Supreme Court Holds IEEPA Tariffs Unlawful. President Trump Terminates and Partially Replaces all IEEPA Tariffs. What’s Next?

Key Takeaways: 

• The Supreme Court of the United States held Friday that the International Emergency Economic Powers Act (IEEPA) does not authorize the U.S. president to impose tariffs.
• In response, President Trump issued executive orders and a proclamation that (1) terminate collection of all IEEPA tariffs, (2) impose a new 15% global tariff on all imports under a separate statutory authority, Section 122, and (3) continue the suspension of duty-free treatment of low-value (i.e. de minimis) imports.
• Whether—and when—importers are entitled to refunds of IEEPA duties already paid remains a critical question to be determined by the lower courts.
• Non-IEEPA tariffs imposed under other statutory authorities, such as Section 232 and Section 301, are unaffected.
• Importers should closely monitor guidance from the U.S. Court of International Trade, White House, and U.S. Customs and Border Protection, and consult with counsel regarding next steps.
• Downstream customers should review their contracts and consult with counsel regarding potential refunds or price adjustments 

The Supreme Court Ruling 

On the morning of Friday, February 20, 2026, the Supreme Court, in a 6-3 decision, held in Learning Resources, Inc. v. Trump that the IEEPA does not authorize the president to impose tariffs. 

Writing for the majority, Chief Justice Roberts began with Article I, Section 8 of the Constitution, which vests in Congress alone the power to “lay and collect Taxes, Duties, Imposts and Excises.” The Court recognized that the tariff power is “very clearly … a branch of the taxing power.” The Framers intentionally denied the executive any part of this authority, and the government conceded that the president has no inherent peacetime power to impose tariffs.  

The Court then rejected the government’s argument that the IEEPA delegated to the president the power to impose tariffs. The Court offered several reasons why the statutory language does not support that delegation: 

• No mention of tariffs or duties. IEEPA authorizes the president to “investigate, block … regulate, direct and compel, nullify, void, prevent or prohibit … importation or exportation.” Notably absent from this detailed list is any reference to tariffs, duties, or taxation—language that Congress has consistently included in statutes that delegate tariff power.
• “Regulate” in IEEPA does not mean “tax.” Though “regulate” is a broad term, no other statute includes the power to tax within the power to regulate. When Congress intends to grant both powers, it does so separately and expressly. Also, reading “regulate” to include taxation would render IEEPA partly unconstitutional because the statute authorizes the president to regulate both “importation or exportation,” and the Constitution expressly forbids taxing exports.
• Neighboring words in IEEPA confirm that it does not include a taxing power. Each of the nine verbs in IEEPA’s operative provision authorizes a distinct action for sanctioning foreign actors or controlling foreign commerce—blocking imports, prohibiting transactions, and the like. None includes the distinct power to raise revenue, and tariffs are different in kind from these regulatory tools. 

President Trump's Termination of IEEPA Tariffs and Imposition of "Replacement" Section 122 Tariff 

Later on Friday, and in response to the Supreme Court’s decision, President Trump issued two executive orders and one proclamation: 

Ending Certain Tariff Actions 

The first order terminates “as soon as practicable” the collection of all IEEPA tariffs. This includes tariffs imposed under the following previous Executive Orders: 

• Executive Order 14193 of February 1, 2025, Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border, as amended (fentanyl-related “trafficking tariffs” of up to 35% on products of Canada).  
• Executive Order 14194 of February 1, 2025, Imposing Duties to Address the Situation at Our Southern Border, as amended (fentanyl-related “trafficking tariffs” of up to 25% on products of Mexico).
• Executive Order 14195 of February 1, 2025, Imposing Duties to Address the Synthetic Opioid Supply Chain in the People’s Republic of China, as amended (fentanyl-related “trafficking tariffs” of up to 20% on products of China).
• Executive Order 14245 of March 24, 2025, Imposing Tariffs on Countries Importing Venezuelan Oil (threatened tariff, but not actually imposed against any country).  
• Executive Order 14257 of April 2, 2025, Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits, as amended (“reciprocal tariffs” of at least 10%, and as high as 50%, against nearly all U.S. trade partners).
• Executive Order 14323 of July 30, 2025, Addressing Threats to the United States by the Government of Brazil, as amended (tariff of up to 40% on products of Brazil in response to that country’s prosecution of its former president, Jair Bolsonaro).
• Executive Order 14329 of August 6, 2025, Addressing Threats to the United States by the Government of the Russian Federation, as amended (tariff of up to 25% on products of India in response to that country’s purchase of Russian oil).
• Executive Order 14380 of January 29, 2026, Addressing Threats to the United States by the Government of Cuba (threatened tariff, but not actually imposed against any country).
• Executive Order 14382 of February 6, 2026, Addressing Threats to the United States by the Government of Iran (threatened tariff, but not actually imposed against any country). 

The order does not otherwise repeal these prior executive orders, and the underlying declared emergencies remain in effect. 

Imposing a Temporary Import Surcharge to Address Fundamental International Payments Problems 

The proclamation effectively replaced the repealed IEEPA tariff with a temporary 10% ad valorem tariff on most imports from all countries pursuant to Section 122 of the Trade Act of 1974. President Trump shortly thereafter announced his intention to raise the new Section 122 tariff to 15%.

Section 122 authorizes the president to impose tariffs of up to 15% on all imports from a particular country to address large and serious U.S. balance-of-payments deficits or to prevent an imminent and significant depreciation of the dollar. The president can impose such tariffs for up to 150 days, after which Congress must vote to continue the tariffs. Section 122 has never been used before and is thus untested in the courts. 

Consistent with the above, President Trump’s new Section 122 tariff will apply to goods that enter the United States for consumption on or after February 24, 2026, and before July 24, 2026, unless earlier modified or suspended, and unless extended beyond July 24 by an act of Congress. There is also a brief “on the water” exception for goods in transit to the United States before 12:01 a.m. EST on February 24, 2026, and which enter the United States for consumption prior to February 28, 2026. 

Like a majority of the IEEPA tariffs that the Section 122 tariff is intended to replace, it will not apply to imports that are subject to tariffs under Section 232 of the Trade Expansion Act of 1962. For imports that are only partially subject to Section 232 tariffs, the Section 122 tariff will apply to the non-subject portion. 

In addition, the Section 122 tariff will not apply to: (1) certain critical minerals; (2) metals used in currency and bullion; (3) energy and energy products; (4) certain natural resources and fertilizers; (5) certain agricultural products, including beef, tomatoes, and oranges; (6) pharmaceuticals and pharmaceutical ingredients; (7) certain electronics; (8) certain aerospace products; and (9) information materials, donations, and accompanied baggage. Complete descriptions of included and excluded items are provided in Annex 1 and Annex 2 to the proclamation. 

Continuing the Suspension of Duty-Free De Minimis Treatment for All Countries 

The second order continues President Trump’s suspension of duty-free treatment of low-value imports (known as the de minimis exception) from all countries.  

In anticipation of the Supreme Court’s ruling in Learning Resources, there had been some speculation whether a decision on the validity of IEEPA tariffs would affect President Trump’s suspension of the de minimis exception—an action that he took in conjunction with his imposition of several of the IEEPA tariffs.  

The new proclamation confirms that the suspension of de minimis continues. It also modifies the tariff rates applicable to packages sent to the United States through the international postal network to apply the new Section 122 tariff, at least until CBP publishes a different entry process for such packages. 

Availability of Refunds of Paid IEEPA Tariffs 

Neither the Supreme Court’s decision, nor the executive orders and proclamation, speak to one of the most important questions after Learning Resources: whether refunds are due on IEEPA tariffs that importers have already paid, which are estimated to have reached $130–$200 billion to date. Only Justice Kavanaugh’s dissent briefly discusses refunds, noting that “the refund process is likely to be a ‘mess.’” The decisions of the U.S. Court of Appeals for the Federal Circuit (CAFC) and U.S. Court of International Trade (CIT) in the cases that were ultimately consolidated as Learning Resources also did not directly discuss refunds of paid duties.  

As a result, entitlement to tariff refunds will need to be determined through further proceedings before the CIT. This may occur in the Learning Resources cases themselves, if the plaintiffs raise the question of refunds on remand. Alternately, the question of refunds is already before the CIT in many of the IEEPA tariff cases that have been filed—and stayed by the CIT—while the Learning Resources case was pending.  

In turn, the CIT could order U.S. Customs and Border Protection (CBP) to provide such refunds to all importers. Alternatively, the CIT could require importers who want refunds to bring their own individual court actions (as many importers already have done). In that regard, the Supreme Court’s decision did not discuss appropriate relief. While the CAFC and CIT both held that IEEPA did not authorize tariffs, they previously diverged on the remedy:  

• The CIT also entered a universal injunction that would have halted collection of those tariffs from all importers.
• But the CAFC vacated that injunction, instructing the CIT to reconsider whether such universal relief was appropriate in light of Supreme Court’s recent decision in Trump v. CASA regarding universal injunctions.[1]  

The injunction question itself is now moot, given that President Trump has terminated collection of the IEEPA tariffs. But CAFC’s disapproval of the universal injunction may impact how the CIT handles refund claims. Guided by Trump v. CASA, the CIT may attempt to limit refund relief to just the parties who brought the case. However, the CIT may also find reasons to distinguish Trump v. CASA.[2]   

If the CIT orders only limited refunds, other importers may need to file their own cases in the CIT and obtain individual injunctive relief. This would create an extraordinary burden on the CIT and importers, as IEEPA tariffs have been paid by thousands of U.S. importers since February 2025. (In the only analogous case in recent years, involving an export tax that was struck down by the Supreme Court, the CIT ultimately ordered CBP to implement a universal refund process for all exporters, without requiring individual court actions.) 

Impact on Other Tariffs 

Non-IEEPA tariffs are unaffected by the Supreme Court’s decision and President Trump’s new executive orders and proclamation.  

In addition to IEEPA, President Trump has relied on other statutory authority to impose tariffs—specifically the China tariffs imposed by the first Trump administration under Section 301 of the of the Trade Act of 1974, and the various product-specific tariffs imposed by both Trump administrations under Section 232 of the Trade Expansion Act of 1962 (including steel, aluminum, copper, autos & auto parts, trucks & truck parts, semiconductors, etc.). These tariffs are based on statutory authority unrelated to IEEPA and are explicitly excluded from President Trump’s order terminating collection of IEEPA tariffs.  

Notably, both the Section 301 China tariffs and several of the Section 232 tariffs (specifically those on steel and aluminum, and steel and aluminum derivative articles) have survived significant prior legal challenges in the CIT and CAFC. 

The Tariff Landscape Looking Forward 

Tariffs have been a cornerstone of President Trump’s economic and foreign policy since his first term and that policy is unlikely to change in light of the Supreme Court’s decision. Indeed, in anticipation of the Learning Resources decision, the Trump administration had already suggested that it had a “Plan B” in place to impose tariffs pursuant to other congressional delegations of its tariff power.  

President Trump’s swift replacement of the IEEPA tariffs with a 15% Section 122 tariff is evidence of “Plan B” in action. However, the Section 122 tariffs are limited to 150 days, and cannot exceed 15%, meaning the president has already exercised the extent of his Section 122 power. Importers should therefore brace for the possibility of new and expanded tariffs under Section 232 and/or Section 301, as well as potential reliance on other statutes. 

The Administration has already stated that, in addition to Section 122, it intends to rely on Section 301 as the statutory basis to impose future tariffs against a wide variety of imported goods and supplier countries. U.S. Trade Representative Jamieson Greer has announced that the Trump Administration will initiate Section 301 cases, “in short order,” against “most major trading partners.” He said these investigations will seek to impose tariffs to address such areas of concern as industrial excess capacity, forced labor, pharmaceutical pricing practices, discrimination against U.S. technology companies and digital goods and services, digital services taxes, ocean pollution, and practices related to the trade in seafood, rice, and other products. These new Section 301 investigations will be conducted on an “accelerated timeframe.”

What do Importers Need To do? 

The Learning Resources decision represents a major precedent in U.S. tariff law and it has prompted a response from the White House with immediate impact for importers, many of whom will face a meaningfully reduced tariff burden, at least in the immediate term. 

However, the CIT must still determine whether tariff refunds are available, and whether such refunds will be made available universally or only to parties that bring suit in the CIT.

Importers that were affected by IEEPA tariffs should consult with qualified trade counsel to determine whether any action is necessary to preserve their right to obtain refunds. Subject to further guidance by the CIT and/or CBP such action may include:  

• Filing lawsuits in the CIT (which may be filed within two years of final assessment of duties paid on a given entry), and/or either
• Filing protests with CBP for any liquidated entries on which IEEPA tariffs were assessed (which may be filed within 180 days of liquidation), or
• Filing Post Summary Corrections for any unliquidated entries on which IEEPA tariffs were assessed. 

Importers should also closely monitor additional pronouncements from the White House and CBP regarding availability and processing of IEEPA tariff refunds, and new or modified tariffs under other statutes. 

What can Downstream Customers do? 

The implications of Learning Resources for downstream customers are less clear. While such customers may certainly have felt the impact of IEEPA tariffs in the form of higher prices, non-importers generally cannot pursue relief directly with CBP and may have difficulty establishing standing before the CIT to directly challenge tariffs or obtain refunds. 

Downstream customers should review their supply contracts and consult with qualified counsel to determine any right to claim partial refunds on purchased goods or price adjustments on continuing supply contracts if their suppliers obtain tariff relief as a result of the Supreme Court’s decision.  

Downstream customers may also consider outreach to ensure that their suppliers are taking appropriate action to ensure that collection of IEEPA tariffs has ceased and to preserve any right to IEEPA tariff refunds.

Endnotes

[1] In Trump v. CASA, Inc., 145 S. Ct. 2540 (2025), SCOTUS expressed skepticism whether U.S. District Court had jurisdiction to enter universal injunctions against President Trump’s executive order ending birthright citizenship, holding that lower courts could only create injunctions broad enough to provide complete relief to the plaintiffs in the case, while recognizing that in certain cases, such injunctions could have the incidental effect of providing relief for a broader group.

[2] Notably, the parties in the CIT IEEPA tariff cases included 12 U.S. states, which sued not as importers who directly paid the tariffs, but as downstream purchasers harmed by the effect of tariffs on prices. The CIT could conclude that providing these states complete relief is only possible with universal refunds. The CIT could also conclude that ordering universal refunds of the tariffs collected by CBP is different than the injunction against an executive order in Trump v. CASA.