Supreme Court Strikes Down IEEPA Tariffs—Key Takeaways and Implications for Importers

On February 20, 2026, the United States Supreme Court issued its landmark decision in Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections, Inc., holding in a 6-3 ruling that the International Emergency Economic Powers Act (“IEEPA”) does not authorize the President to impose tariffs, and invalidating both the “Reciprocal Tariffs” first imposed in April 2025 on “Liberation Day” and the “Trafficking and Immigration Tariffs” relating to fentanyl. The decision, authored by Chief Justice John G. Roberts Jr. and joined by Justices Sotomayor, Kagan, Gorsuch, Barrett, and Jackson, represents a significant check on executive authority and immediately calls into question the legality of tariff revenues collected over the past year. For businesses that have paid tariffs imposed under IEEPA, the ruling opens the door to potential refunds, though the path to recovering those payments remains uncertain.

This alert summarizes the Court’s decision, explains its implications for tariff refunds, identifies the tariffs that remain in effect, and outlines recommended next steps for affected businesses.

The Supreme Court Decision

The Supreme Court in Learning Resources concluded that the power to impose tariffs is “very clear[ly] . . . a branch of the taxing power” that Article I, Section 8 of the Constitution vests exclusively in Congress.¹ While some tariffs are not directly implicated by the Court’s ruling following delegations of authority by Congress under other statutes, the Court rejected the Government’s reliance on IEEPA to defend the challenged duties. The Court not only struck down the Reciprocal Tariffs and the Trafficking and Immigration Tariffs in particular, but also held more broadly that “IEEPA does not authorize the President to impose tariffs.”

The Major Questions Doctrine. In the portion of the opinion joined by Justices Gorsuch and Barrett, the Chief Justice invoked the major questions doctrine, reasoning that Congress does not delegate “highly consequential power” through ambiguous statutory language. The Court emphasized that no President in IEEPA's nearly fifty-year history had ever invoked the statute to impose tariffs,² and that the “‘lack of historical precedent,’ coupled with the breadth of authority” claimed, suggested the IEEPA tariffs extended beyond the President’s “legitimate reach.” The stakes here, the Court noted, “dwarf those of other major questions cases.”

Statutory Text. In the portion of the opinion joined by Justices Sotomayor, Kagan, and Jackson, the Court held that IEEPA’s grant of authority to “regulate . . . importation” does not encompass the power to levy tariffs. IEEPA’s lengthy enumeration of specific presidential powers—to “investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit” importation or exportation—contains no mention of tariffs or duties. The Court’s opinion noted that “[t]he U.S. Code is replete with statutes granting the Executive the authority to ‘regulate’ someone or something,” yet “the Government cannot identify any statute in which the power to regulate includes the power to tax.” The Court further observed that interpreting “regulate” to include taxation would render part of IEEPA unconstitutional, because the statute also covers exportation, and the Constitution specifically bars taxes on exports.

The Dissent. Justices Kavanaugh, Thomas, and Alito dissented, arguing that tariffs are “a traditional and common tool to regulate importation” and that the President should be permitted to impose them under IEEPA. The dissent warned that the majority’s decision not only was formalistic—as it suggested comparable tariffs could be imposed under other authorities—but that it could create significant practical difficulties, including a potentially enormous refund obligation and uncertainty surrounding the trade deals the administration has negotiated with foreign governments.

Which Tariffs Are Affected

The ruling invalidates all tariffs imposed pursuant to IEEPA, which include two major categories:

Trafficking and Immigration Tariffs. These tariffs, first imposed in February 2025, placed a 25% duty on most Canadian and Mexican imports (later increased for Canada, but also later applied only to imports not subject to duty-free treatment under the United States-Mexico-Canada Agreement) and a 10% duty (later increased) on most Chinese imports. The Trafficking and Immigration Tariffs were premised on the President’s declaration that fentanyl trafficking constituted an “unusual and extraordinary threat.”

Reciprocal Tariffs. Beginning on “Liberation Day” in April 2025, the President imposed tariffs of at least 10% on imports from virtually all trading partners, with dozens of nations facing higher rates. The Reciprocal Tariffs were imposed based on the President’s declaration that persistent trade deficits constituted a national emergency.

Other Tariffs. Importantly, the decision does not directly disturb tariffs imposed under other statutory authorities. For example, product-specific tariffs on steel, lumber, auto parts, aluminum, and pharmaceuticals, which were imposed (but have not in all cases been implemented) pursuant to Section 232 of the Trade Expansion Act of 1962 (“Section 232”) remain in effect. As another example, any tariffs imposed pursuant to Section 301 of the Trade Act of 1974 (“Section 301”) also remain in effect.

Most observers believe that Section 232 and 301 tariffs are not as readily subject to legal challenge, given that these statutes expressly authorize the President to adjust imports, can be imposed only following investigative processes (conducted by, respectively, the U.S. Secretary of Commerce and the U.S. Trade Representative (“USTR”)), and have a more well-established history. However, courts will need to consider whether the Learning Resources decision, and in particular its characterization of tariffs as a form of taxation, has implications beyond IEEPA, as importers foreseeably may now be more inclined to challenge new—and, potentially, existing—tariffs.

The Refund Question

The Court’s decision did not answer what is likely to be the most consequential practical issue for importers: whether and how refunds will be issued for the estimated $175 billion or more in IEEPA tariff revenues collected by the federal government.

The Court did not address refunds. The majority opinion did not specify whether refunds must be issued, nor did it prescribe any mechanism for reimbursement (a practical challenge highlighted by the dissent). Instead, the case was remanded to the U.S. Court of International Trade (the “CIT”) to address next steps.

The CIT had previously clarified the path to refunds. On December 15, 2025, the CIT held in AGS Company Automotive Solutions v. United States that it “has the explicit power to order reliquidation and refunds where the government has unlawfully exacted duties.” This in essence means that importers are not required to file suit preemptively to preserve their right to refunds if the IEEPA tariffs were struck down. This, in turn, would mean that a broader universe of importers may in turn be eligible for refunds, as long as AGS, which remains pending in the CIT, is not overturned.

The refund mechanism remains uncertain. It is unclear whether U.S. Customs and Border Protection (“CBP”) will voluntarily process refunds administratively (including through CBP’s protest process), or whether importers will instead need to seek court-ordered relief, likely before the CIT, following the Supreme Court’s decision. Notably, CBP is an agency within the Department of Homeland Security, which is currently without funding during the partial government shutdown, raising questions about how quickly CBP will be able to announce and execute upon a refund process.

The Department of the Treasury previously stated that it “can easily cover” any tariff refunds, and U.S. Secretary of the Treasury Bessent had previously indicated that CBP would establish an administrative refund mechanism. But President Trump told reporters after the decision that he expected any refund process to be “locked up in litigation for years,” and Secretary Bessent similarly characterized the IEEPA tariff revenues as “in dispute” and suggested refund proceedings could be protracted.

Accordingly, it remains to be seen whether importers seeking refunds will be able to avail themselves of administrative remedies, versus being forced to litigate.

The scale is unprecedented. Penn-Wharton Budget Model economists estimate that IEEPA-based tariff collections total approximately $175 billion to $179 billion, a figure that exceeds the combined fiscal 2025 spending of the Department of Transportation and the Department of Justice. More than 1,000 businesses had already sought tariff refunds before the ruling was issued, a number that is expected to grow significantly.

The Administration’s Response: New Tariffs Under Alternative Authorities

Within hours of the decision, President Trump signed a proclamation imposing a new 10% global tariff under Section 122 of the Trade Act of 1974, effective February 24, 2026. On February 21, the President announced his intention to increase these tariffs to 15%. As with the prior IEEPA tariffs, tariffs imposed pursuant to Section 122 “stack”—i.e., they are generally in addition to, rather than instead of, any preexisting duties. The Section 122 tariffs will apply to virtually all imports, except for (i) imports of specific categories of goods identified in annexes to the proclamation; and (ii) certain categories of transactions (e,g,, products imported under Chapter 98 of the Harmonized Tariff Schedule of the United States), which have been (under the IEEPA tariffs) and will remain (under the Section 122 tariffs) subject to duty-free treatment.

Section 122 authorizes a “temporary import surcharge” to address balance-of-payments deficits but is expressly limited to a 15% maximum rate and a 150-day duration, after which Congress must act. Unlike IEEPA—which was an attractive tool for the President because, prior to the decision, it allowed the President to impose tariffs immediately and indefinitely—Section 122 tariffs require affirmative congressional approval to continue beyond 150 days. Accordingly, these tariffs may prove to be only a short-term replacement for the invalidated IEEPA tariffs.

Potentially for that reason, the administration has also announced plans to launch “accelerated” Section 301 trade investigations of “most major trading partners.” Should these investigations lead to formal determinations by USTR that other countries’ trade practices are “unjustifiable” or “discriminatory,” further tariffs might be imposed. The administration may also pursue tariffs under Section 232 (which allows tariffs to be imposed on imports of certain products that raise national security concerns), or Section 201 of the Trade Act of 1974 (which allows temporary “safeguard” tariffs on imports that cause serious injury to domestic industries). As with Section 301 tariffs, however, both Section 232 and Section 201 tariffs can only be imposed following an investigation and subsequent formal findings and recommendations. Another mechanism that has been discussed is Section 338 of the Tariff Act of 1930, which authorizes duties on countries determined to unreasonably discriminate against U.S. trade, though this Depression-era statute has never been used to impose tariffs.

Secretary of the Treasury Bessent has stated that combining Section 122, Section 232, and Section 301 tariffs “will result in virtually unchanged tariff revenue in 2026,” which appears to signal the administration’s resolve to find alternative avenues to reimpose the same levels of duties that were in place under IEEPA. Those seeking to challenge the imposition of such tariffs might view the Secretary’s comments as evidence that the result of any new “investigation” was predetermined.

Recommended Steps for Affected Importers

In light of the Court’s ruling and the unresolved refund process, we recommend that clients who have paid IEEPA-based tariffs take the following steps promptly:

Continue Payments. Although President Trump signed a proclamation ordering the U.S. government to terminate the collection of IEEPA tariffs “as soon as practicable,” this could take some days to resolve. Importers who owe duties in this interim window should continue to make payments until CBP provides alternative instructions, as failure to make payments, particularly if IEEPA-related and non-IEEPA duties are both owing, could result in penalties or liquidated damages claims.

Preserve Records. Compile and preserve all records of entries subject to IEEPA tariffs, including entry summaries, duty payment records, and internal documentation of tariff cost allocation. Thorough recordkeeping will be essential for any refund claim.

Engage Counsel. Contact experienced trade counsel to discuss the most efficient path to assert a right to refunds and to evaluate the scope of potential recovery.

Utilize Administrative Mechanisms. Monitor and, where necessary, utilize existing administrative remedies—including post-summary corrections, protests, requests for extension of liquidation, and other remedies under 19 U.S.C. § 1514 and related provisions—with close attention to statutory and regulatory deadlines. Missing these deadlines could jeopardize the ability to recover tariff payments.

Monitor Forthcoming Guidance. The refund process will likely be shaped by guidance from CBP, the Department of Justice, and/or the Department of the Treasury.

Assess Exposure Under New Tariff Authorities. Evaluate the potential impact of the replacement tariffs under Section 122 and any forthcoming tariffs under Section 301 or other authorities. Companies (and even countries) that previously negotiated favorable treatment, including trade deals, should closely monitor whether those arrangements will be honored under the new tariff framework. While some counterparties may be tempted to reopen negotiations now that the IEEPA tariffs have been struck down, the potential for tariffs to be re-imposed under new authorities should be carefully assessed.

Conclusion

The Supreme Court’s decision in Learning Resources is a watershed moment in U.S. trade policy, affirming that Congress—not the President—holds the constitutional power to impose tariffs. While more limited tariffs—those that Congress has specifically delegated authority to impose—are not directly affected, the decision means that IEEPA, the statute on which this Administration has largely relied, cannot be relied upon by the President going forward.

For importers who have paid billions of dollars in duties flowing from IEEPA-related tariffs, the decision represents an opportunity to pursue potentially significant refunds. The specific steps that importers must take are currently unclear, but importers will need to take proactive steps and navigate what is expected to be a complex and potentially contentious reimbursement process. At the same time, the administration’s swift pivot to alternative tariff authorities means that the broader trade landscape remains dynamic and uncertain.

We will continue to monitor developments in the refund process, forthcoming executive actions, and any legislative responses. Please do not hesitate to reach out with questions about how this decision affects your business.