Federal Appeals Court Rules IEEPA Tariffs Illegal — What Happens Next? What Can I Do to Prepare?

At a Glance

• If the Supreme Court reviews the case and reverses the Federal Circuit’s decision on the merits (i.e., finding that the challenged tariffs are authorized under IEEPA or otherwise), it will direct the U.S. Court of International Trade (CIT) to enter judgment in favor of the government, and the Trump administration, absent intervention by Congress, may continue to impose the challenged tariffs.
• But if the courts ultimately strike down the challenged tariffs, the prospects and scope of retroactive relief (i.e., duty refunds) for importers that are not parties to the litigation is unclear — thus incentivizing importers to prepare for multiple potential avenues for relief, including the filing of post-summary corrections, administrative protests, or, if necessary, a separate lawsuit in the CIT.
• The White House has other statutory authority at its disposal, including Section 122 of the Trade Act of 1974, which allows the president to impose an additional 15% tariff on imports for 150 days (unless extended by Congress); and Section 338 of the Tariff Act of 1930, which allows the president to impose additional tariffs up to 50% on any country that discriminates against U.S. products.

On August 29, 2025, the U.S. Court of Appeals for the Federal Circuit (CAFC), sitting en banc, concluded in a 7-4 decision that President Trump exceeded his statutory authority under the International Emergency Economic Powers Act (IEEPA) by imposing “trafficking” tariffs on Canada, China, and Mexico and “reciprocal” tariffs on nearly all U.S. trading partners (collectively, “Challenged Tariffs”).

The case, V.O.S. Selections v. Trump (IEEPA CAFC Litigation), is headed to the U.S. Supreme Court (SCOTUS), where SCOTUS, assuming it decides to hear the case, will determine (1) whether the trial court — i.e., the U.S. Court of International Trade (CIT) — had jurisdiction to hear the case; and, if so, (2) whether the lower courts correctly determined that the Challenged Tariffs exceeded statutory authority under IEEPA.

Although the CAFC’s decision has no immediate impact on U.S. importers — the Challenged Tariffs remain in effect until at least October 14, 2025 — the CAFC’s decision has prompted questions for U.S. importers regarding its impact, the timeline for resolution, the scope of potential relief, and next steps if a retroactive refund opportunity arises.

This memorandum is intended to address five principal questions: (1) What tariffs did the CAFC strike down? (2) What happens next? (3) What happens if the plaintiffs prevail? (4) What happens if the government prevails? and (5) What can I do to prepare?

What Tariffs Did the CAFC Strike Down?

The CAFC invalidated the “trafficking” and “reciprocal” tariffs arising from five executive orders (EOs), including:

• EO 14193 (Trafficking Canada): 25% ad valorem duties on products of Canada (10% for energy products)
• EO 14194 (Trafficking Mexico): 25% ad valorem duties on all products of Mexico
• EO 14195 (Trafficking China): 10-20% ad valorem duties on all products of China
• EOs 14257 and 14266 (Reciprocal): 10-125% ad valorem duties on nearly all global imports

(collectively, “Challenged Executive Orders”).¹

What Happens Next?

Do Importers Still Need to Pay the Challenged Tariffs?

Yes. The CAFC stayed its order until October 14, 2025, a move that was intended to allow the government to seek SCOTUS review, which it did on September 3, 2025. The CAFC directed that its order will remain stayed until SCOTUS either (1) denies review or (2) grants review and issues a judgment.

Until then, absent further intervention by the courts or otherwise, importers must continue paying the Challenged Tariffs.

What Is the Timeline for a Resolution?

As referenced above, the timeline is highly dependent on whether SCOTUS grants the government’s petition for certiorari and, if so, whether SCOTUS hears the case on an expedited basis (which the government has requested).

In the normal course, the losing party (in this case, the government) files a petition for certiorari (or “cert petition”) asking SCOTUS to grant review, hear oral argument and issue a decision on the merits. On average, it takes SCOTUS roughly two months after a cert petition is filed to decide whether to grant review. And if review is granted, it would typically take several months, up until the end of June 2026, before SCOTUS would issue a decision.

However, the Trump administration has requested that SCOTUS review the IEEPA CAFC Litigation on an expedited basis. Specifically, citing the “enormous importance of quickly confirming the full legal standing of the President’s tariffs under [IEEPA] . . . and the urgent need for a swift resolution,” the government requested that SCOTUS issue a decision on the cert petition by September 10, 2025, and if granted, adopt a briefing schedule that  tees up oral argument in “the first week of November.” Per the government’s cert petition, the plaintiffs have consented to the proposed timeline.

SCOTUS has wide latitude to expedite briefing, oral argument and a decision in exceptional cases, and it may do so here. If it takes that path, it will issue an order setting an expedited schedule.

What Happens If the Plaintiffs Prevail?

If the courts conclude that the Challenged Tariffs exceed statutory authority under IEEPA, the prospects for retroactive relief (i.e., duty refunds) for importers that are not parties to the litigation is contingent on answers to the following questions:

Will any relief granted in the IEEPA CAFC Litigation apply to nonparties or will nonparties have to file their own suit?

This is an open question. A key issue in the IEEPA CAFC appeal, and a primary point of disagreement between the CAFC and the CIT, was whether any remedy granted should apply on a nationwide basis or only to the plaintiffs. While the CIT issued a nationwide injunction, the CAFC vacated that injunction and remanded this issue to the CIT for further consideration. Assuming success on the merits, it may be necessary for importers seeking refunds to file their own suit, depending on how this issue is ultimately resolved. However, as we discuss below, importers should take steps to preserve their rights in the interim.

Are the courts authorized to order retroactive duty refunds?

Yes, although the scope of any judicial relief remains unclear. If the plaintiffs prevail, the government will likely argue — as it did via a recent letter to the CAFC, dated August 11, 2025 — that a court order directing U.S. Customs and Border Protection (CBP) to issue retroactive refunds would result in severe economic consequences and that any relief should be applied prospectively.²

Does the CIT’s authorization to order retroactive duty refunds extend to importers that are not parties to the litigation?

Yes, but it is unlikely that nonparty importers will automatically receive duty refunds if the plaintiffs prevail. It is possible that CBP will establish an administrative refund process, either announced through the Cargo Systems Messaging Service (CSMS) or through a new regulatory process.

What are the possible mechanisms for nonparty importers to obtain a duty refund?

In analogous scenarios, CBP has allowed nonparty importers to pursue refunds through two administrative mechanisms:

1. Post-Summary Corrections (PSCs)
   

   The importer of record (IOR) may file, in the case of unliquidated entries, a PSC. Generally, a PSC must be filed within 300 days of entry and no later than 15 days before liquidation.

   Practical Considerations

   Given that a resolution of the IEEPA CAFC Litigation is likely several months away, the PSC option may be unavailable for entries made in early 2025.

    

2. Administrative Process
   

   In the case of liquidated entries, an IOR may file an administrative protest within 180 days of liquidation.³ If CBP denies the protest (either affirmatively or via a deemed denial), the IOR’s right to seek judicial review at the CIT (via the filing of a summons within 180 days after protest denial) is preserved under 28 U.S.C. § 1581(a).

   Practical Considerations

   If the plaintiffs prevail, CBP will likely argue that no duty refund is required for liquidated entries (although this issue may be mooted by a court order directing CBP to reliquidate).

   Moreover, if the plaintiffs prevail, it is likely that even if CBP denies a refund request administratively, an importer may still recover duty refunds by filing a separate lawsuit pursuant to the CIT’s jurisdiction under 28 C.F.R. § 1581(i). Under the most conservative approach for avoiding a statute of limitations defense, an importer must file a summons and complaint in the CIT within two years after the Challenged Executive Orders were issued.

It is important to underscore, however, that only the IOR will qualify for refunds, thus creating complexities in scenarios where, for example, informal entries are handled by intermediaries such as express consignment operators, who often serve as nominal consignee, and the IOR.

What Happens If the Government Prevails?

If SCOTUS reviews the IEEPA CAFC Litigation and reverses the CAFC’s decision on the merits (i.e., finding that the Challenged Tariffs are authorized under IEEPA or otherwise), SCOTUS will direct the CIT to enter judgment in favor of the government, and the Trump administration, absent intervention by Congress, may continue to impose the Challenged Tariffs.

However, there is a possibility that SCOTUS, without deciding the merits, finds that the CIT lacked jurisdiction to hear the case. In a similar and pending challenge to the IEEPA tariffs, the U.S. District Court for the District of Columbia concluded that the CIT lacks jurisdiction because IEEPA does not delegate to the president any authority to impose tariffs.⁴ If SCOTUS reaches the same conclusion, it will direct the CIT to dismiss the IEEPA CAFC Litigation; but its premise (i.e., that jurisdiction is lacking because IEEPA does not authorize the imposition of tariffs), would all but guarantee, absent intervention by Congress, that plaintiffs in similar challenges to the IEEPA tariffs currently pending in other federal courts will prevail on the merits.

What Can I Do to Prepare?

Identify Entries

Identify affected entries by reviewing import data available through the Automated Commercial Environment (ACE).

Monitor Liquidation Dates

Track liquidation dates for all affected entries. Liquidation occurs approximately 314 days after entry. And as noted above, an importer must file an administrative protest within 180 days of liquidation. Once an entry is liquidated and the liquidation becomes final, CBP will likely argue that no refund of duties paid is required.

Practical Considerations: For unliquidated entries, the IOR may request extensions of liquidation, which CBP may grant for up to three years, but 19 C.F.R. § 159.51 states that liquidation shall not be suspended simply due to pending liquidation. Thus, we recommend that importers consider the filing of protests for liquidated entries if the IEEPA CAFC Litigation has not been resolved within 180 days from liquidation (i.e., the protest deadline). Within the protest, the importer may request that CBP stay its decision on the protest pending the outcome of the IEEPA CAFC Litigation.

Document Thoroughly

For all entries where an exemption to IEEPA was claimed (e.g., on-the-water, informational materials, Chapter 98), ensure that the basis for the claimed exemption is well documented, given that a potential IEEPA refund process will likely draw additional scrutiny from CBP.

Review Existing Commercial Agreements

If an existing commercial agreement includes a cost-sharing mechanism for the payment of tariffs (e.g., a buyer directly reimburses the IOR for a portion of IEEPA tariffs paid), ensure that the commercial agreement accounts for a scenario where a duty refund becomes available.

Prepare for Tariffs to Continue

As noted above, even if the courts ultimately strike down the Challenged Tariffs, the outcome will have no direct impact on other tariffs imposed under IEEPA (e.g., 40% tariff on Brazil-origin goods and 25% “secondary” tariffs on India-origin goods); nor U.S. tariffs imposed under non-IEEPA legal authority (e.g., tariffs under Section 232 and Section 301 of the Trade Act of 1974).

Moreover, the White House has other statutory authority at its disposal, including Section 122 of the Trade Act of 1974, which allows the president to impose an additional 15% tariff on imports for 150 days (unless extended by Congress); and Section 338 of the Tariff Act of 1930, which allows the president to impose additional tariffs up to 50% on any country that discriminates against U.S. products.

For More Information

Faegre Drinker’s customs and international trade team is monitoring and analyzing new developments. For further information you may contact the authors.