Trump Administration Tariff Measures Ruled Unlawful by U.S. Court of Appeals

Strategic Insights -

In a landmark decision on August 29, 2025, the U.S. Court of Appeals for the Federal Circuit ruled that two key Trump administration tariff measures were unlawful. The measures, known as "reciprocal" tariffs and "trafficking" tariffs, were imposed on imports from various countries in response to alleged disparate tariff rates and barriers imposed on U.S. goods.

The decision marked the first time the Federal Circuit has sustained a serious challenge to any of President Trump's signature tariffs. Specifically, the ruling related to the reciprocal tariffs applicable to most U.S. trading partners and the trafficking tariffs imposed on imports from China, Canada, and Mexico.

Key Takeaways:

  • The Federal Circuit affirmed the U.S. Court of International Trade's ruling that the reciprocal and trafficking tariffs exceeded the president's power to "regulate imports" under the International Emergency Economic Powers Act (IEEPA).
  • The court held that IEEPA's text and legislative history do not explicitly grant the president authority to impose tariffs or other taxes for the purpose of raising revenue.
  • The court also relied on the major questions doctrine, which requires an unambiguous congressional delegation of the taxing power to authorize the president to apply tariffs of such magnitude and unlimited duration.
  • A concurring opinion by four judges in the majority went further, finding that IEEPA does not authorize the president to impose any tariffs, not just those at issue.
  • The dissenting opinion viewed the use of IEEPA as properly within the president's powers to regulate importation and found the challenged tariffs met IEEPA's statutory requirements.
  • President Trump initially announced the reciprocal tariffs on April 2, 2025, and the trafficking tariffs on February 1, 2025.
  • The reciprocal tariffs have been modified several times, with country-specific rates ranging from 15% to 41%.
  • Canada and Mexico are currently exempt from the reciprocal tariffs due to the imposition of a trafficking tariff on these countries.
  • The decision does not cover tariffs imposed by the president pursuant to other statutes, including the China tariffs imposed under Section 301 of the Trade Act of 1974 or the steel, aluminum, copper, and automobile tariffs imposed under Section 232 of the Trade Expansion Act of 1962.

Statistics:

  • 10%: Initial reciprocal tariff rate imposed on most U.S. trading partners
  • 34%, 84%, and 125%: Initial and subsequent country-specific tariff rates imposed on China
  • 25%: Trafficking tariff rate imposed on Canada and Mexico
  • 20%, 35%, and 41%: Subsequent trafficking tariff rates imposed on China, Canada, and Mexico
  • 12%: Reciprocal tariff rate that will be imposed on Canada and Mexico if the trafficking tariff is lifted
  • 15%: Maximum tariff rate that can be imposed under Section 122 of the Trade Act of 1974
  • 150 days: Maximum duration of tariff imposition under Section 122 of the Trade Act of 1974

Sources:

  • V.O.S. Selections, et al. v. Trump (Fed. Cir. Case No. 25-1812)
  • Federal Circuit Case No. 25-1812 (August 29, 2025)
  • Executive Order No. 14257 (April 2, 2025)
  • Executive Order No. 14266 (April 9, 2025)
  • Executive Order No. 14259 (April 8, 2025)
  • Executive Order No. 14298 (May 12, 2025)
  • Executive Order No. 14326 (July 31, 2025)
  • Executive Order No. 14194 (February 1, 2025)
  • Executive Order No. 14193 (February 1, 2025)
  • Executive Order No. 14195 (February 1, 2025)
  • Executive Order No. 14231 (March 6, 2025)
  • Executive Order No. 14232 (March 6, 2025)
  • Executive Order No. 14228 (March 3, 2025)