Federal courts deliver blow to Trump’s tariff authority while appeals court grants temporary reprieve, leaving billions in potential refunds hanging in the balance.
At a Glance
- Federal courts ruled Trump overstepped constitutional authority with tariffs under emergency powers
- Appeals court temporarily allows tariffs to continue while White House challenges the ruling
- Approximately $10 billion in tariff revenue collected since April 2 could be refunded if ruling upheld
- Ruling affects “reciprocal” tariffs and 10% baseline tariff but not auto, steel, or aluminum tariffs
- Importers, not consumers, would be primary beneficiaries of potential refunds
Constitutional Challenge to Presidential Tariff Authority
Two federal courts have ruled that President Donald Trump exceeded his constitutional authority by imposing sweeping tariffs using emergency powers. The U.S. Court of International Trade (CIT) determined that the International Emergency Economic Powers Act (IEEPA) does not grant the president authority to implement broad tariff policies, as the Constitution explicitly reserves commerce regulation powers for Congress. This ruling specifically impacts the “reciprocal” tariffs and 10% baseline tariff implemented by the administration but does not affect tariffs on automobiles, auto parts, steel, or aluminum imposed under Section 232 of the Trade Expansion Act.
The CIT ordered the government to cease collecting tariffs under the IEEPA within 10 days of its decision, creating significant uncertainty for importers and businesses. The ruling represents a substantial legal challenge to the administration’s trade strategy, which has relied heavily on presidential authority to implement tariff policies without congressional approval. Some legal experts suggest the administration may pursue alternative legal avenues to maintain its tariff agenda, potentially using Section 122 of the 1974 Trade Act as an alternative justification.
What’s next after “reciprocal tariffs” were struck down by the court?
If the Court of International Trade’s ruling on “reciprocal tariffs” is upheld, ALL tariffs collected since April 2nd would need to be refunded.
Based on our calculations, which assume 2024-levels of US…
— The Kobeissi Letter (@KobeissiLetter) May 29, 2025
Appeals Court Grants Temporary Stay
In a significant development, the U.S. Court of Appeals for the Federal Circuit has temporarily allowed the Trump administration to continue collecting tariffs while it appeals the trade court’s decision. This temporary stay prevents immediate disruption to the current tariff structure but leaves open the possibility of substantial refunds if the lower court’s ruling is ultimately upheld. The administration has characterized the CIT’s ruling as a “judicial coup” and is vigorously contesting the decision through the appeals process.
“This will do tremendous damage to Trump’s agenda. His whole second term seemed to be DOGE, deport, and (trade) deals.”, said Todd Tucker.
The dueling court decisions have created what some analysts call “tariff whiplash,” leaving businesses uncertain about future trade costs and potential refund eligibility. The final outcome of this legal battle could have far-reaching implications for presidential trade authority and how future administrations approach international commerce policy. The appeals process may extend for months, prolonging uncertainty for businesses that have already incorporated tariff costs into their operational budgets and pricing strategies.
"If the court's decision is ultimately upheld, importers can get their money back," a former Clinton trade official told Newsweek. https://t.co/AoehO1oX1p
— Newsweek (@Newsweek) May 29, 2025
Potential Refund Implications for Businesses
If the CIT ruling is upheld, the administration may be required to refund approximately $10 billion in tariff revenue collected since April 2. The Customs and Border Protection (CBP) has already issued guidance on how importers can request refunds for duties on exempt or lower-tariff products, acknowledging some responsibility to issue refunds for certain tariff charges if duties are reduced or rescinded. This potential refund process would primarily benefit importing businesses rather than end consumers, as there is no mechanism to ensure that refunded tariffs would translate to lower retail prices.
“I believe the court’s order should prompt CBP to suspend the liquidation of entries moving forward. This would mean that if the ruling is ultimately upheld, importers could reclaim their payments.”, said William Reinsch.
The logistics of processing potential refunds remain complex and contentious. While importers have legal grounds to pursue refunds based on the CIT decision ruling the tariffs illegal, many experts anticipate resistance from the administration. The scale of potential refunds creates fiscal challenges, and the precedent of court-mandated tariff refunds could impact how future administrations approach trade policy implementation. Businesses currently subject to these tariffs should maintain detailed records of payments to facilitate potential refund claims if the CIT ruling stands after appeals are exhausted.
