Introduction
Today, the Supreme Court held in a 6-3 decision that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose peacetime tariffs of unlimited duration.
This Legal Update discusses the Court's decision, the Administration's possible reactions, and the availability of refunds of the invalidated tariffs
Background
In early 2025, President Donald Trump imposed a variety of tariffs on foreign goods. These consisted of a 25% duty on most Canadian and Mexican imports, duties ranging between 10% and 20% on Chinese imports, and a 10% (or higher) duty on all imports from other trading partners. To do so, the President invoked his authority under the 1977 International Emergency Economic Powers Act (IEEPA). The IEEPA gives the President a variety of economic tools to address significant foreign threats during declared national emergencies. To justify the tariffs, the President pointed to two national emergencies—the influx of illegal drugs from Canada, Mexico, and China (colloquially called the fentanyl tariffs), as well as "large and persistent" trade deficits (likewise called the reciprocal tariffs).
Court's Holding
In an opinion written by Chief Justice Roberts, the Supreme Court held that the President lacks authority under the IEEPA to impose tariffs of any kind.
The Court began by observing that "the President enjoys no inherent authority to impose tariffs during peacetime," because the Constitution provides that "[t]he Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises."
The Court then held that the IEEPA—which authorizes the President to "regulate . . . importation," separated by 16 other words, 15 U.S.C. § 1702(a)(1)(B)—"cannot bear" the weight to justify an "independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time." The statute, it said, does not "effect a sweeping delegation of Congress's power to set tariff policy."
The six Justices in the majority disagreed on the relevance of the major questions doctrine, which requires a clear statement by Congress to uphold Executive Branch actions sought to be justified by assertions of "extraordinary delegations of Congress's powers." In parts of the opinion joined only by Justice Gorsuch and Justice Barrett, the Chief Justice cited several statutes that address tariffs in granular ways—conditioning the power to impose them "on demanding procedural requisites." That shows, they said, that "[w]hen Congress has delegated its tariff powers, it has done so in explicit terms, and subject to strict limits." Given "the breadth, history, and constitutional context" of the President's asserted authority to impose tariffs, "he must identify clear congressional authorization to exercise it." And they concluded that the "IEEPA's grant of authority to 'regulate . . . importation' falls short."
Justice Kagan, joined by Justices Sotomayor and Jackson, did not join the part of the Chief Justice's opinion relying on the major questions doctrine because they concluded that "ordinary tools of statutory interpretation" showed that the IEEPA does not authorize the President's tariffs.
Justice Kavanaugh authored the principal dissent, joined by Justices Thomas and Alito. In their view, the statutory text, history, and precedent authorize the President to impose tariffs as a means to "regulate . . . importation" under the IEEPA, because "tariffs are a traditional and common tool to regulate importation."
Administration's Next Steps: President Trump announced that he was invoking authority under Section 122 of the Trade Act of 1974, 19 U.S.C. § 2132, to impose an across-the-board 10% tariff. That statute limits Presidentially-imposed tariffs to 150 days. In addition, the Administration is likely to commence investigations under Section 301 of the Trade Act of 1974, 19 U.S.C. § 2411-2420, which authorizes the President to impose tariffs based on country-specific problematic trade practices, along with other potential actions.
Tariff Refunds
The Supreme Court's decision does not automatically require refunds of the IEEPA tariffs. The U.S. Court of International Trade (CIT), in an opinion issued last December and discussed in our Legal Update, made clear that importers do not have to file administrative protests at U.S. Customs & Border Protection (CBP) in order to preserve their right to a refund.
We believe that parties who paid IEEPA-based tariffs have a right to obtain a refund, absent action by Congress. How parties obtain such refunds is the next question to be answered—i.e., whether they must file a complaint at the CIT or if CBP will establish an administrative process to issue the refunds. If the Administration objects to the latter, it may be necessary to file an action in the CIT seeking a refund pursuant to 28 U.S.C. § 1581(i). Because the governing statute of limitations is two years, and the first tariffs were imposed in February 2025, those actions need not be filed right away but will have to be filed if it appears that CBP will not establish (or be ordered to establish) an administrative process for providing refunds.
Read the opinion here.
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