The Death of IEEPA Tariffs? What the Court Ruling Means & What Trump Will Do Next.

On May 28, 2025, the U.S. Court of International Trade (CIT) delivered a landmark ruling that declared former President Trump's use of the International Emergency Economic Powers Act (IEEPA) to impose 10% universal tariffs and 30% tariffs on China unconstitutional. The decision strikes at the core of the executive’s unilateral trade war authority and reshapes the battlefield for US tariff policy heading into the second Trump administration.

The court ruled that the Trump administration’s global tariffs, imposed under IEEPA without Congressional authorization, violated constitutional separation of powers and exceeded the scope of the statute. The key legal findings:

• IEEPA is not a tariff tool: The court made clear that IEEPA is meant for national emergencies related to foreign assets and financial threats, not for managing trade balances or pressuring foreign governments.
  

• Blanket tariffs DOES NOT CONSTITUTE a national emergency response: The ruling emphasized that trade deficits, supply chain imbalances, and geopolitical tensions do not constitute the “unusual and extraordinary threats” required under IEEPA.
  

• Immediate consequences: The court vacated the tariff orders, permanently enjoined enforcement, and ordered that tariffs collected under IEEPA must be refunded, unless the government secures a stay pending appeal.
  

This decision invalidates the legal backbone of Trump's signature 10% "baseline tariff" policy and his retaliatory framework against China, Mexico, and other countries.

However, for now the US can still collect its 10% "baseline tariffs." How, given the ruling?

The administration has filed a formal appeal to the Federal Circuit Court of Appeals, as confirmed by their May 28 Notice of Appeal. Their next step is to seek a stay of enforcement of the ruling. If granted, a stay would temporarily suspend the court’s injunction, allowing the administration to continue collecting the 10% and 30% tariffs, delay billions in potential refunds, and maintain negotiating leverage while transitioning to a new statutory authority such as Section 232 or 301.

To secure a stay, the government must convince the court that (1) it has a fair chance of succeeding on appeal, (2) it would suffer irreparable harm without the stay, (3) the harm to others would be limited, and (4) the stay aligns with the public interest. While Trump’s legal case on appeal is weak, the equities favor a stay: issuing massive refunds, disrupting customs enforcement, and altering trade strategy midstream all pose serious national and economic risks.

Historically, courts often grant stays in high impact policy cases involving national security, international trade, or fiscal harm. Legal observers estimate a 70-85% likelihood that the stay is granted thus buying Trump time to legally reissue tariffs under a different authority and keeping his trade policy intact through most of his term.

The IEEPA ruling does however removes Trump’s fastest, broadest tool but it does not leave him powerless. His team has several legally viable alternatives, already outlined in strategic blueprints by advisors like Stephen Miran and Scott Bessent with some possible outcomes including but not limited too,

One additional possibility being discussed by analysts, including those at Goldman Sachs, is the use of Section 122 of the Trade Act of 1974 (19 U.S.C. § 2132). This little used statute allows the president to impose up to 15% blanket tariffs on all imports for a maximum of 150 days if there's a BoP (Balance of Payment) crisis.

Section 122 does not require an investigation, nor any findings by a federal agency. However, it has never been used, and once invoked, the tariffs must run the full 150 day course and cannot be adjusted or terminated early. It's also an extremely blunt tool, tariffs under Section 122 must be universal and cannot be tailored by country or product.

While Section 122 may be appealing as a short-term patch, it lacks the durability, flexibility, and legal resilience of Sections 232 and 301. For this reason, most legal experts and administration aligned strategists still view 232 and 301 as the preferred long term options. Another option under consideration is Section 338 of the Tariff Act of 1930, which allows the president to impose tariffs of up to 50% on imports from countries that discriminate against the US. This authority, though never used, is similar to Section 301 in its retaliatory scope. However, unlike Section 301, Section 338 does not require a formal investigation, making it a faster, if more diplomatically aggressive, tool. The key limitation is that the tariff ceiling is capped at 50% and must be applied only to discrimination-based cases.

As the Council on Foreign Relations (CFR) has outlined, the president has broad but not unlimited authority to impose tariffs under several statutes delegated by Congress. Key among them:

• Section 232 (national security) allows tariffs without Congressional approval if the Commerce Department finds imports threaten US security. Courts defer heavily to the executive here.

• Section 301 (unfair trade practices) empowers the US Trade Representative to impose tariffs after a formal investigation.
  

These tools, unlike IEEPA, include procedural guardrails (investigations, findings) that courts have upheld. Importantly, presidents can tailor tariff rates by country under these statutes without running afoul of Most Favored Nation (MFN) obligations, as long as the discrimination is grounded in statutory exemptions like national security or retaliation.

This legal foundation is why most analysts now expect Trump to migrate his tariff structure away from IEEPA and toward 232/301. Congress could override him, but political appetite is limited. His team has also has several legally viable alternatives, already outlined in strategic blueprints by advisors like Stephen Miran and Scott Bessent.

1. Reimpose Tariffs Under Section 232 (National Security)

• Legally upheld and broadly interpreted by courts

• Trump can re-justify tariffs as necessary to protect:

  - Defense supply chains

  - Semiconductor/EV ecosystems

  - Strategic energy systems

• Enables tiered tariffs, e.g, 5% on allies, 10% on trade neutral countries, 30% on China
  

Reopen Section 301 (Unfair Trade Practices)

• Specifically targets China for:

  • IP theft

  • Subsidy distortion

  • Overcapacity (EVs, batteries, AI chips)

• Can be tailored to strategic sectors and avoids IEEPA entirely
  

3. Adopt a Tiered Tariff Framework ("Buckets")

• Classify countries by:

  • Security alliance status

  • Trade reciprocity

  • Currency manipulation

• Legally implement via 232 or 301 with published Commerce/USTR findings

• This approach mirrors the 10%/30% vision while surviving judicial review
  

4. Use IEEPA for Financial Pressure, Not Trade

• Impose user fees on interest paid to foreign holders of US Treasuries (e.g., PBOC)

• Penalize reserve accumulation that suppresses the dollar

• Targets capital flows, not goods, sidesteps IEEPA’s limitations on trade policy
  

5. Deploy a Strong Dollar Policy

• Reduce inflationary pressure from tariffs

• Encourage Treasury flows, blunt consumer costs

• Strengthens political viability of a long term tariff regime.
  

The court’s decision kills Trump’s use of IEEPA for trade, but it does not kill the trade war. What’s coming next is a strategic legal migration: from emergency based blanket tariffs to a more surgical, security and rules based framework.

If executed cleanly, Trump could still preserve his 10% tariff on the rest of the world and 30% on China by securing a legal stay and rapidly transitioning to durable statutory tools like Section 232 and 301. This approach would allow him to avoid issuing refunds, maintain economic leverage during litigation, and reestablish tariffs under stronger legal footing. Most importantly, it would restore tariff policy as a central pillar of his economic agenda ensuring that trade weaponization remains a signature feature of his presidency through 2026.