US Supreme Court Limits Presidential Tariff Powers

In a much-anticipated decision published on February 20, 2026, the US Supreme Court held that the president lacks specific authority under an emergency statute to impose tariffs on US imports, invalidating all tariffs under review.

KEY TAKEAWAYS

• The International Emergency Economic Powers Act (IEEPA) does not authorize the US president to impose tariffs.
• The opinion does not clarify how importers will obtain refunds.
• Other tariff authorities remain in effect, and the Trump administration has signaled its intent to expand programs and add additional tariffs under other programs.

Since February 2025, President Trump has imposed a variety of tariffs on imports into the United States in reliance on broad language in IEEPA, giving him authority to “regulate . . . importation or exportation of . . . any property in which any foreign county or a national thereof has any interest.”[1]

On February 20, his ability to do so was struck down by the US Supreme Court in a 6-3 decision that held unequivocally that “IEEPA does not authorize the President to impose tariffs.” The effects from such holding will be far reaching, from navigating a process to address refund requests by impacted importers, to possibly upending the framework trade agreements negotiated in the past year with various US trading partners, to whether and how the president will continue to pursue his tariff agenda under other statutory authorities going forward. While many details remain to be seen in coming weeks, the decision is a major development for US importers and will have a significant legal and commercial impact.

SCOPE OF IEEPA TARIFFS

On February 1, 2025, President Trump issued Executive Orders 14193, 14194, and 14195, invoking IEEPA to impose tariffs on Canada, Mexico, and China (the Trafficking Tariffs) after declaring a national emergency related to the influx of migrants and illegal drugs into the United States. Goods qualifying for preferential treatment under the United States–Mexico–Canada Agreement were exempt from the Trafficking Tariffs.

On April 2, 2025, President Trump issued Executive Order 14257, which invoked IEEPA to impose a 10% baseline tariff on “all imports from all trading partners,” with higher rates (up to 50%) for certain countries based on large annual trade deficits (the Reciprocal Tariffs and, collectively with the Trafficking Tariffs, the IEEPA Tariffs).

Other tariffs have been imposed by the Trump Administration in the past year in reliance on IEEPA (e.g., the recently removed secondary tariffs on India for purchasing Russian oil) but were not directly the subject of the Supreme Court ruling; however, it seems clear from the decision that these tariffs have also been invalidated as a result of this opinion.

PROCEDURAL HISTORY

Starting in April 2025, several small businesses and states separately challenged the IEEPA Tariffs. The Court of International Trade (CIT) consolidated these cases, finding that it had exclusive jurisdiction to hear cases concerning laws imposing tariffs pursuant to 19 USC § 1591(i). A three-judge CIT panel unanimously held that the IEEPA Tariffs “exceed any authority granted to the President by IEEPA to regulate importation” and vacated and permanently enjoined the operation of the relevant executive orders.[2] That decision was appealed to the Court of Appeals for the Federal Circuit, which ultimately affirmed the CIT’s decision that the IEEPA Tariffs are unlawful.[3]

At the same time, the US District Court for the District of Columbia found in a separate lawsuit brought by a separate group of importers that IEEPA does not authorize tariffs of any sort.[4] That decision was appealed but, before arguments could be heard, the US Supreme Court granted certiorari in both cases, consolidating them and hearing oral argument on November 5, 2025.

SUPREME COURT INVALIDATES THE IEEPA TARIFFS

The Court held that IEEPA does not authorize the President to impose tariffs.

The majority opinion explained that Article I vests the taxing power, including tariffs, in Congress alone, and the executive has no inherent peacetime tariff authority. The Court recognized the government’s reliance on IEEPA’s authority to “regulate importation,” claiming a sweeping implicit delegation to impose tariffs of unlimited amount, duration, product, and country.

Applying the major questions doctrine, Chief Justice Roberts, joined by two other justices, was reluctant to read extraordinary delegations of this core taxing power into ambiguous text. When Congress delegates the power to tariff, Chief Justice Roberts emphasized that it does so explicitly and subject to strict limits, including through capping the amount and duration of tariffs and subjecting them to “demanding procedural prerequisites.” IEEPA includes no such language or limits. All six justices in the majority agreed that, even apart from the major questions doctrine, IEEPA does not delegate tariff power to the president.

No president has used IEEPA to impose tariffs in its half-century history, and this lack of precedent with the claimed breadth and vast economic significance counseled the Court against reading IEEPA to authorize tariffs. The Court looked to IEEPA’s statutory text listing specific verbs but omitting tariffs or duties. It found that the principle of regulation does not typically include taxation, and it noted that the government could identify no other statute in which the power to “regulate” included the power to tax. The Court also noted that to read into IEEPA the power to tax within the power to regulate would authorize taxation on exports, which is expressly prohibited by the Constitution.[5]

Ultimately, the Court affirmed the Federal Circuit decision and vacated and remanded the DC Circuit Court decision with instructions to dismiss for lack of jurisdiction, recognizing CIT’s exclusive jurisdiction over challenges arising out of tariff modification.

The Court did not order refunds or specify remedies, and it left intact other trade statutes that expressly authorize duties with constraints. The principal dissent flagged significant refund exposure, warning that the United States may have to refund billions collected under IEEPA Tariffs and noting that the refund process was acknowledged at argument to be a “mess,” with no guidance from the Court on whether or how refunds should occur. The principal dissent also cautioned that the ruling could unsettle trade arrangements purportedly facilitated by the IEEPA Tariffs, creating further uncertainty.

POTENTIAL REFUND MECHANISMS FOR IMPORTERS

Because IEEPA does not authorize the challenged tariffs, the affirmed judgment implies the IEEPA Tariffs are invalid, positioning affected importers to seek refunds. Legislation has already been introduced to fast track refunds for small and independent businesses, and more tariff-related or refund-specific legislation may follow. The Court’s decision did not address the validity of the many framework trade agreements reached in light of the IEEPA Tariffs or how to determine the applicable tariff rate for goods subject to these agreements. Importers with litigation in the CIT that has been stayed pending the Court’s opinion will need to monitor closely, as that is likely to be revived next week.

Importers should prepare for refunds by ensuring a proper understanding of their universe of imports and fulsome documentation for tariffs paid. Refunds may not look the same for each entry. Determine what entries remain unliquidated, which have liquidated within 180 days and remain available for protest, and which have liquidated and now fall outside the protest window. While the CIT or CBP may establish a separate process for collecting refunds, there are certain steps that importers can take now.

Correcting Unliquidated Entries

For unliquidated entries, we anticipate that importers will file post-summary corrections (PSCs) to remove offending Harmonized Tariff Schedule of the United States (HTSUS) Chapter 99 classifications imposing IEEPA Tariffs. Importers will need to exercise caution in doing so, though, particularly for imports that may be subject to other tariff authorities, including under various “stacking” orders. We advise importers to work closely with their customs brokers and legal counsel in revising unliquidated entries, and to closely monitor the CSMS for guidance.

Seeking Refunds for Liquidated Entries

Liquidated entries present a different concern. Importers can protest such entries, and many already have done so, which have been effectively stayed pending the Supreme Court decision. Entries affected in the same manner can be protested in bulk, and CBP generally has two years to respond.

For liquidated entries outside the protest window, we recommend that importers file suit with the CIT. While a decision was pending at the Supreme Court, hundreds of importers filed suit in the CIT to preserve their right to tariff refunds.[6] In December, CIT issued a decision in a lead tariff refund case, AGS Company Automotive Solutions v. United States, as entries subject to the IEEPA tariffs began to liquidate. The AGS court made it clear that liquidation of an entry will not bar the CIT from granting refunds for cases that are pending at the time of the Supreme Court’s decision. In reaching its decision, the court relied on the government’s representation that liquidation would not be a bar for refunds if the tariffs are ultimately declared unlawful.

Downstream Effects of Tariff Refunds

An additional consideration may be downstream claims for tariff refunds from customers who may have been charged for tariffs or engaged in tariff risk sharing, but who were not importers themselves. Companies should scrutinize their commercial contracts to determine whether, and how, those agreements allocate responsibility for pursuing refunds, and to ensure they understand any associated rights or obligations.

Beyond the formal contractual requirements under which a company may be obligated to pay some of its IEEPA tariff refunds to another party, there are consumer protection considerations under state and federal law. If a company has represented in its public statements—other than in marketing materials—that its price increases are the result of tariffs imposed on imported goods and those tariffs are later refunded, there may be allegations of unfair or deceptive acts or practices or price gouging under applicable laws. These factual evaluations are conducted on a case-by-case basis, and the laws are broad-based across multiple agencies such as the Federal Trade Commission and by state attorneys general.

Importers should also be speaking closely with their tax departments and advisors to understand how refunds may affect income recognition and previously allocated tariff expenses.

FUTURE TARIFF ACTIONS BY THE TRUMP ADMINISTRATION

Other tariff actions, including those imposed pursuant to trade investigations under Section 301 of the Trade Act and Section 232 of the Trade Expansion Act of 1962, are not affected by the Supreme Court’s decision and remain in effect. Such actions may be expanded or relied on more heavily now that the president’s authority under IEEPA has been rejected by the Supreme Court. President Trump also indicated in a post-decision press conference that he intends to impose a global 10% tariff under Section 122 of the Trade Act of 1974 early next week. This action is limited to a total cap of 15% and a duration of 150 days, unless extended by Congress. The administration also signaled its intent to open new trade investigations as a means to supplement the lost IEEPA Tariffs, with additional executive orders anticipated as early as Friday afternoon.

See our December 10, 2024 LawFlash for an overview of the various tools the administration has at its disposal to impose tariffs, including those for unilateral executive action and trade investigations.

HOW WE CAN HELP

Our global trade team is closely monitoring these developments and can assist clients with the following:

• Strategic planning for refund claims with CBP and/or CIT, as applicable
• Evaluating alternative sourcing options and supply chain restructuring to mitigate tariff exposure under any new tariff regimes that may replace the IEEPA Tariffs
• Representing importers in seeking CBP guidance
• Engaging with relevant government agencies in both the United States and globally to advocate for client interests

Our global offices can provide real-time updates on worldwide responses to US trade actions. This cross-border capability allows us to offer comprehensive solutions that account for both US and foreign legal and regulatory considerations.

The rapidly evolving status of the tariffs creates significant business risk and uncertainty for impacted clients. Our lawyers stand ready to advise clients in all aspects of contract negotiation and litigation, and we are well positioned to advise clients on negotiating contract language to address tariff risks and handle supply chain litigation.

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