Supreme Court Rejects Trump Tariffs under IEEPA

---

Written by John Egan for IIR News Intelligence (Sugar Land, Texas)

---

Summary

In a 6-3 decision Friday, the U.S. Supreme Court ruled that President Donald Trump exceeded his legal authority in unilaterally imposing unbounded tariffs on nearly every country in the world using a 1970s-era emergency economic law.

---

Majority Rules Against Trump

The Supreme Court on February 20 ruled 6-3 that President Donald Trump's unlawfully relied on the International Emergency Economic Powers Act (IEEPA) of 1977 to impose tariffs of varying levels on nearly every country in the world. The ruling was a major setback for the president's economic policy, though Trump and members of Congress vowed to find other ways to achieve the same aims.

Three Democratic-appointed justices--Associate Justices Elena Kagan, Sonia Sotomayer and Ketanji Brown Jackson--joined three Republican-appointed justices--Chief Justice John Roberts and Associate Justices Amy Coney Barrett and Neil Gorsuch--in ruling against the president.

The court's other Republican-appointed associate justices, Brett Kavanaugh, Clarence Thomas and Samuel Alito Jr., disagreed with the majority. In their dissent, they argued that the president has broad power to impose tariffs as part of his conduct of foreign policy. They warned that the court's decision could cause global economic chaos as importers sought refunds of fees they paid.

The IEEPA tariffs reportedly raised about $133.5 billion through mid-December, according to an article in The Wall Street Journal that cited U.S. Customs and Border Protection.

The high court's decision noted claims by Trump's lawyers that the IEEPA tariffs will reduce the national deficit by $4 trillion, and that international agreements reached in reliance on the tariffs could be worth $15 trillion.

Trump said he found the ruling to be "deeply disappointing and I'm ashamed of certain members of the court, absolutely ashamed (of them) for not having the courage to do what's right for our country."

He also singled out the three Democratic-appointed justices as a "disgrace to our nation."

Despite the court ruling, Trump said he has other available "methods, practices, statutes and authorities" and planned to impose a 10% across-the-board global tariff.

The case was Learning Resources, Inc., et al. v. Trump, President Of The United States, et al., which also incorporated a different lawsuit, Trump, President of the United States, et al. v. V.O.S. Selections, Inc., et al. Friday's majority decision affirms an earlier ruling from the U.S. Court of Appeals for the Federal Circuit.

That high court's ruling did not address whether refunds of the unlawfully collected IEEPA tariffs would have to be refunded, under what mechanism and who deserves a refund. Those issues will be sorted out by the U.S. Court of Appeals for the Federal Circuit.

Court's Sharp and Broad Criticism of Trump's Rationale

The high court's majority ruled against the president on a number of fronts:

• It said the Constitution gave Congress, not the Executive Branch, the exclusive power to tax and tariff.
• It also found that the sums of money involved, and the tariff's broad impact on the U.S. economy, ran afoul of the court's "major questions" doctrine, where it has held that "both separation of powers principles and a practical understanding of legislative intent" suggest Congress would not delegate "highly consequential power" to the Executive branch using "ambiguous language. When Congress has delegated its tariff powers, it has done so in explicit terms and subject to strict limits. ... The Framers did not vest any part of the taxing power in the Executive Branch."
• The court also rejected the administration's argument that tariffs are one of many ways that the president can regulate trade under IEEPA, synonymous with or at least closely related to its allowed powers of "regulation" and "importation."
• Although the court did not explicitly rule on whether Trump's declarations that the importation of illegal drugs or the existence of large trade imbalances in goods constituted actual emergencies, it was skeptical: "Emergency powers," the majority wrote, all, "tend to kindle emergencies. Dozens of IEEPA emergencies remain ongoing today, including the first--declared over four decades ago in response to the Iranian hostage crisis. And as the Framers understood, emergencies can 'afford a ready pretext for usurpation' of congressional power."
• The majority found that Trump administration's expansive view of its own power "would represent a transformative expansion of the President's authority over tariff policy. It is also telling that in IEEPA's half century of existence, no President has invoked the statute to impose any tariffs, let alone tariffs of this magnitude and scope. That lack of historical precedent, coupled with the breadth of authority that the President now claims, suggests that the tariffs extend beyond the President's legitimate reach."

Background to Supreme Court Case

Trump relied on IEEPA to issue two sets of tariffs in early 2025 to address two kinds of foreign threats: the influx of illegal drugs from Canada, Mexico and China; and what he described as "large and persistent" trade deficits. Trump asserted that the drug influx had "created a public health crisis" while persistent trade deficits in goods "led to the hollowing out" of the American manufacturing base and "undermined critical supply chains." He declared a national emergency on both issues, deeming the threats "unusual and extraordinary," invoking his authority under IEEPA to respond to what he deemed "emergencies."

The U.S. has run a trade deficit in goods for decades, though the U.S. exports more in services than it imports.

Prior to the Supreme Court's ruling, two other federal courts had ruled against the president's use of IEEPA to levy duties on imported goods. For more on those prior decisions, see September 3, 2025, article - Trump Tariffs, and His Economic Agenda, Threatened by Court Decision and May 30, 2025, article - Appeals Court Pauses Block on Trump Tariffs. In May, Trump lost at the U.S. Federal Court of International Trade (USCIT), but that decision was temporarily stayed so the parties could seek a review by the Supreme Court.

Refunds Not Addressed

While it affirmed the earlier ruling from the U.S. Court of Appeals for the Federal Circuit, the high court did not address the knotty questions of whether the several hundred billion dollars of unlawfully collected IEEPA tariffs should be refunded, how that could be done and who would be entitled to a refund.

A recent research paper from the New York Federal Reserve Bank and Columbia University concluded that U.S. businesses and consumers paid about 90% of the president's tariffs, with overseas importers absorbing a small portion of them. Trump has consistently asserted that overseas exporting nations would pay the tariffs, and his administration has criticized the New York Fed/Columbia University paper.

Other Tools Available to the President

Although the Supreme Court ruling struck down Trump's ability to levy tariffs under IEEPA, there are several other options that could be used to continue that element of the president's economic policy. However, all of those other legal authorities have tougher hurdles and come with specific requirements that may constrain Trump's ability to impose broad tariffs swiftly on a wide range of countries.

Supreme Court Justice Brett Kavanaugh, in his dissent from the majority, included a list of the other trade authorities that the president could use, noting that "the Court's decision is not likely to greatly restrict Presidential tariff authority going forward."

Here's are some of the other laws Trump could use to slap steep levies on imported goods:

• Section 232 of the Trade Expansion Act allows the president to impose tariffs on foreign products in the interest of national security. Trump has already used this authority to tax imports of autos, steel and copper, along with other goods. But invoking this section of trade law requires a Department of Commerce investigation into whether a particular import poses a national security risk. Trump would need to give the department up to 270 days to complete its investigation before levying a tariff. Section 232, in other words, is narrowly focused: separate investigations must be completed for each good that the president seeks to tariff.
• Section 122 of the 1974 Trade Act to put in place a global tariff up to 15%, but only for 150 days.
• Section 301 of the 1974 Trade Act would give the president the power to impose duties after conducting an investigation and finding that a country engaged in trade practices that were unfair, unreasonable or in violation of previously signed trade deals.
• Section 338 of the 1930 Trade Act, allows the government to impose tariffs if other countries "uniquely discriminate" against the U.S.

Key Takeaways

• The U.S. Supreme Court ruled 6-3 that President Donald Trump exceeded his authority in relying on a 1970s-era economic emergency law to impose a variety of tariffs on nearly every country in the world.
• The U.S. has collected over $200 billion in tariffs over the last year under that law.
• The president and members of Congress vowed to find other ways to accomplish the same objectives: raising revenue for the government and "rebalancing" trade relations with other countries.
• The high court ruling did not address whether those who have borne the tariffs should get refunds.
• A recent economic analysis, disputed by the Trump administration, concluded that U.S businesses and consumers paid about 90% of the tariffs, with exporting nations absorbing the balance.
• There are other legal vehicles the president could use to import tariffs, but all include some obstacles and limitations.

---

About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).