U.S. Supreme Court Strikes Down IEEPA Tariffs

The United States Supreme Court ruled today in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs. The consequences of this decision will potentially be far-reaching, as the IEEPA tariffs have generated billions of dollars in revenue since being imposed. The Supreme Court's decision does not directly address how tariff refunds will be paid or processed. The tariffs affected by today's ruling, such as the "global" tariffs and certain tariffs on Brazil, Mexico and China, are only those that were implemented under IEEPA. Today's ruling does not invalidate tariffs imposed under other statutory authority.

IEEPA was invoked by President Trump as statutory justification to impose broad country-based tariffs to address two alleged emergencies: the opioid crisis and trade deficits. At the core of a 6-3 decision authored by Chief Justice Roberts, the Court concluded that these tariffs had neither constitutional nor statutory justification under IEEPA. However, as other statutory grounds for tariffs are unaffected by this decision, the Administration may seek to reimpose the invalidated IEEPA tariffs under an alternative statutory basis going forward.

The Court observed at the outset that the Constitution grants the President "no inherent authority to impose tariffs during peacetime," because a tariff is a "tax levied on imported goods and services" and the Constitution clearly vests Congress with both the taxation power and the authority to raise revenue.

Recognizing this fact, the Trump Administration claimed that Congress had expressly authorized the President to do so in passing IEEPA. IEEPA is a 1977 statute authorizing the President to "investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit . . . importation or exportation." The Court disagreed that IEEPA granted the authority the President claimed. "What common sense suggests, congressional practice confirms. When Congress has delegated its tariff powers, it has done so in explicit terms, and subject to strict limits. Congress has consistently used words like "duty" in statutes delegating authority to impose tariffs."

The Court concluded that "The President asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope. In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorization to exercise it. IEEPA's grant of authority to 'regulate . . . importation' falls short. IEEPA contains no reference to tariffs or duties. The Government points to no statute in which Congress used the word 'regulate' to authorize taxation. And until now no President has read IEEPA to confer such power."

Although the Court's majority struck down the tariffs on statutory grounds, Chief Justice Roberts, joined by Justices Gorsuch and Barrett, also ruled against the tariffs pursuant to the so-called Major Questions Doctrine. This doctrine holds that where "the Government claim[s] broad, expansive power on an uncertain statutory basis," the Court will be skeptical of such asserted delegations of legislative authority out of concern for "constitutional structure" and "common sense." The Chief Justice and his two colleagues rejected the "Government's and the principal dissent's proposed foreign affairs exception" to the Major Questions Doctrine.

Justices Sotomayor, Kagan, and Jackson joined the Court's opinion on constitutional and statutory grounds, but the three justices did not join the Chief Justice's opinion on the Major Questions Doctrine.

Justice Kavanaugh dissented, joined by Justices Thomas and Alito. They would have accepted IEEPA as sufficient statutory support for the tariffs and would have carved out a foreign affairs exception to the Major Questions Doctrine.

One key next step will be determining how tariff refunds will be paid or processed. While the Court's decision does not address this directly, it does provide some key procedural signals. Notably, today's decision consolidated appeals from two cases, one from the D.C. Circuit, and another from the Federal Circuit (which hears cases filed with the U.S. Court of International Trade). The decision affirmed the decision of the Federal Circuit, while vacating the decision from the D.C. Circuit for lack of jurisdiction. This signals that the Court believes judicial claims involving tariffs (including refunds) likely need to be resolved in the U.S. Court of International Trade, rather than through the U.S. District Courts. Another avenue for relief for those that have not commenced litigation will likely be through the filing of post-summary corrections with the Customs and Border Protection agency on tariffs paid at the time of entry of merchandise.

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