Tariff Update: Pauses, New Tariffs, and Lawsuits

President Trump continues to expand his trade policy by announcing proposed increased tariffs, while trading partners attempt to effectuate trade deals with the US, and as President Trump’s authority to impose his initial tariffs is being actively litigated.

UK Agreement

On May 8, President Trump announced the framework for a trade deal with the UK, the first agreement the Trump administration has reached since imposing its recent tariffs.[1] Specifics about the agreement were not immediately clear, and President Trump stated that “the final details are being written up.” The fact sheet from the administration in part stated that the 10% universal tariff would remain in place, the US would adjust the tariff on automobiles to 10% for the first 100,000 imported by UK car manufacturers each year, and the US will negotiate an alternative arrangement to the Section 232 tariffs on aluminum and steel. The administration later agreed to remove the tariff on aluminum and steel imported from the UK but indicated it would impose a quota. A deal between the two counties has not yet been finalized.

De-escalation & Further Negotiations with China

From February through April, President Trump continuously imposed increasing tariffs on goods imported from China,[2] and in response, China imposed retaliatory tariffs on goods exported from the US. Then, on May 12, by joint statement, the US and China announced they were temporarily lowering tariffs on each other’s products.[3] President Trump then signed an executive order reducing the country-specific tariff on goods from China from 125% back down to 34% and suspending 20% of that for ninety days beginning May 14.[4] The 20% tariff imposed in connection with the purported fentanyl related national emergency remains in place. China likewise reduced its retaliatory tariff from 125% back down to 34% and suspended 20% of that for ninety days, and it agreed to suspend or remove non-tariff countermeasures it had taken against the US since April.

The joint statement also indicated that the US and China would establish a mechanism to continue discussions about economic and trade relations between Vice Premier of the State Council He Lifeng, Treasury Secretary Scott Bessent, and US Trade Representative Jamieson Greer.

Thereafter, the US and China have accused each other of violating the agreement. On May 30, President Trump, without any detail, claimed that China had “totally violated its agreement with us.” US Trade Representative Greer clarified that China had not removed other non-tariff trade restrictions it had levied on the US. China responded urging the US to “immediately correct its erroneous actions, cease discriminatory restrictions against China and jointly uphold the consensus reached at the high-level talks in Geneva.” China criticized that the Trump administration has taken steps to seriously undermine their agreement, including increasing export restrictions in the semiconductor sector and on certain chemicals to China and announcing that it would revoke visas for Chinese students.

The US and China have until August 12, to reach a more permanent deal. Otherwise, the suspended tariffs will go back into effect.

Actions Against Companies, the European Union, and Steel

On May 23, President Trump announced his expectation that iPhones sold in the US must be manufactured in the US, “not India, or anyplace else,” and stated that if that is not the case, Apple must pay a tariff of at least 25%. President Trump later clarified that the tariff would be imposed on all imported smartphones, not just iPhones. He added that the tariffs would start “I guess the end of June.” Likewise, President Trump threatened Mattel with a 100% tariff on its imports after Mattel CEO Ynon Kreiz stated that the company was considering raising toy prices due to tariffs and that it would not move manufacturing to the US because doing so would be more expensive than paying the tariffs. Unlike his threat regarding smartphones, President Trump has not clarified whether the 100% tariff would be on all imported toys rather than just Mattel’s imports.

Smartphones are currently exempt from most of the recently imposed tariffs. But the Trump administration could use Section 232 to impose tariffs on smartphones. Section 232 enables the president to impose tariffs on imports in response to national security threats. Section 232 is the justification the administration has previously used for the tariffs on automobiles, auto parts, steel, and aluminum imports.

The same day, President Trump also threatened a 50% tariff on all imports from the European Union starting on June 1, because discussions with the EU “are going nowhere.” EU Trade Commissioner Maroš Šefčovič responded by stating that “the EU’s fully engaged, committed to securing a deal that works for both” and that trade between the EU and US “must be guided by mutual respect, not threats.” Days later, President Trump agreed to delay imposing the 50% tariff until July 9 after speaking with European Commission President Ursula von der Leyen.

Then, on May 30, President Trump announced his plan to double tariffs on imports of aluminum and steel to 50%. In response, the EU stated it would implement countermeasures on July 14 or earlier. The administration has since issued a proclamation officially increasing the tariffs on imports of aluminum and steel.[5] The increase took effect on June 4.

Lawsuits Challenging Tariffs

Individuals, companies, and states have begun to challenge President Trump’s authority to impose tariffs under the International Economic Emergency Powers Act (IEEPA). Tariffs are typically authorized by Congress.[6] The president has no independent discretion to impose or alter tariffs. Instead, for the executive branch to impose tariffs, they must be authorized by statute. To impose his recent tariffs, President Trump has relied on IEEPA. The IEEPA was enacted with the intent of restraining the president’s emergency powers that Congress believed past presidents had abused under the Trading with the Enemy Act (TWEA).[7] The IEEPA gives the president authority to control international transactions after declaring a national emergency with respect to an “unusual and extraordinary threat” to the national security, foreign policy, or economy of the US.[8] The president’s IEEPA powers “may not be exercised for any other purpose.” The IEEPA does not mention tariffs or duties and has never been used before to impose tariffs.

The president’s initial orders levying tariffs on goods from Canada, China, and Mexico claimed that the influx of illegal aliens from Mexico and illicit drugs from all three countries and the failure of the countries to act posed a threat to the national security, foreign policy, and economy of the US.[9] Then, to impose a baseline tariff and country-specific “reciprocal” tariffs, President Trump claimed that the lack of reciprocity in US trade relationships, disparate tariff rates and non-tariff barriers, and US trading partners’ economic policies that suppress domestic wages and consumption constitute a threat to the national security and economy of the US.[10]

In response to these tariffs, lawsuits have been filed by members of the Blackfeet Nation in Montana;[11] the New Civil Liberties Alliance in Florida;[12] the State of California and Governor Gavin Newsom;[13] an individual, the Liberty Justice Center, twelve Attorneys General, and various companies in the United States Court of International Trade;[14] and two educational product companies in the District of Columbia.[15] Each lawsuit challenges President Trump’s authority to impose tariffs under the IEEPA.

In each lawsuit not filed in the Court of International Trade, the US filed motions to transfer the lawsuits to the Court of International Trade. The Montana and Florida district courts granted the motions (although the Montana decision has been appealed),[16] the DC district court denied the motion,[17] and the California district court ruled it lacked jurisdiction, denied the motion, but dismissed the case without prejudice (at California’s request to allow it to appeal the decision).[18]

On May 28, the Court of International Trade issued the first order addressing the recently imposed tariffs.[19] It determined that the IEEPA does not authorize the tariffs at issue, and therefore it vacated the challenged executive orders and permanently enjoined their operation.

For the tariffs imposed on goods from Canada, China, and Mexico to address the purported illicit drug national emergency, the court ruled that the executive orders do not “deal with” the specific threats they invoke as required by IEEPA. The court rejected the government’s argument that the president’s orders pressure the countries to address the crisis. It stated that if “deal with” means “impose a burden until someone else deals with,” then everything would be permitted. Instead, the court concluded that “deal with” connotes a direct link between an act and the problem it purports to address. Because the tariffs do not deal with the threats in the executive orders, the court held that they were not authorized under IEEPA.

For the baseline and country-specific reciprocal tariffs, the court ruled that the words “regulate . . . importation” in the IEEPA do not authorize the president to impose whatever tariff rates he deems desirable because such a reading would create an unconstitutional delegation of power. Because the IEEPA did not authorize the tariffs and because the tariffs were in response to an imbalance in trade, the court determined that they fell under the narrower, nonemergency authorities in Section 122 of the Trade Act. The court then ruled that the tariffs do not comply with the limitations imposed by Section 122. Therefore, the court concluded that the tariffs are ultra vires and contrary to law.

The same day, the US filed a notice of appeal to the United States Court of Appeals for the Federal Circuit Court, applied for the appellate court to stay the judgment and injunction pending the appeal, and applied for an immediate administrative stay while the appellate court considers the motion to stay. The following day, on May 29, the Federal Circuit granted the request for an immediate administrative stay, thereby temporarily staying the judgments and permanent injunctions entered by the Court of International Trade while the Federal Circuit considers the motion for a stay, which will be fully briefed on June 9.[20]

On May 29, the United States District Court for the District of Columbia likewise determined that the IEEPA does not authorize the president to impose tariffs and that the tariffs are ultra vires.[21] It therefore denied the US’s motion to transfer and granted the plaintiffs’ motion for a preliminary injunction.

On the transfer issue, the court recognized that the Court of International Trade has exclusive jurisdiction over “any civil action commenced against the United States, its agencies, or its officers, that arises out of any law of the United States providing for,” in relevant part, “tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other than the raising of revenue.”[22] Because the action arises out of IEEPA, the court stated that subject-matter jurisdiction turns on whether IEEPA is a “law . . . providing for” “tariffs, duties, fees or other taxes on the importation of merchandise for reasons other than the raising of revenue.” Therefore, the jurisdiction question and the merits question were intertwined and both turned on whether IEEPA authorizes or provides for tariffs.

The court explained that the IEEPA does not authorize the president to impose tariffs. Preliminarily, it noted that the IEEPA does not use the words “tariffs” or “duties,” their synonyms, or any other similar terms like “customs,” “taxes,” or “imposts.” It reasoned that the only activity authorized by IEEPA that could plausibly encompass the power to levy tariffs is to “regulate . . . importation.” But the court then stated the power to regulate is not the power to tax, noting that the US Constitution recognizes the distinction, the terms tariff and regulate have different plain meanings, and, in the context of the statute, regulate is appropriately read to refer to the power to issue economic sanctions. The court clarified that every time Congress has delegated the president the authority to levy duties or tariffs, it established express limits on that authority, and the IEEPA does not include language setting limits on any potential tariff-setting power. The court explained that those statutory limitations would be eviscerated if the president could invoke a virtually unrestricted tariffing power under IEEPA. Last, it stated that historical and general administrative practice indicates that IEEPA does not encompass the power to impose tariffs.

The court then rejected the US’s counterarguments. It first stated that the US’s interpretation conflicted with the text of the IEEPA because tariffs are typically assessed after US-based importers have taken possession of imported goods and property owned by US nationals falls outside of the IEEPA’s scope. The court then stated that the US’s interpretation would render the IEEPA unconstitutional because it provides that the president may “regulate . . . exportation” and the Constitution prohibits export taxes. And finally, the court explained that a nonbinding case cited by the US was not compelling because courts’ approach to statutory interpretation has since changed, the case was interpreting the TWEA, and the president’s IEEPA powers were designed to be more limited in scope than those of the TWEA.

The preliminary injunction granted by the DC court only applies to the two plaintiffs, and the court stayed its operation for fourteen days to allow for appellate review. The same day, the US filed a notice of appeal to the United States Court of Appeals for the District of Columbia Circuit.

After these court decisions, the Trump administration has stated that they will not back down on their tariff policies without a fight, calling the decisions a mere “hiccup” in President Trump’s plan caused by “activist judges.” The administration further indicated that they are operating on the assumption that the appellate courts will uphold the tariffs and that they are therefore pressing forward on negotiations. And if they do lose on appeal, the administration plans on using other statutes to pursue President Trump’s tariff agenda.

What's Next?

As of now, it is unclear how, if, and when this will come to some sort of conclusion. Will the tariffs remain in place? Will countries successfully negotiate exclusions or effectuate other deals? Or will the appellate courts affirm that the IEEPA does not authorize the president to impose tariffs? Time, politics, and forthcoming appellate court decisions will hold the answers. Stay tuned. As this continues, the Adams & Reese Global Trade & Transportation Team will continue to monitor the situation.

FOOTNOTES

[1].     Fact Sheet: U.S.-UK Reach Historic Trade Deal, White House (May 8, 2025), https://www.whitehouse.gov/fact-sheets/2025/05/fact-sheet-u-s-uk-reach-historic-trade-deal/fact-sheets/2025/05/fact-sheet-u-s-uk-reach-historic-trade-deal/

[2].     Exec. Order No. 14,195, 90 Fed. Reg. 9121 (Feb. 7, 2025); Exec. Order No. 14,200, 90 Fed. Reg. 9277 (Feb. 11, 2025); Exec. Order No. 14,228, 90 Fed. Reg. 11463 (Mar. 7, 2025); Exec. Order No. 14,899, 90 Fed. Reg. 14899 (Apr. 2, 2025); Exec. Order No. 14,257, 90 Fed. Reg. 15041 (Apr. 7, 2025); Exec. Order No. 14,259, 90 Fed. Reg. 15509 (Apr. 14, 2025); Exec. Order No. 14,266, 90 Fed. Reg. 15625 (Apr. 15, 2025).

[3].     Joint Statement on U.S.-China Economic and Trade Meeting in Geneva, White House (May 12, 2025), https://www.whitehouse.gov/briefings-statements/2025/05/joint-statement-on-u-s-china-economic-and-trade-meeting-in-geneva/

[4].     Exec. Order No. 14,298, 90 Fed. Reg. 21831 (May 21, 2025).

[5].     Proclamation, Adjusting Imports of Aluminum and Steel into the United States (June 3, 2025).

[6].     See U.S. Const. art I, § 8, cl. 1 (vesting in Congress the exclusive powers to “lay and collect Taxes, Duties, Imposts and Excises”).

[7].     See H. Rep. No. 95-459 (1977); S. Rep. Np. 95-466 (1977).

[8].     50 U.S.C. §§ 1701-1702.

[9].     Exec. Order No. 14,193, 90 Fed. Reg. 9113 (Feb. 7, 2025); Exec. Order No. 14,194, 90 Fed. Reg. 9117 (Feb. 7, 2025); Exec. Order No. 14,195, 90 Fed. Reg. 9121 (Feb. 7, 2025).

[10].    Exec. Order No. 14,257, 90 Fed. Reg. 15041 (Apr. 7, 2025).

[11].    Complaint for Declaratory & Injunctive Relief, Webber v. U.S. Dep’t of Homeland Sec., No. 25-26 (D. Mon. Apr. 4, 2025).

[12].    Complaint for Injunctive & Declaratory Relief, Emily Ley Paper, Inc. v. Trump, No. 25-464 (N.D. Fla. Apr. 3, 2025).

[13].    Complaint for Declaratory & Injunctive Relief, California v. Trump, No. 25-3372 (N.D. Cal. Apr. 16, 2025).

[14].    Complaint & Requests for Preliminary Injunction & Injunction, Barnes v. United States, No. 25-43 (Ct. Int’l Trade Feb. 3, 2025) (later dismissed for lack of standing); Complaint, V.O.S. Selections, Inc. v. Trump, No. 25-66 (Ct. Int’l Trade Apr. 14, 2025); Complaint, Oregon v. Trump, No. 25-77 (Ct. Int’l Trade Apr. 23, 2025); Complaint, Princess Awesome, LLC v. U.S. Customs & Border Prot., No. 25-78 (Ct. Int’l Trade Apr. 24, 2025).

[15].    Complaint for Declaratory & Injunctive Relief, Learning Res., Inc. v. Trump, No. 25-1248 (D.D.C. Apr. 22, 2025).

[16].    Emily Ley Paper, Inc. v. Trump, No. 25-464, 2025 WL 1482771 (N.D. Fla. May 20, 2025); Webber v. U.S. Dep’t of Homeland Sec., No. 25-26, 2025 WL 1207587 (D. Mont. Apr. 25, 2025), appeal docketed, No. 25-2717 (9th Cir. Apr. 28, 2025).

[17].    Learning Res., Inc. v. Trump, No. 25-1248, 2025 WL 1525376 (D.D.C. May 29, 2025), appeal docketed, No. 25-5202 (D.C. Cir. May 30, 2025).

[18].    Order Re: Motion to Transfer, California v. Trump, No. 25-3372 (N.D. Cal. June 2, 2025).

[19].    V.O.S. Selections, Inc. v. United States, No. 25-66, 2025 WL 1514124 (Ct. Int’l Trade May 28, 2025) (per curiam).

[20].    V.O.S. Selections, Inc. v. United States, No. 2025-1812, 2025 WL 1527040 (Fed. Cir. May 29, 2025) (per curiam).

[21].    Learning Res., Inc., 2025 WL 1525376.

[22].    Id. at *6 (quoting 28 U.S.C. § 1581(i)(1)(B)).