Court Halts Enforcement of Trump’s Liberation Day Tariffs: What Next?

By Brett W. Johnson, Derek Flint, and T. Troy Galan

A recent decision by the U.S. Court of International Trade (CIT) has significant implications for companies engaged in imports to the United States. On May 28, 2025, a three-judge panel issued a permanent injunction barring enforcement of tariffs imposed under the International Emergency Economic Powers Act (IEEPA), including the Liberation Day tariffs announced by President Trump earlier this year. Although an appeal to the U.S. Court of Appeals for the Federal Circuit is likely, companies should evaluate short- and long-term supply chain strategies to address continued uncertainties — and be vigilant for further guidance concerning potential duty refunds.

IEEPA and the “Liberation Day” Tariffs

On April 2, 2025, President Trump announced a new set of tariffs, described by the Administration as “reciprocal” and implemented as part of a broader economic emergency response. These included:

These measures were collectively referred to as the Liberation Day tariffs. And even before Liberation Day, President Trump imposed a 25% tariff on selected goods from Mexico and Canada. The Administration’s stated emergency justifications for these tariffs included trade deficits, a lack of reciprocity in international trade, and fentanyl trafficking.

Unlike prior tariff regimes based on other authorities, such as Section 301 of the Trade Act  (Section 301) and Section 232 of the Trade Expansion Act (Section 232), these tariffs were imposed under IEEPA — a statute that had never been previously used to issue tariffs — without a formal investigative process. A 90-day pause was announced shortly thereafter, but key portions remained in effect, including the universal 10% tariff.

Legal Challenges and the CIT’s Decision

After the tariffs were announced, a number of lawsuits were filed challenging the President’s authority to impose tariffs under IEEPA. In its ruling addressing the merits of these lawsuits, the CIT held that the President lacked the authority to issue the Liberation Day tariffs and the tariffs on goods from Canada and Mexico. The court concluded that:

“The worldwide and retaliatory tariff orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs. The [] tariffs fail because they do not deal with the threats set forth in those orders.”¹

In short, the court found that IEEPA neither mentions nor authorizes tariffs. While the statute allows the President to regulate financial transactions and freeze assets in response to foreign threats, it does not confer authority to impose duties on imports.

The CIT also rejected the emergency justification offered by the U.S. Government. The opinion emphasized that a long-standing trade deficit — even if politically significant — does not constitute an “unusual and extraordinary threat” within the meaning of IEEPA. Similarly, the CIT determined that the U.S. Government failed to establish the requisite causal connection between the tariffs and a specific external threat justifying such sweeping trade measures.

Scope of the Injunction

The permanent injunction blocks enforcement of the following tariffs:

However, the ruling does not affect tariffs imposed under other legal authorities — such as the 25% tariffs on autos, auto parts, steel, and aluminum implemented under Section 232 or previous Chinese imports subject to Section 301. These measures remain in force.

Next Steps

The U.S. Government is expected to appeal the decision to the U.S. Court of Appeals for the Federal Circuit. While a stay of the injunction could be sought during the appellate process, as of now, the Liberation Day tariffs are unenforceable. The case is also likely to reach to the U.S. Supreme Court, particularly given the constitutional questions concerning the President’s emergency authority.

Implications

The CIT’s ruling presents companies with an opportunity to reassess import operations and supply chain strategies. However, companies may want to consider delaying any immediate operational changes — such as withdrawing merchandise from Foreign Trade Zones or bonded warehouses — until implementing guidance is issued by U.S. Customs and Border Protection (CBP). Alternatively, some companies may pursue an expedited import approach to take advantage of the current permanent injunction before a potential stay is issued by the appellate courts. This “rush” strategy, however, may result in filing or reporting delays if CBP systems are not updated promptly, potentially necessitating the protest of certain duties after liquidation.

The CIT’s order requiring repayment of all Liberation Day tariffs also raises significant contractual questions regarding which party is entitled to a refund. Where pricing was adjusted after the tariffs were issued to account for increased costs — for instance, when a foreign manufacturer reduced its price while the U.S. entity remained the importer of record — the determination of entitlement will likely depend on the interpretation of modified contractual terms.

Regardless of which party is ultimately entitled to the refund, companies should consider proactively exploring mechanisms for recovering duties already paid, in the event the CIT’s repayment order is upheld. Doing so may allow companies to maximize recovery while also mitigating risk related to contractual compliance. As the legal framework continues to evolve, strict adherence to CBP regulations — including proper documentation, accurate classification, and robust recordkeeping — remains essential.

In parallel, companies should continue evaluating alternative supply chain strategies. Ongoing legal uncertainty — whether involving the potential for a stay, the use of alternate legal authorities to reimpose tariffs, or the application of other trade policy tools like export controls or import restrictions — warrants careful contingency planning to protect long-term operational stability.