Federal Courts Weigh in on Tariffs

Federal courts weighed in on tariffs this week, acting on lawsuits filed by small businesses and a number of states—including Connecticut—challenging the Trump administration’s authority to levy tariffs.

The first—and most consequential decision—was issued May 28 by the U.S. Court of International Trade, which ruled that the tariffs the administration imposed in April were illegal.

A three-judge panel unanimously ruled the president overstepped his authority when he imposed trade sanctions using the 1977 International Emergency Economic Powers Act.

The court determined that the Constitution gave Congress the power to levy taxes and tariffs, invalidating all tariffs imposed under the IEEPA.

“The court does not pass upon the wisdom or likely effectiveness of the president’s use of tariffs as leverage,” the decision read.

“Because of the Constitution’s express allocation of the tariff power to Congress … we do not read IEEPA to delegate an unbounded tariff authority to the president.”

Temporary Stay Issued

A day later, the U.S. Court of Appeals for the Federal Circuit in Washington temporarily paused the trade court’s decision, effectively reinstating the tariffs.

The appeals court said it was giving itself time to consider the Trump administration’s appeal, directing plaintiffs in the relevant cases to respond by June 5 and the administration by June 9.

The Trump administration told the appeals court that it would seek “emergency relief” from the U.S. Supreme Court.

“The request for an immediate administrative stay is granted to the extent that the judgments and the permanent injunctions entered by the Court of International Trade in these cases are temporarily stayed until further notice,” the appeals court said in its order.

The Trump administration had earlier told the appeals court for the Federal Circuit that it would seek “emergency relief” from the U.S. Supreme Court as soon as May 30 if the ruling was not paused.

Some sector-specific tariffs, including those on steel, aluminum, and cars, were not covered by the trade court’s ruling as they were imposed under separate federal statutes.

Tariff Costs

Earlier May 29, another federal court—the U.S. District Court for the District of Columbia—also blocked the administration’s authority to unilaterally impose tariffs.

Ruling in favor of two Illinois toy importers, Judge Rudolph Contreras also said the administration had exceeded its authority.

Contreras paused his ruling for 14 days. Unlike the trade court’s ruling, which had a national impact, his decision only blocked the collection of tariffs from the two plaintiffs.

The administration’s tariff policies were expected to hike the cost of goods imported into Connecticut by an estimated $3.16 billion.

Imports from most countries face 10% levies, after the president’s April 9 announcement of a 90-day pause on the so-called reciprocal tariffs he imposed a week earlier.

Those tariff policies were expected to hike the cost of goods imported into Connecticut by an estimated $3.16 billion—a 14% increase over 2024.

CBIA’s Chris DiPentima said businesses “desperately need predictability,” as the ongoing uncertainty was disrupting supply chains, investment plans, and economic growth.

“While the intervention of the courts might get us closer to the light at the end of the tunnel, that light still seems very distant,” he said.