The SCOTUS Decision is In: IEEPA Tariffs are Out
On February 20, the US Supreme Court (SCOTUS) judges released their decision about the legality of US President Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose “reciprocal tariffs” on US trading partners across the globe.
“IEEPA does not authorize the President to impose tariffs. The judgment… is vacated, and the case is remanded with instructions to dismiss for lack of jurisdiction,” read the latest Opinion of the Court for Learning Resources, Inc. v. Trump.
Chief Justice John Roberts wrote the majority opinion and the court agreed 6-3 that the tariffs exceeded the law, according to an article cited by Expana.
Wall Street’s major indices jumped following the ruling, with the Nasdaq composite up about 0.8% as of 11:15 AM ET. Companies now face a potentially lengthy wait for refunds, with more than 1,800 tariff-related cases filed, according to Reuters. The refunds could take months, or even years. However, the SCOTUS decision does not provide any direction regarding refunds.
The Decision
The decision brings together two cases: One from Learning Resources plaintiffs (two small businesses that sued in the US District Court for the District of Columbia) and another from VOS Selections plaintiffs (five small businesses and 12 States that sued in the Court of International Trade or CIT).
In each of the cases, the plaintiffs’ arguments were with the US President’s ability, and ultimately the ability of the Executive Branch to assign tariff rates.
“Article I, Section 8, of the Constitution specifies that ‘The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises.’ The Framers recognized the unique importance of this taxing power—a power which “very clear[ly]’ includes the power to impose tariffs…” read the February 20 SCOTUS decision. “And they gave Congress ‘alone… access to the pockets of the people.’ …The Framers did not vest any part of the taxing power in the Executive Branch.”
US President Trump and his administration put the country into “a national emergency” to impose reciprocal tariffs. However, the SCOTUS official’s decision deems the US to be in a state of peace—which may be something that the Trump administration would argue against.
However, it’s not clear if Trump’s team can argue the final decision of America’s highest court. Still, there could be a request for a “re-hearing.” Even less likely, Congress could vote to grant the US President power to impose tariffs.
Either way, the US President and his trade team have previously stated that there are other “tariff levers” to pull to achieve their intended goals (Section 232, Section 301, Section 201, Section 338).
“The Government thus concedes that the President enjoys no inherent authority to impose tariffs during peacetime. It instead relies exclusively on IEEPA to defend the challenged tariffs,” according to the decision document.
What’s Next?
US Supreme Court Judge Kavanaugh issued one of three dissenting opinions against the decision.
“The Court says nothing today about whether, and if so how, the Government should go about returning the billions of dollars that it has collected from importers,” according to the document.
On February 19, the Trump Administration finalized a trade agreement with Indonesia for US market access and to further Trump’s push for homegrown manufacturing, agriculture, digital sector growth. It’s not clear how such trade deals will be impacted now that the SCOTUS decision has been posted.
Industry Response
The National Retail Federation issued a response to Friday’s ruling, stating:
“The Supreme Court’s announcement today regarding tariffs provides much-needed certainty for US businesses and manufacturers, enabling global supply chains to operate without ambiguity. Clear and consistent trade policy is essential for economic growth, creating jobs and opportunities for American families. We urge the lower court to ensure a seamless process to refund the tariffs to US importers. The refunds will serve as an economic boost and allow companies to reinvest in their operations, their employees and their customers.”
Meanwhile, California Governor Gavin Newsom called on the Trump Administration to immediately issue refund checks, with interest, to American families and businesses. Governor Newsom issued the following statement:
“Time to pay the piper, Donald. These tariffs were nothing more than an illegal cash grab that drove up prices and hurt working families, so you could wreck longstanding alliances and extort them. Every dollar unlawfully taken must be refunded immediately — with interest. Cough up!”
Looking Back
On November 5, 2025, the US Supreme Court began its hearing on Trump’s “reciprocal tariffs” which have been made possible by invoking IEEPA—an emergency powers act that is the basis for many US tariffs. Previously, several small businesses challenged Trump’s IEEPA tariffs—one of which was a New York wine importer called VOS Selections, reported SCOTUS Blog.
On April 2, 2025, President Trump announced the US will implement a minimum 10% tariff on all countries, effective from April 5, and assigned higher reciprocal rates for certain trading partners as part of his “Liberation Day” showing.
Written by Ryan Gallagher
