitutional and statutory limits. The plaintiffs claimed that, unlike earlier tariffs on steel, aluminum, and certain auto imports (imposed under Section 232 of the Trade Expansion Act), or the China-focused duties maintained under Section 301, these new tariffs rested entirely on an expansive reading of IEEPA.

IEEPA, enacted in 1977, gives presidents broad authority to regulate trade in response to national emergencies. Past administrations have used it to freeze assets, restrict financial transactions, and ban certain imports and exports. But using trade deficits themselves as the basis for declaring a national emergency — and imposing tariffs across the board — marked new legal territory.

The Federal Circuit’s Reasoning

In its majority opinion, the appeals court wrote that “it seems unlikely that Congress intended to [ ] grant the President unlimited authority to impose tariffs.” That reasoning echoes the CIT’s earlier conclusion that the Liberation Day tariffs “exceed any authority granted to the President” under IEEPA.

The dissenting judges, however, stressed that the law is not an unconstitutional delegation of legislative authority, pointing to long-standing precedent upholding presidential trade measures under emergency statutes. Their dissent provides potential grounds for further review by the Supreme Court.

What’s at Stake

The stakes are high. Tariffs collected under Trump’s emergency proclamations have already generated more than $150 billion in revenue this year. If the tariffs are ultimately invalidated, the government could face refund obligations to U.S. importers, creating significant uncertainty for both the Treasury and the trade community.

For importers and freight forwarders, the immediate takeaway is that the tariffs remain in effect for now. Companies should continue to classify goods, pay duties, and structure supply chains on the assumption that the reciprocal and baseline tariffs apply — at least until the Supreme Court provides further clarity.

At the same time, businesses must weigh the risk of retroactive duty refunds if the tariffs are struck down. Importers may wish to review entry records and consider strategies to preserve refund rights in case duties are later declared unlawful.

Looking Ahead

President Trump has vowed to take the case to the Supreme Court, underscoring the political and economic weight of the issue. The high court’s eventual ruling could redefine the limits of presidential tariff authority — a question that directly affects every importer of foreign goods into the United States.

For now, the Federal Circuit’s ruling signals that there are limits to IEEPA’s reach, and that courts may be willing to push back against expansive uses of emergency economic powers. Importers, carriers, and logistics providers should closely monitor the appeals process and be prepared for multiple scenarios — from continued tariffs to significant refunds — in the months ahead.

As new tariff regulations continue to evolve, navigating these changes requires experienced legal counsel. At Liang + Mooney, PLLC, our seasoned tariff lawyers can answer your questions and concerns with sophisticated legal solutions.  If you seek strategic counsel and insight into which tariffs apply to your operations, we invite you to contact us to schedule a consultation.