Overview

Supreme Court Strikes Down IEEPA Tariffs

On February 20, 2026, the Court issued its decision in Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections, Inc., two consolidated appeals concerning tariffs President Trump had imposed under IEEPA. In an opinion authored by Chief Justice Roberts, the Court held that IEEPA does not give the president authority to impose tariffs. Chief Justice Roberts was joined in the majority opinion by Justices Sotomayor, Kagan, Gorsuch, Barrett, and Jackson, though the justices differed in their reasoning across several parts of the opinion. Justices Thomas, Kavanaugh, and Alito dissented.

The core of the majority's reasoning was textual. IEEPA's list of authorized presidential actions makes no mention of tariffs or duties, an omission that the Court found notable given the specific and significant powers Congress did enumerate. The Court reasoned that had Congress intended to convey the distinct and extraordinary power to impose tariffs, it would have done so expressly, as it has consistently done in other tariff statutes. The Court held that IEEPA's key phrase, on which the government relied, says nothing about imposing tariffs or taxes; it authorizes the president, upon declaring a national emergency, to "regulate" the "importation" of foreign goods. The Court found that the meaning of "regulate," both in common parlance and as Congress uses it, does not encompass taxing. The administration's broader argument — that wartime precedents and the statute's predecessor supported a tariff power — was also rejected. The Court concluded that the president lacks inherent peacetime authority to impose tariffs, and that the attenuated chain of inferences from wartime precedents could not support a reading of IEEPA that includes the distinct power to levy tariffs.

The decision struck down all tariffs imposed under the statute, including the "Liberation Day" tariffs, and returned the case to the U.S. Court of International Trade to address the question of refunds. On the same day as the Supreme Court decision, President Trump issued an executive order stating that IEEPA tariffs "shall no longer be in effect and, as soon as practicable, shall no longer be collected," and U.S. Customs and Border Protection issued instructions to halt collections by the end of February 23, 2026. All IEEPA-based tariffs terminated at 12:00 a.m. eastern time on February 24, 2026.

Significance and Impact

The financial stakes of the ruling were substantial on multiple dimensions. The Tax Foundation estimated that IEEPA tariffs had raised more than $160 billion for the federal government through February 20, 2026, and would have raised $1.4 trillion from 2026 through 2035. The ruling effectively shielded U.S. taxpayers from that major tax increase and erased nearly three-fourths of the new tariff revenue the Trump administration had anticipated. On the other side of the ledger, the decision effectively invalidated billions of dollars in tariffs collected under IEEPA authority, potentially opening the door to an estimated $175 billion in refunds for affected businesses.

The refund question quickly became the ruling's most complex practical consequence. Neither the Supreme Court's decision nor the executive order revoking the IEEPA tariffs addressed refunds, leaving the issue to renewed proceedings before the U.S. Court of International Trade, where importers may need to pursue administrative remedies and litigation amid continued uncertainty. According to the government, importers had deposited or paid IEEPA-based duties on over 53 million entries, and as of March 4, 2026, about 20.1 million of those entries remained unliquidated. On March 4, 2026, the Court of International Trade ordered CBP to stop collection of IEEPA-based tariffs and reverse IEEPA-based tariffs that had been assessed but not yet paid by importers. Nearly 2,000 importers had filed cases at the Court of International Trade challenging the IEEPA tariffs and seeking refunds while the Supreme Court case was pending.

Beyond the refund question, the ruling significantly reshaped the tariff landscape. The IEEPA ruling reduced the weighted average applied tariff rate on all imports from 14.9 percent to 8.2 percent under the remaining Section 232 tariffs. While the ruling struck down the IEEPA tariffs, it did not affect the industry-specific Section 232 tariffs imposed by President Trump, which cover products including steel, aluminum, autos, and heavy trucks.

Reactions and Debate

The administration's public response combined legal compliance with defiance. The Trump administration made clear it would use other authorities to advance its tariff agenda; Treasury Secretary Bessent had stated in December 2025 that the administration could "recreate the exact tariff structure" with other tariff authorities if the Supreme Court struck down the IEEPA tariffs. True to that promise, the White House acted within hours of the ruling. Within hours, the White House issued three presidential actions: one ending the IEEPA tariff orders, one reimposing tariffs under Section 122 of the Trade Act of 1974, and one continuing the suspension of de minimis treatment. Trump imposed a 10 percent tariff on nearly all countries under Section 122, effective February 24, 2026, applying to an estimated $1.0 trillion of annual imports.

Critics of the original tariff program viewed the ruling as a necessary reassertion of constitutional boundaries. The Washington Legal Foundation, which participated as amicus curiae, had argued that IEEPA gives the president no legal basis to impose tariffs, and that the administration's reading to the contrary violated the major questions canon. The Tax Foundation described the ruling as "a welcome rebuke of President Trump's overreach of executive authority." Supporters of the administration's trade policy argued that the goals behind the tariffs remained legitimate and that other statutory authorities provided ample tools to pursue them. The political valence of the ruling was sharpened by the unusual ideological composition of the majority: the six-justice coalition spanned the Court's liberal bloc and several of its conservative members, making the decision difficult to characterize as partisan.

The de minimis question added a further layer of controversy. The president had used IEEPA to remove the de minimis exception for low-value imports prior to its statutory elimination in 2027; following the Supreme Court's decision, the president issued a new executive order on February 20, 2026, again affirming that the de minimis exception was no longer available, still relying on IEEPA. That issue remained subject to litigation at the Court of International Trade.

Outlook

The ruling did not end the administration's tariff program so much as it forced its reorganization. The Section 122 tariff that replaced the IEEPA tariffs expired after 150 days, on July 24, 2026. Separately, the Court of International Trade ruled on May 20, 2026, that the 10 percent tariffs established under Section 122 are also invalid. The administration has continued to expand its use of Section 232 and Section 301 authorities. New Section 301 tariffs apply to an estimated $949 billion of annual imports. The administration also has ongoing Section 232 investigations that could lead to additional tariffs on pharmaceuticals, pharmaceutical ingredients, and medical devices.

The refund process remains the most consequential unresolved matter for businesses. The Court of International Trade is requiring CBP to issue regular status updates on its progress toward a refund system, but the sheer volume of affected entries means resolution is likely to take considerable time and may require additional judicial intervention. The decision has created significant uncertainty for businesses on a host of issues, including how the tariff refund process will work, potential litigation over these refunds, and which new tariffs may be unveiled in the coming months.

More broadly, the ruling established a durable limit on executive trade authority that will shape litigation over any future emergency-based trade actions. The Court's reasoning — that Congress must speak clearly when delegating an extraordinary power like the authority to tax imports — sets a high bar for future administrations seeking expansive readings of economic emergency statutes. Whether Congress chooses to respond by legislating new, explicit tariff authority remains an open question. For now, the administration's trade agenda has continued through alternative statutory channels, though each has faced its own legal tests. The overall tariff burden on American importers and consumers remains elevated, even as the specific instrument the administration relied on most heavily has been permanently removed from the toolkit.