Customs Trade Update

On May 28, the U.S. Court of International Trade ruled that some tariffs under the International Emergency Economic Powers Act (IEEPA)—including those related to Fentanyl and reciprocal trade—are illegal.

For now, U.S. Customs and Border Protection (CBP) will continue to collect these tariffs until a formal order says otherwise. It’s still unclear if refunds will be given or how they would work.

For more details, please read below. If you have any questions or are thinking about changes to your supply chain, please contact your Yusen Logistics representative or email us at solutions@us.yusen-logistics.com and a member of our team will contact you promptly.
 

IEEPA Tariffs Ruled Illegal

On May 28th, the U.S. Court of International Trade (CIT) issued a unanimous 49-page ruling>> declaring the IEEPA tariffs illegal. The Trump Administration has already filed an appeal>> with the Federal Circuit. The ruling concerns two sets of IEEPA-related tariffs:

• Fentanyl tariffs (implemented in February), imposing a 20% tariff on Chinese imports, 25% on Canadian and Mexican imports, and 10% on certain energy products and potash.
• Reciprocal tariffs (introduced in April), currently set at 10% for most countries until early July, with China maintaining a 10% rate until August (previously as high as 125% for China).

Key Findings of the CIT

The three presiding judges—two appointed by Republican presidents (Reagan & Trump) and one by a Democratic president (Obama)—determined the IEEPA tariffs were unlawful for the following reasons:

• Scope of Presidential Authority --While the IEEPA statute allows the President to “regulate” importation, historical context does not support an interpretation granting unrestricted power to impose tariffs or taxes on imports.
• Lack of Extraordinary Threat Justification-- The fentanyl tariffs do not directly address an “unusual and extraordinary threat,” as required by IEEPA. Instead, they function as leverage in trade negotiations with China, Canada, and Mexico rather than tackling the specific fentanyl crisis.
• Uniformity in Application -- The CIT ruled that the IEEPA tariffs must be declared unlawful for all importers, not just the plaintiffs, ensuring consistency across trade regulations.
   

Implications for Importers

Although this ruling is favorable for importers—the parties responsible for paying these tariffs—the following factors must be considered:

• Government Request for Stay -- This evening, the government formally requested the CIT>> to stay (pause) execution of its ruling pending resolution of the appeal. Plaintiffs have until June 18 to respond, though a decision could come sooner. If granted, this would preserve the status quo until the appeals process concludes.
• Possible Appeal Timeline -- Unless the appeals court or Supreme Court fast-tracks the case, the appeals process will likely take 1 to 2 years. If the CIT agrees to a stay, the government will continue collecting the IEEPA tariffs during the appeals process, meaning importers may need to keep paying these tariffs for another year or two. The CIT initially ordered the government to implement the ruling (e.g., via CSMS messages) within 10 days, but CBP is unlikely to halt tariff collection unless the CIT denies the government’s stay request.
• Refunds Are Not Guaranteed -- The CIT did not order refunds for all importers; it merely ruled the tariffs unlawful. While plaintiffs had requested refunds as part of their complaint, today's ruling does not explicitly grant them. Given the financial stakes, CBP is unlikely to voluntarily refund tariffs—even if the government loses its appeals. Importers may need to file individual refund lawsuits, although these refunds could possibly be facilitated using Protests and Post Summary Corrections (PSCs). Importers should consult customs counsel to determine the best strategy for preserving their refund rights.
   

Impact on Other Tariffs

The ruling only applies to IEEPA tariffs—it does not affect Section 232 tariffs (autos, auto parts, aluminum, steel) or Section 301 tariffs. Whether this decision influences the appeals court’s ruling on Section 301 tariffs—specifically List 3 and List 4A—remains uncertain. Notably, while the appeals court has deliberated on Section 301 tariffs for over five months, the CIT disposed of the IEEPA tariff issue in less than two weeks.

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