SCOTUS Rules IEEPA Does Not Authorize Tariffs
On Friday, February 20, 2026, the U.S. Supreme Court in a 6-3 decision upheld a lower court ruling against the country-specific “reciprocal” tariffs imposed by President Trump in 2025 under the International Emergency Economic Powers Act of 1977 (IEEPA). The Supreme Court upholding the Federal Circuit’s ruling that the President cannot impose tariffs under IEEPA does not address refunds for the roughly $200 billion collected from over 300,000 importers since implementation last year. The process of refunds, the timing, and whether the government must issue refunds falls to the Court of International Trade for further review, without a set timeline.
Chief Justice John Roberts authored the majority opinion and was joined in full by Justices Sonia Sotomayor, Elena Kagan, Neil Gorsuch, Amy Coney Barrett, and Ketanji Brown Jackson. Justices Brett Kavanaugh, Clarence Thomas and Samuel Alito dissented.
In the opinion, the Court emphasized that “the Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises.” Chief Justice Roberts wrote that the Constitution gives Congress — not the Executive — “access to the pockets of the people.”
The decision significantly narrows emergency economic authority in trade policy and is expected to shift future tariff actions toward statutes that explicitly authorize duties. As of this writing, the White House has not issued an immediate response on their next steps.
What this Decision DOES Do:
- Citing the major questions doctrine, rules that IEEPA does not grant the power to tariff
- Rules that the tariffs on countries imposed in 2025 are not permitted
With this ruling, lower courts that had previously stayed pending cases from importers must decide how to move forward with those challenges
Puts pressure on the Trump administration to act quickly to replace the tariffs
What this Decision Does NOT Do:
- No impact on Section 232 tariffs on steel, aluminum, copper, derivatives, autos, etc.
- These tariffs are typically 50% on steel, aluminum, copper and their select derivatives and remain in effect
- The U.S. Supreme Court has previously upheld the Section 232 tariffs specific to goods; no future challenge is expected
- No impact on China Section 301 tariffs – 6,800 imports covered by 25% rate; 3,200 still face 7.5% rate under existing Section 301 action
- A lower court previously upheld the President’s authority to use 301 tariffs
- Decision does not address refunds, eligibility or timeline
- Does not cancel “deals” or “agreements” reached with countries under pressure of IEEPA tariffs
Which Tariffs Could Replace IEEPA:
Section 122 Balance of Payments Tariffs (15% for 150 days)
In preparation for potential adverse ruling on the tariffs, the Trump administration is reportedly ready to impose tariffs under Section 122 of the Trade Act of 1974, which allows a rate of up to 15 percent for 150 days to address “balance of payments” concerns. An announcement of a tariff an action under Section 122 may come at any moment or in the coming days.
Many countries facing tariffs under IEEPA were subject to a 15 percent rate, including Japan, South Korea, the EU, among others, meaning a pivot to Section 122, may not have significant immediate impact. Section 122 tariffs do not require an investigation or a lengthy timeline, allowing the President to move quickly should they decide to use this provision to replace the IEEPA tariffs.
Section 301 of the Trade Act of 1974 Tariffs
President Trump imposed tariffs of up to 25 percent on China starting in 2018 using Section 301 and has initiated a 301 case against Brazil. This is a more cumbersome process, requiring public input, but can be used to target a specific country, or multiple countries simultaneously. Each action may require a separate investigation and finding of an unfair trade practice for each targeted country. Many expect an expanded use of Section 301 tariffs throughout 2026.
Section 232 “National Security” tariffs
The U.S. Supreme Court previously ruled that the President has the authority to determine a national security threat and impose tariffs under Section 232 of the Trade Expansion Act of 1962. Section 232 tariffs of 50 percent currently apply to imports of steel, aluminum, copper, and select goods made from those metals, classified as derivatives of steel, aluminum, or copper. In addition to these three tariff actions, the Trump administration’s Department of Commerce has initiative an additional eleven 232 cases on imports such as timber, semiconductors, pharmaceuticals, critical minerals, aircraft, wind turbines, among others. Sources indicate industry groups may have also submitted an additional dozen 232 petitions for the Department’s consideration. The Secretary of Commerce has 270 days to complete the investigation and report to the President, who then has 90 days to determine whether to take action and, if so, what action to implement.
Tariff Refunds
- The opinion signals that relief must proceed through existing trade-law mechanisms rather than through automatic nationwide repayment
There is no clear pathway for refunds, if courts permit them. Courts and the government would likely limit refunds to direct importers who filed the Customs paperwork through the ACE system. This creates a challenge throughout the supply chain that may have absorbed the tariff costs passed along, but are not eligible for a refund directly from the government – if refunds are made available. Another factor in refund calculation is the combining of IEEPA with other tariff and duty actions. Any Most Favored Nation General Duty rates, Section 232, Section 301, and antidumping and countervailing duties are not subject to this Court ruling nor refunds due to this challenge.
Majority Opinion (Roberts joined by Justices Gorsuch and Barrett for part of the opinion)
- Delegating sweeping tariff authority represents a major transfer of congressional power
- Congress must speak clearly when granting such authority
Reasoning: “IEEPA’s grant of authority to “regulate . . . importation” falls short. IEEPA contains no reference to tariffs or duties. The Government points to no statute in which Congress used the word “regulate” to authorize taxation. And until now no President has read IEEPA to confer such power.” “Based on two words separated by 16 others in Section 1702(a)(1)(B) of IEEPA – ‘regulate’ and ‘importation’ – the President asserts the independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time. Those words cannot bear such weight.” (Roberts)
Concurrences
Justice Kagan (joined by Sotomayor & Jackson):
- Agreed IEEPA does not authorize tariffs but rejected reliance on the major questions doctrine, stating the case could be resolved through “ordinary tools of statutory interpretation” without expanding broader separation-of-powers theories.
Justice Jackson (separate concurrence):
- Emphasized legislative history and congressional intent, writing that “nothing in IEEPA’s text or history suggests Congress contemplated the use of emergency powers to impose duties,” reinforcing that tariff authority must be clearly delegated.
Dissents
Justice Thomas:
- Argued the majority unduly restricts presidential authority during economic emergencies, warning the ruling “unduly cabins the President’s ability to respond to economic threats” and treats tariffs too narrowly as taxation rather than tools of foreign-policy regulation.
Justice Kavanaugh (joined by Thomas & Alito): Contended that IEEPA’s authority to regulate importation should be read broadly, emphasizing that “regulating importation has long included the authority to shape the terms on which goods enter the United States,” and cautioning that the decision may weaken executive flexibility in national security and trade crises.