- with readers working within the Business & Consumer Services industries
In a landmark decision issued today in Learning Resources, Inc. v. Trump, the U.S. Supreme Court ruled 6–3 that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs unilaterally.
The ruling has immediate and far-reaching consequences for businesses that import goods into the United States, those that have already paid billions of dollars in IEEPA-based tariffs, and those operating under recently negotiated trade agreements.
Background: How We Got Here
Shortly after taking office, President Trump declared national emergencies to address what he described as two foreign threats: the influx of illegal drugs from Canada, Mexico, and China, and “large and persistent” trade deficits with foreign nations. Invoking IEEPA, the President imposed a 25% duty on most Canadian and Mexican imports, an initial 10% duty on Chinese imports (later increased to 20%), and a baseline duty of at least 10% on all imports from all trading partners under the so-called “reciprocal” tariffs. Dozens of nations faced even higher rates, and these tariffs applied notwithstanding any existing trade agreements.
Two separate legal challenges quickly arose. In Learning Resources, Inc., a group of small businesses sued in the U.S. District Court for the District of Columbia. In V.O.S. Selections, Inc., importers challenged the tariffs through the Court of International Trade. The Supreme Court granted certiorari in both cases and consolidated them for argument.
The Court's Reasoning
Writing for the majority, Chief Justice Roberts emphasized a principle rooted in the Constitution's design: the power to impose tariffs is a branch of the taxing power, and that power belongs to Congress. Article I, Section 8 of the Constitution vests in Congress the power “[t]o lay and collect Taxes, Duties, Imposts and Excises”—language the Framers placed first among the enumerated powers for good reason.
The Court examined the text of IEEPA, which authorizes the President to “investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit . . . importation or exportation.” Absent from that lengthy list, the Court observed, is any mention of tariffs or duties. The majority held that had Congress intended to convey the “distinct and extraordinary power to impose tariffs,” it would have done so expressly, as it consistently has in other tariff statutes—statutes that typically include caps on rates, time limits, and demanding procedural prerequisites.
Applying the so-called “major questions doctrine,” the Court noted that the economic and political significance of the President's claimed authority was staggering, and that “a reasonable interpreter would not expect Congress to pawn such a big-time policy call off to another branch.” The Court found no exception to the major questions doctrine for emergency statutes or foreign affairs contexts, reasoning that the Framers gave “Congress alone” the tariff power during peacetime and that Congress would not relinquish it “through vague language, or without careful limits.”
The majority further emphasized that during IEEPA's “half century of existence,” no President had ever invoked the statute to impose tariffs—let alone tariffs of this magnitude and scope—until now. Presidents had regularly relied on IEEPA for non-tariff purposes, while using other, more specific statutes in Title 19 to impose duties on foreign goods.
Although the Chief's opinion commanded a six-justice majority on the bottom-line holding that IEEPA does not authorize tariffs, several justices in the majority wrote separately to concur. On the other side, two justices filed dissenting opinions—Justices Kavanaugh and Thomas. We note only two of those additional opinions here.
Justice Kagan, joined by Justices Sotomayor and Jackson, concurred on narrower grounds, concluding that “straight-up statutory construction” resolved the case without the need for the major questions doctrine. Justice Kagan's concurrence emphasized that IEEPA's text, read alongside the broader statutory landscape, simply does not include the power to impose tariffs—”one power is conspicuously missing.”
Justice Kavanaugh authored a vigorous dissent, joined by Justices Thomas and Alito. The dissent argued that the broad power to “regulate . . . importation” has historically encompassed tariffs, pointing to President Nixon's 1971 worldwide tariffs under IEEPA's predecessor statute (the Trading with the Enemy Act) and the Supreme Court's own 1976 decision in Federal Energy Administration v. Algonquin SNG, Inc., which unanimously upheld President Ford's tariffs on oil imports under similar statutory language. Justice Kavanaugh characterized the majority's holding as creating a “nonsensical” distinction between quotas and embargoes (which IEEPA concededly authorizes) and tariffs—observing that it “does not make much sense to think that IEEPA allows the President to shut off all imports from China, but not to impose even a $1 tariff.”
What This Means for Your Business
The practical implications of today's decision are significant. Businesses should be aware of the following key takeaways:
Existing IEEPA tariffs are unlawful. The Court's ruling means that the tariffs President Trump imposed under IEEPA—including the drug trafficking tariffs on Canadian, Mexican, and Chinese goods, and the “reciprocal” tariffs on imports from all trading partners—lack statutory authority and cannot stand. If your business has been paying these tariffs on imported goods, the legal basis for those charges has been eliminated.
Billions of dollars in refunds may be forthcoming—but the process will be messy. As the dissent acknowledged, the Government may be required to refund billions of dollars to importers who paid the IEEPA tariffs. However, the Court's opinion says nothing about how that refund process should work. As was acknowledged at oral argument, the process is likely to be a “mess”—particularly because some importers may have already passed tariff costs on to consumers or downstream purchasers. Businesses that have paid IEEPA-based tariffs should consult with trade counsel promptly to evaluate their refund rights and position themselves accordingly.
Refunds will likely require further litigation—and smaller businesses may feel the pinch. Because the Court's opinion “says nothing” about how the Government should return the billions it has collected, the refund process will likely play out through the U.S. Court of International Trade, where more than 1,000 refund-related cases are already pending. President Trump himself acknowledged on Friday that the issue will likely need to be “in court for the next five years,” and former Trump Commerce Secretary Wilbur Ross echoed that prediction, stating bluntly: “There will be more litigation.” The time and expense of that process will fall hardest on smaller North Carolina importers, who should begin documenting their tariff payments now and explore whether industry groups or class-wide mechanisms may help reduce individual litigation costs.
Trade deals negotiated under the shadow of IEEPA tariffs face uncertainty. According to the Government, IEEPA tariffs helped facilitate trade deals worth trillions of dollars with nations including China, the United Kingdom, and Japan. The Court's decision could generate significant uncertainty regarding those trade arrangements, and businesses relying on favorable terms secured through recent negotiations should monitor developments closely.
The President retains tariff authority under other statutes. Importantly, today's ruling does not strip the Executive Branch of all tariff power. As Justice Kavanaugh noted in dissent, “numerous other federal statutes authorize the President to impose tariffs and might justify most (if not all) of the tariffs at issue.” These include Section 232 of the Trade Expansion Act of 1962, Sections 122, 201, and 301 of the Trade Act of 1974, and Section 338 of the Tariff Act of 1930. However, these statutes generally require additional procedural steps—such as agency investigations, public hearings, and findings—and impose caps on rates and durations. The Administration may seek to re-impose tariffs under one or more of these authorities, but doing so will take time and be subject to the constraints Congress built into those laws.
Supply chain planning requires immediate attention. The sudden removal of IEEPA tariffs will shift the cost calculus for importers, manufacturers, and retailers. Businesses should evaluate their current pricing, sourcing, and supply chain strategies in light of the likely near-term tariff relief—while also preparing for the possibility that tariffs could be reimposed through other statutory mechanisms with different rates, scopes, and timelines.
Looking Ahead
Today's decision is a notable affirmation of Congress's primacy over tariff policy. As Justice Gorsuch wrote in his concurrence, most “major decisions affecting the rights and responsibilities of the American people . . . are funneled through the legislative process for a reason.” The ball is now in Congress's court. Legislators may choose to enact new tariff legislation—potentially even granting the President broader authority under IEEPA—or they may use this moment to reassert control over trade policy. Either way, the era of unilateral presidential tariffs imposed through emergency declarations appears to be over, at least for now.
Businesses affected by these tariffs should act quickly to assess their exposure, preserve refund claims, and develop contingency plans for the shifting trade landscape. We will continue to monitor developments as the practical consequences of this ruling unfold.
Update, February 23, 2026: New Tariffs Already in Effect
The Administration moved quickly over the weekend. Within hours of the Supreme Court's ruling, President Trump imposed a new blanket tariff on almost all imports under a different statute—Section 122 of the Trade Act of 1974—and quickly raised those tariffs to the statutory maximum of 15%.
Because Section 122 caps tariffs at 15%, these new duties are generally lower than those that came before. Imports from China, Mexico, and Canada, which faced rates of 20% or higher under IEEPA, got a cut. But for countries like the U.K. and Australia that had been subject to lower IEEPA rates, the flat 15% is actually an increase.
The new tariffs are also temporary, at least without legislative approval. Section 122 limits them to 150 days unless Congress votes to extend them. That is a far cry from the IEEPA tariffs, which had no rate cap, no expiration date, and effectively no procedural requirements.
The Administration has made clear that even more tariffs are coming, and that those imposed under Section 122 are just a stopgap. For instance, Section 301 of the same Trade Act lets the President impose tariffs country-by-country when the Trade Representative finds a trading partner is denying U.S. rights under a trade agreement or engaging in “unjustifiable” practices that burden U.S. commerce. Unlike the across-the-board approach of IEEPA or Section 122, Section 301 tariffs are, at least in theory, geographically targeted, but they carry no rate caps, meaning duties could ultimately climb well above 15%. U.S. Trade Representative Jamieson Greer has announced Section 301 investigations targeting “most major trading partners” on an “accelerated timeframe.”
The Administration has also floated expanding Section 232 national security tariffs—already covering autos, steel, and semiconductors—to additional industries.
Tariffs imposed under either Section 301 or Section 232 require formal investigations before tariffs can take effect, which is why the Administration is pursuing them now in parallel with the Section 122 “stopgap.”
Meanwhile, the new Section 122 tariffs are themselves likely to face legal challenges.
Key Takeaways After the Weekend:
New Tariffs
For North Carolina businesses, the bottom line is this: while they may look different, tariffs may not be going away. Although some groups have signaled willingness to challenge these new hikes on imports, President Trump has likewise signaled he is not going to stop trying to impose them. For now, companies should assess how the new 15% rate compares to what they paid under IEEPA and adjust pricing and sourcing accordingly.
IEEPA Refund Claims
Don't lose sight of IEEPA refund claims. The new Section 122 tariffs don't moot or replace refunds owed for tariffs collected under IEEPA. Those remain unlawful, and the right to recovery is unchanged.
Planning for What's Next
Plan for the 150-day cliff. When Section 122 expires, tariff rates could move sharply in either direction depending on whether Congress acts or the Administration succeeds in imposing new tariffs under Section 301 or 232. With accelerated investigations and potential Section 232 expansion already underway, the trade landscape will keep shifting.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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