Supreme Court Rejects U.S. Global Tariffs

On February 20, 2026, the United States Supreme Court issued a highly anticipated ruling in a pair of monumental consolidated cases, Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections, Inc. The Court, in a 6-3 split, held that the International Emergency Economic Powers Act (“IEEPA”) does not authorize a President to issue tariffs.

In other words, the Court rejected the legal basis for many of the tariffs that President Trump has imposed during his second term, such as reciprocal tariffs. These tariffs have generated billions in tax revenues since they were imposed. Accordingly, the Court's decision is one of the most important decisions of President Trump's second term. This Client Alert examines the decision and the likely effect it will have on international and domestic trade.

Background

The U.S. Constitution gives Congress the power to issue tariffs. Over the centuries, the Supreme Court has authorized Congress to delegate limited tariff authority to the President. At issue in this case was whether IEEPA, an act of Congress that allows a President to “regulate” the “importation” of goods, in fact delegated any tariff authority to the President.

Immediately after re-taking office, President Trump declared various national emergencies and then issued tariffs under IEEPA. These included tariffs intended to combat illicit drug trafficking, as well as reciprocal tariffs intended to address balance-of-trade deficits among trading partners. President Trump was the first President to have issued tariffs under IEEPA. A coalition of states and a number of businesses immediately filed lawsuits challenging these tariffs.

District Court and Appellate Decisions

In May 2025, the Court of International Trade (“CIT”) issued a decision in a pair of consolidated cases, V.O.S. Selections v. United States and Oregon v. Trump. (See previous Lewis Brisbois Alerts on these cases, “Legal Battle Over Trump Tariffs Intensifies,” “Update on Trump Tariff Litigation,” and “Recent Updates to Trump Tariff Appeal.”) The CIT permanently enjoined tariffs that President Trump imposed under IEEPA on the grounds that, among other things, IEEPA does not empower a President to impose tariffs. The CIT also held that there are different statutory mechanisms for the President to address balance-of-trade deficits, namely section 122 of the Trade Act of 1974.

Also at the end of May 2025, a district court judge in the District of Columbia issued a similar decision in Learning Resources v. Trump. Unlike the V.O.S. Selections case, Learning Resources' holding was narrower and applied only to the petitioners in that case.

The Trump Administration immediately appealed these decisions to the Federal Circuit Court of Appeals, which stayed the district court decisions during the appeal.

On August 29, 2025, less than a month after oral argument, the Federal Circuit issued an en banc opinion in V.O.S. Selections, holding, among other things, that IEEPA does not authorize the President to issue the tariffs at issue. As with the earlier decisions, the Federal Circuit allowed the government to appeal to the Supreme Court before its ruling took effect.

As a result of these decisions, more than 1,000 different parties filed actions in the CIT seeking refunds of tariffs previously paid pursuant to the various IEEPA tariffs, which at times were as high as 145% for certain goods from China. Those cases were stayed and have not been resolved, as the Supreme Court had not weighed in—until now.

The Supreme Court Decision

On February 20, 2026, the Supreme Court issued its long-awaited decision in the consolidated Learning Resources and V.O.S. Selections case. The opinion of the Court was delivered by Chief Justice John Roberts, and includes multiple concurring and dissenting opinions that total about 170 pages.

The majority opinion of the Court held that only Congress has the power to issue tariffs, and that the Court would not countenance reading “extraordinary delegations of Congress's powers” into ambiguous provisions in IEEPA. Citing the “major questions doctrine,” the majority held that, given the importance of Congress's taxing authority, Congress would have to make a clear and explicit delegation of authority (i.e., something beyond simply authorizing the President to “regulate”) in order to allow the Executive Branch to impose tariffs and that the authority would be subject to “strict limits.” The Court concluded specifically that an authorization to “regulate” did not delegate authority to tax, which includes the power to impose tariffs.

What May Be Next For Presidential Tariffs

The Supreme Court's decision presents a tectonic shift in U.S. tariff policy for President Trump. To continue imposing tariffs without an act of Congress, President Trump will have to instead rely on other federal statutes, such as section 232 of the Trade Expansion Act of 1962, or sections 201 or 301 of the Trade Act of 1974. None of these authorities is affected by the February 20 decision. Each of these laws requires a finding by another governmental agency or authority, such as the Secretary of Commerce or International Trade Commission, that certain predicate facts have occurred. This process is obviously much slower than Executive Orders.

Alternatively, there are potentially other statutory grounds for the President to issue tariffs without resorting to other government actors. As the CIT noted in the V.O.S. Selections case, section 122 of the Trade Act of 1974 authorizes the President to issue certain tariffs to address balance-of-trade deficits.

It is highly likely that the President will issue section 122 tariffs in the coming months, though it is unlikely that a court would agree that he may do so retroactively with respect to the reciprocal tariffs. From the government's perspective, the only way to avoid massive tariff refunds would be through an act of Congress—which also appears unlikely to happen.

Refunds

More than 1,000 companies have filed claims for refunds of the IEEPA tariffs in the CIT in anticipation of the Supreme Court's decision finding the tariffs to be unlawful. (For an analysis of those cases, see the Lewis Brisbois Client Alert, “Companies Line Up with Lawsuits for Tariff Refunds.”) Notably missing from the Supreme Court's decision is any guidance on the issue of refunds.

In the leading tariff refund case, AGS Company Automotive Solutions v. United States Customs and Border Protection, No. 1:25-cv-0025, the government represented that it would not oppose the Court's authority to order reliquidation of merchandise subject to the IEEPA duties if they were found unlawful, which would “result in a refund of all duties determined to be unlawfully assessed, with interest.”

Though the exact procedure for requesting a refund of the unlawful IEEPA tariff is still unclear—i.e., whether a claimant must file an action in the CIT or whether another refund process will be created—the government's position strongly suggests that there is a path to receive refunds for any IEEPA tariffs paid. Lewis Brisbois has advised clients in filing these cases, and is ready to assist other companies with filing claims for tariff refunds.

Key Takeaways

In the coming days, importers can probably expect delays and complications with Customs and Border Protection (“CBP”), as well as in their respective supply chains, as changes to tariffs are implemented as a result of the Learning Resources opinion. CBP is likely to publish immediate guidance to address these changes.

Businesses that have paid IEPPA tariffs will no doubt file increasingly more refund cases in the CIT. Following the Learning Resources case, it appears that district courts are not the proper venue for such cases. The CIT is likely to be overwhelmed with cases, which will in all likelihood not progress quickly; instead, it is likely the CIT will call for establishment of a process for affected companies to use to pursue refunds.

As Justice Brett Kavanaugh noted in his dissenting opinion, “ [t]he United States may be required to refund billions of dollars to importers who paid the IEEPA tariffs, even though some importers may have already passed on costs to consumers or others.” So, in addition to litigation in the CIT, businesses may see civil litigation among counterparties who were obliged to cover the cost of tariffs. It will be important for businesses that seek refunds to maintain and provide careful documentation of tariffs they have paid.

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