On Friday, February 20, the Supreme Court in Learning Resources, Inc. v. Trump held that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs. The decision resolves consolidated challenges to certain IEEPA-based tariffs—including a 25% duty on most Canadian and Mexican imports, 10–20% on Chinese imports, and a baseline 10% “reciprocal” tariff on all trading partners.
In its opinion, the Court emphasized that Congress alone is vested with the power to “lay and collect Taxes, Duties, Imposts and Excises” under Article I, Section 8 of the Constitution. The majority concluded that the terms “regulate” and “importation” contained in IEEPA do not confer “the independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time.” Three Justices relied on the “major questions doctrine,” requiring clear congressional authorization for actions of major economic significance; three others reached the same result through ordinary statutory interpretation.
What this means for your business – Refunds and Next Steps
While this decision is welcome news for importers, as certain IEEPA tariffs can no longer be collected on entries clearing customs after 10:01 am EST, uncertainty around whether and how importers may seek and receive refunds remains.
First, the Court’s opinion did not address whether or how the U.S. Government should issue tariff refunds. Typically, importers seek refunds through an administrative process with U.S. Customs and Border Protection. It is unclear, however, if these same processes will apply to refunds for the IEEPA tariffs given the constitutional challenges raised by the IEEPA tariffs. The claim that the IEEPA-based tariffs are unconstitutional has been the basis for some importers to forego the administrative process and file direct claims with the Court of International Trade.
Second, it is not entirely clear what today’s opinion means for other IEEPA-based tariffs, specifically those concerning Brazil and India. Though not subject to Learning Resources, the same basis for tariffs overruled in today’s decision underlies the IEEPA tariffs assessed against certain goods from Brazil and India.
Following the ruling from the Court, President Trump announced on Saturday, February 21 that he will impose a new fifteen percent (15%) global tariff under Section 122 of the Trade Act of 1974, a separate authority for tariffs than the IEEPA tariffs struck down by the Supreme Court. We expect continuing changes in tariffs moving forward.
