Summary
Today, the Supreme Court dealt a heavy blow to President Trump’s trade agenda, concluding that the International Emergency Economic Powers Act (IEEPA) does not confer authority on the President to impose tariffs. While the President has other narrower tariff authority at his disposal, President Trump envisioned IEEPA as authorizing tariffs that were imposed, lifted, raised, lowered, expanded, or contracted at the President’s whim. The Court disagreed, and President Trump will look for alternatives to support one of his marquee foreign policy and economic initiatives. The Court’s opinion does not address the thorny issue of refunds for the trillions of dollars of tariffs already collected, but it seems plain that refunds must be available…provided that the party who actually paid the tariffs comes forward.
The Upshot
- The Supreme Court has overturned the tariffs imposed by President Trump under the IEEPA.
- In a concise, narrow opinion authored by Chief Justice Roberts, the Court concluded that the IEEPA’s grant of authority to the President to “regulate” trade is not sufficiently explicit to delegate Congress’ “birth-right power to tax within the quotidian power to ‘regulate.’” The Court affirmed the decision of the Federal Circuit, which had affirmed the decision of the Court of International Trade.
- Unsurprisingly, the Trump administration voiced strong disappointment with the decision. The administration will look to other trade authority to implement its trade agenda, and importantly, to salvage bilateral trade agreements entered into in order to avoid the now-nullified IEEPA tariffs. President Trump immediately indicated that he would invoke Section 122 of the Trade Act of 1974 to impose a 10% global tariff to mitigate the loss of the IEEPA tariffs. Section 122 allows for the imposition of tariffs up to 15% for no more than 150 days (unless extended by Congress).
- The Department of Commerce has several open investigations that could result in new tariffs under Section 232 for sectors including polysilicon and semiconductors, aircraft, drones, wind turbines, PPE, medical devices, robotics and industrial machinery, and pharmaceuticals. These investigations will likely multiply.
- Companies that have paid IEEPA tariffs directly or indirectly should consult counsel to determine how to pursue a refund from the government or from other trade partners.
The Bottom Line
Today’s decision strips the Trump administration of its preferred weapon in the trade war it has been waging since last spring. The trade landscape will remain very cloudy as President Trump decides how to replace these IEEPA tariffs. Meanwhile, companies are lining up for refunds.
On February 20, 2026, the Supreme Court issued its decision in Learning Resources, Inc. v. Trump, No. 24-1287. In a concise, narrow opinion authored by Chief Justice Roberts, a 6-3 majority of the Court concluded that Congress did not delegate its authority to impose tariffs to the President under the International Emergency Economic Powers Act (IEEPA). Therefore, the tariffs imposed by the Trump administration based on the IEEPA exceeded President Trump’s authority and are invalid. These tariffs include the tariffs imposed on Canada, Mexico, and China for failing to suppress trafficking in illegal drugs and the so-called “Reciprocal Tariffs” imposed on all U.S. trading partners to address persistent trade deficits. The Trump administration perceived these tariffs as a very nimble weapon that could be adjusted with little or no notice to suit the immediate priorities of the administration.1 But the Court’s opinion could not be more clear: “IEEPA does not authorize the President to impose tariffs.” Slip op. at 20.2
As is his wont, the Chief Justice was surgical in the scope and rationale of the decision, leaving some aspects of the President’s authority undisturbed. The Court did not limit the President’s ability to act under the IEEPA other than by imposing tariffs. Id. at 16. The Court did not evaluate whether the President’s grounds for invoking IEEPA’s powers rise to the level of “emergency” contemplated by Congress. In fact, the Court offers an odd disclaimer at the end of the opinion that “[w]e claim no special competence in matters of economics or foreign affairs”–an oblique nod, perhaps, to Executive Branch primacy in deciding what is an “emergency.” Id. at 20. Even more significantly, the Court seemed to go out of its way to confirm that Section 232 of the Trade Expansion Act of 1962 authorizes the President to impose tariffs, within the considerable procedural and substantive constraints of that statute. Id. at 9 n.2.
The Trump administration still has many tools in its toolbox to pursue its trade policy. President Trump immediately indicated that he would invoke Section 122 of the Trade Act of 1974 to impose a 10% global tariff to mitigate the loss of the IEEPA tariffs. Section 122 allows for the imposition of tariffs up to 15% for up to 150 days (unless extended by Congress). The Commerce Department has been laying the groundwork for expanding Section 232 tariffs to many sectors of the economy beyond the steel and aluminum tariffs now in effect. Sectors likely to be affected include timber, lumber, and wood products; copper and copper products; semiconductors and semiconductor manufacturing equipment; pharmaceuticals and pharmaceutical ingredients; processed critical minerals and downstream products; passenger cars and trucks; commercial aircraft and jet engines; wind turbines; drones; robotics and industrial equipment; and the parts and components of all of these categories.
Similarly, the U.S. Trade Representative has a number of investigations pending under Section 301 of the Trade Act of 1974 which could result in the imposition of tariffs or other trade actions. The administration could also take further non-tariff action under IEEPA. And, while the IEEPA tariffs are nullified, Congress could effectively ratify those tariffs by adopting them into law, and giving the President the authority to waive the tariffs in favor of bilateral trade agreements.
It will take several months to get clarity, but we expect that the administration will continue to pursue bilateral “zero-for-zero” trade agreements, and will brandish all trade weapons at its disposal in that cause, and in the ongoing discussions with Canada and Mexico regarding the U.S.-Mexico-Canada Agreement. For U.S. trade partners, negotiated agreements will continue to offer the best chance for certainty and stability in U.S. trade relations, so we expect that bilateral negotiations will continue. However, in the meantime, today’s decision will contribute to the prevailing precariousness of the trade environment.
The Court did not address the question of refunds for IEEPA tariffs paid. There are dozens (possibly hundreds) of refund claims pending in the Court of International Trade (CIT) that may begin to move forward now that the CIT’s May 2025 decision overturning the IEEPA tariffs has been affirmed. As the CIT noted in a decision in one of those cases, that court has jurisdiction to unwind tariff payments even after they have been liquidated, and the Trump administration’s lawyers have stated unequivocally that the administration will not contest the CIT’s ability to do so. However, a party’s eligibility for a refund, and the best procedure for pursuing a refund, requires consultation with counsel and consideration of the specific facts around the tariff payment.
If you require counsel on pursuing a refund, or the potential for adverse trade action affecting your company, please contact the author or another Ballard Spahr lawyer.
1: The Court cataloged some of the “several increases, reductions, and other modifications” made to the tariffs by the President. Slip op. at 3.
2: While the majority opinion was only 20 pages long, other justices wrote lengthy concurrences (Gorsuch, Barrett, and Kagan) and dissents (Kavanagh and Thomas) debating the merits and limitations of the “major questions doctrine.” While this doctrine is a topic of compelling interest to Supreme Court scholars, it is worth noting that the volume of ancillary opinions (over 140 pages total) certainly delayed the announcement of the majority’s decision, extending the unauthorized life of the IEEPA tariffs by months and billions of dollars.
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