In a 6-3 decision issued on February 20, 2026, the Supreme Court struck down President Trump’s sweeping emergency tariffs. The Court held in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (“IEEPA”) does not authorize the President to impose tariffs, invalidating the “reciprocal” tariffs imposed on nearly every country, along with the higher “trafficking and immigration” rates targeting Mexico, Canada and China. Tariffs imposed under other statutory authorities remain in full effect.
The decision does not address how the more than $133 billion in the IEEPA tariffs already collected will be refunded to importers. Unless the Administration adopts a streamlined refund mechanism, importers may need to seek refunds through administrative processes or litigation. Realizing these refunds may require targeted litigation supported by a disciplined administrative record. Companies should promptly conduct an early audit of impacted entries to identify refund-eligible shipments, preserve evidence of payment, and map applicable deadlines. Strategic use of post-summary corrections and protests may be critical to maximize recovery while keeping refund channels open; properly framed protests can toll or extend pathways for judicial review, whereas incomplete or untimely filings may forfeit rights. Given the short and unforgiving timelines governing corrections, protests, and U.S. Court of International Trade actions, importers should engage counsel now to triage entries, implement an entry-by-entry filing strategy, and position high-value claims for efficient settlement or litigation.
Notably, the ruling does not prevent the Administration from imposing new tariffs, as the President retains that authority under various trade statutes. As a practical matter for importers and practitioners, the Administration has already begun implementing replacement tariffs under these alternative authorities, signaling that the decision is unlikely to materially alter the Administration’s trade policy.
Background
IEEPA gives the President broad economic powers during a national emergency, and since its enactment in 1977, has been primarily used to impose sanctions and restrict financial transactions. The question before the Supreme Court was whether the IEEPA authorized the President to impose tariffs to address foreign threats.
The tariffs at issue arose from a series of executive orders. On February 1, 2025, President Trump issued executive orders invoking the IEEPA to impose the “trafficking and immigration” tariffs on Canada, Mexico, and China, citing a purported national emergency due to migrants and illegal drugs coming to the United States from these countries. Then, on April 2, 2025, the President issued another executive order invoking the IEEPA to implement what the Administration termed “reciprocal” tariffs on imports from all trading partners at a baseline rate of 10%, with higher rates applied to dozens of countries. To justify these measures, the Administration relied on language in the IEEPA giving the President authority to “regulate . . . importation.”
Two groups of challengers in separate proceedings contested the President’s authority to impose these tariffs. Several small businesses and states brought claims in the Court of International Trade, which ruled in their favor; the Federal Circuit, sitting en banc, affirmed in relevant part the Court of International Trade’s finding that the IEEPA’s grant of authority did not authorize tariffs. Two additional small businesses filed separately in the U.S. District Court for the District of Columbia, which likewise held that the IEEPA did not authorize tariffs; that decision was appealed. The Supreme Court granted certiorari in both cases, consolidated them, and resolved both appeals in a single opinion.
The Supreme Court’s Decision
The Supreme Court’s majority found that the IEEPA does not grant the executive branch authority to impose tariffs. The Court emphasized that Article I of the U.S. Constitution assigns the power to impose taxes, including tariffs, to Congress, and that the President possesses no inherent authority to impose tariffs during peacetime. Conceding this framework, the Government relied on the IEEPA’s statutory language authorizing the President to “regulate … importation” to justify the IEEPA tariffs.
The Court rejected the government’s argument, and found that the IEEPA’s authority to “regulate … importation” of property does not include the power to impose tariffs. The Court’s decision turned on the text, structure and historical context of the IEEPA. Critically, the IEEPA enumerates specific presidential powers but makes no mention of tariffs or duties. The Court found unpersuasive the government’s contention that the power to “regulate” implicitly includes the power to tax, noting that the government could not identify any other statute in which regulatory authority has been construed to encompass taxation. The Court also observed that when “Congress grants the power to impose tariffs, it does so clearly and with careful constraints,” noting that “it did neither” with respect to the IEEPA. The absence of historical precedent likewise proved damaging to the government’s position: no prior President has ever invoked the IEEPA to impose tariffs.
The Court also rejected the government’s contention that a tariff is merely a “less extreme, more flexible” form of a trade prohibition authorized by the IEEPA. The majority held that tariffs are “different in kind, not degree” from the other authorities in the IEEPA.
Chief Justice Roberts, writing with Justices Gorsuch and Barrett, separately applied the “Major Questions Doctrine” in further support of the Court’s decision, declining to read into ambiguous text delegations of a core fiscal power from Congress to the Executive. The plurality found that no exception to this doctrine exists for emergencies or foreign affairs.
The majority opinion was silent on remedies. The procedure for obtaining refunds on the unlawful tariffs remains unresolved.
The Court also recognized the Court of International Trade’s exclusive jurisdiction over challenges arising from tariffs by affirming the Federal Circuit’s decision and vacating the D.C. Circuit’s decision, remanding with instructions to dismiss for lack of jurisdiction. This jurisdictional decision clarifies that related disputes will be resolved by the Court of International Trade.
The Dissent
Justice Kavanaugh, joined by Justices Thomas and Alito, dissented, maintaining that the IEEPA properly encompasses tariff authority and arguing that tariffs are a traditional means to “regulate . . . importation.” The dissent also noted the apparent inconsistency that the President might prohibit imports altogether yet lack authority to impose any tariffs.
Notably, the dissent observed that several other trade statutes (e.g., Section 232 of the Trade Expansion Act, Section 301 of the Trade Act of 1974, and Section 338 of the Tariff Act of 1930) “authorize the President to impose tariffs and might justify most (if not all) of the tariffs at issue,” concluding that the majority opinion merely found that “the President checked the wrong statutory box by relying on IEEPA rather than another statute to impose these tariffs.”
The dissent also criticized the majority for failing to offer any guidance on whether or how the government should refund the billions of dollars collected from importers, and warned that issuing refunds will be “a mess.”
Refunds for Importers of Record
Importers that paid IEEPA tariffs will likely be entitled to a refund, but the reimbursement process has not yet been established. The Supreme Court was silent on whether and how the government must pay back the unlawful tariffs, leaving it to the Court of International Trade and the Administration to carry out the refund process. The Trump Administration’s lawyers previously represented in litigation that the government would issue refunds if the IEEPA tariffs were invalidated but did not establish a reimbursement procedure. On February 24, 2026, the lead plaintiffs challenging the tariffs filed a motion for permanent injunctive relief at the Court of International Trade, asking the court to enjoin the “operation of all tariffs imposed under” IEEPA and compel the government to issue “promptly refund all tariffs paid, with interest, under IEEPA.” That motion is presently pending. On March 2, the Federal Circuit issued a formal mandate to the Court of International Trade, permitting it to act on the case going forward. The Customs and Border Protection (“CBP”) will likely be required to devise refund implementation procedures. Although CBP maintains existing mechanisms permitting importers to seek refunds for routine tariff overpayments, whether and to what degree these ordinary measures will apply to IEEPA-based refunds is presently undecided. The Administration retains considerable discretion over the timeline and process for refunds.
In the meantime, importers should evaluate their exposure and take steps to preserve their right to a refund, including by taking the following steps:
- Preserve and organize records of all entries subject to IEEPA tariffs, including entry summaries and tariff payment records.
- Engage counsel now to triage entries, implement an entry-by-entry filing strategy, and position high-value claims for efficient settlement or litigation.
- Track each entry’s liquidation status and applicable deadlines. Entries typically liquidate within 314 days, and become final after the 180-day protest period.
- For unliquidated entries, consider submitting post-summary corrections to remove IEEPA tariffs. To date, it remains unclear whether post-summary corrections will ultimately prove effective because it is reported that CBP has been rejecting post-summary corrections for unliquidated entries related to the IEEPA tariffs.
- For entries nearing liquidation, consider filing liquidation extension requests (because unliquidated entries may allow for a more expedited refund process).
- For entries that have been liquidated and nearing the 180-day protest deadline, consider filing a protest to preserve recovery options.
Ultimately, if a streamlined government claims mechanism is not established, importers may consider initiating their own lawsuits to recover funds, or alternatively, consolidated class litigation may emerge.
Impact on Downstream Purchasers
Only importers of record are in principle entitled to reimbursement for the unlawful IEEPA tariffs. However, impacted importers should evaluate their contracts with downstream purchasers to assess any rights or obligations, including in connection with any contractual tariff-sharing or similar arrangements.
Ordinary consumers presently have no clear remedy available to obtain direct compensation despite bearing tariff-related costs. Nonetheless, several state leaders (including from California, Nevada and Illinois) have demanded compensation on their residents’ behalf. Compensation for consumers may be sought under state and federal laws consumer protection and unfair trade practices laws, including in cases where a company represented to the public that its price increases were directly the result of IEEPA tariffs and later obtained refunds for those same tariffs.
Replacement Tariff Measures
Administration officials have signaled their intent to replace the invalidated IEEPA tariffs with alternative tariffs. Following the ruling, President Trump halted collection of IEEPA tariffs but immediately imposed a 10% global tariff pursuant to Section 122 of the Trade Act of 1974, subsequently increasing it to 15%. That provision authorizes the President to impose temporary tariffs of up to 15%, or alternatively quotas, for periods not exceeding 150 days when addressing “large and serious” trade deficits.
The Administration may also seek to impose new tariffs in varying scopes under other trade authorities. For example, Section 232 of the Trade Expansion Act allows the President to impose tariffs or quotas on imports deemed threats to national security, with broad executive discretion since the statute does not define “national security.” While this authority applies only to specific sectors rather than all imports, there is no cap on tariff rates. Trump used Section 232 in his first term to raise tariffs on steel and aluminum.
Additionally, Section 301 of the Trade Act authorizes the U.S. Trade Representative to respond to unfair foreign trade practices with tariffs or other remedies, though it requires a formal investigation before action can be taken. Trump used this authority during his first term to impose tariffs on China, which remain in effect and are difficult to remove. Because Section 301 tariffs are country-specific, they cannot fully replace broad emergency tariffs.
Further, Section 338 of the Tariff Act of 1930 authorizes the President to impose tariffs of up to 50 percent on imports from countries found to unreasonably discriminate against U.S. trade, though the statute contains ambiguity regarding the role of the International Trade Commission in formal fact-finding. Despite being on the books for nearly a century, Section 338 has never been used to impose trade restrictions, leaving its authority untested. While the statute could potentially serve as a country-specific alternative to emergency tariffs for nations that have not reached trade deals with the United States, any use of Section 338 would almost certainly face legal challenges.
Notably, any replacement go-forward tariffs would, in principle, not impact importer’s rights to a refund for the unlawful IEEPA tariffs.
The Administration’s swift pivot to alternative statutory authorities underscores that significant tariff obligations will continue to apply. Businesses should closely monitor this rapidly evolving landscape to ensure ongoing compliance.
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For a printable version of this post, please click here. If you have questions about this decision or its potential impact, please contact S. Nathan Park at [email protected], Dominique Caamano at [email protected], or Anna Hunanyan at [email protected]. We will continue to monitor developments and provide updates as warranted.
