The U.S. Court of International Trade (CIT) issued a decision May 28 declaring unlawful the IEEPA fentanyl tariffs imposed on Canada, Mexico and China, and the Reciprocal tariffs imposed on all other countries. V.O.S Selections Inc. et al v. United States, Slip Op. 25-66. The court found that the International Emergency Economic Powers Act (IEEPA), the statute the President had invoked to justify these tariffs, did not provide the required statutory authority for these assessments.
The Government has already filed an appeal, and it is anticipated that an appellate court will stay the judgment order pending the outcome of all appeals. As of now, all provisions of HTSUS Chapter 99 imposing the tariffs remain in effect, and imports should be declared under the applicable tariff provisions with duty payments pending the outcome of the appeal unless a future court order says otherwise. Likewise, it is anticipated that the restrictions preventing use of the $800 de-minimis provision of 19 USC 1321 for goods subject to IEEPA tariffs will remain in effect during the appeals process.
This decision, if affirmed on appeal, invalidates all tariffs imposed under IEEPA. These include the so-called fentanyl tariffs of 20% on goods from China and 25% on non-USMCA goods from Canada and Mexico. This decision also applies to the 10% world-wide “reciprocal tariff” imposed on April 5, and the country-specific higher rates currently scheduled to go into effect on July 9.
The court’s decision in Slip Op. 25-66 does not affect any of the Section 232 tariffs on steel, aluminum, autos or their derivates. It therefore will also not affect tariffs that might be imposed resulting from on-going Section 232 investigations on timber, pharmaceuticals, semiconductors and other products. The court’s decision also does not affect the Section 301 tariffs imposed during the previous Trump administration on goods from China.
As of today, no specific action is required by importers to preserve rights to potential refunds. However, depending upon the length of an appeal and future developments, it will likely become necessary for importers to file protests after liquidation of affected entries and/or file suit in the CIT to preserve refund rights. It is recommended that importers monitor their entries and liquidation status through ACE reports or other means to ensure that timely protests are filed when needed. GDLSK will provide updates on appropriate refund procedures as the appeals process develops.
If you have any questions regarding this decision, or other tariff-related issues, please contact one of our attorneys.
