Scotus Tariff Decision Impacts and Next Steps

On Friday, February 20, the Supreme Court issued its decision in the consolidated cases of Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections, Inc., holding that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs. The case challenged the Trump administration's February executive orders imposing "trafficking tariffs" on imports from China, Mexico, and Canada (targeting fentanyl and illegal immigration) and the April 2025 order imposing sweeping "reciprocal tariffs" on imports from most other countries to address trade deficits. Both the Court of International Trade (CIT) and the Court of Appeals for the Federal Circuit (CAFC) previously ruled that IEEPA does not authorize such tariffs. Approximately $180 billion in IEEPA tariffs have been collected to date.

The Supreme Court decision does not address refunds of tariffs already paid; refund questions will likely be addressed by U.S. Customs and Border Protection (CBP) and the lower courts. Currently, the procedures necessary to secure a refund of the invalidated tariffs are not defined. More than 1,800 follow-on cases have been filed with the Court of International Trade since the original case.

In response to the SCOTUS decision, President Trump issued an executive order terminating various tariff actions imposed pursuant to IEEPA. Many other Trump administration tariff actions remain in place, however, including national security-based tariffs on steel, aluminum, copper, autos and auto parts, and heavy trucks. President Trump also immediately issued a new executive order imposing 10% temporary tariffs on most imports and announced that his administration will be opening new investigations that could result in new tariff actions based on alternative statutory authority.

Supreme Court Ruling Striking Down IEEPA Tariffs

In its February 20 decision, the Supreme Court held 6-3 that IEEPA does not authorize the President to impose the challenged tariffs. Chief Justice Roberts, writing for the majority, concludes: 1) that Article I, Section 8 of the Constitution gives Congress the power to lay and collect taxes, not the President; and 2) that the statute's language authorizing the President to "regulate importation" does not clearly delegate the power to impose revenue-raising tariffs. 

The Court emphasized that the President has no inherent authority to impose tariffs during peacetime, and that delegating such authority requires clear congressional authorization. It further found that no President in history has used IEEPA in this manner, which strongly suggests that the statute does not grant such authority. On the statutory interpretation question, the Court found that the word "regulate" in IEEPA, as ordinarily used, means to "fix, establish, or control" or to "direct by rule or restriction," but does not include taxation. The Court reasoned that had Congress intended to convey the distinct and extraordinary power to impose tariffs, it would have done so expressly, as it consistently has in other tariff statutes.

A three-justice plurality (Chief Justice Roberts, Justice Gorsuch, and Justice Barrett) relied on the "major questions doctrine" to support the conclusion that Congress did not delegate broad tariff power to the President in the IEEPA statute. The plurality reasoned that the Court has long expressed reluctance to read extraordinary delegations of congressional powers into ambiguous statutory text, and this principle applies with particular force to the core congressional power of the purse. The plurality also noted that no President invoked IEEPA to impose any tariffs during the statute's fifty-year existence until these cases, and this "lack of historical precedent," coupled with the breadth of authority claimed, suggests that tariffs lie beyond the President's legitimate reach.

Justices Kagan, Sotomayor, and Jackson concurred in the finding that the tariffs are illegal but took the position that the holding could be supported based on statutory interpretation, without the need to rely on the major questions doctrine. Justices Gorsuch wrote separately in reaction to this concurring opinion and to defend the major questions doctrine as a structural safeguard against executive overreach. Barrett wrote separately to respond to Gorsuch. 

Justices Thomas, Kavanaugh, and Alito dissented. The dissenters argued that the word "regulate" in IEEPA's authorization to "regulate importation" is broad enough to encompass tariffs, pointing to historical uses of "regulate" in the context of foreign commerce. They also emphasized that the President's foreign affairs powers and the emergency nature of IEEPA counseled in favor of reading the statute broadly.

Refunds and What This Means Going Forward

The Court’s opinion makes clear that IEEPA tariffs are unlawful. Thus, we expect tariffs paid pursuant to the invalidated executive orders will be refunded. However, there is significant uncertainty as to the timing and process to secure refunds. The Supreme Court’s decision was silent as to the availability and process for refunds, and we expect that additional proceedings before the CIT and/or CAFC may be necessary before a refund process is outlined. CBP may also issue guidance, potentially as part of any further court proceedings. The administration’s action terminating the invalidated tariffs is also silent on refunds.

At this time, importers should take steps to gather information on their shipments and prior duty exposure and consider whether they should take any action before CBP (including potential Post Summary Corrections and/or Protests), and whether filing suit at the CIT may be appropriate.

Withdrawal of IEEPA Tariffs and Imposition of Section 122 Tariffs

In response to the Supreme Court Decision, the White House has already released two executive orders implementing changes to tariff actions. An EO titled “Ending Certain Tariff Actions” terminated the IEEPA tariffs. The EO directs that the IEEPA tariffs “shall no longer be in effect and, as soon as practicable, shall no longer be collected.” 

The White House also issued an EO entitled “Imposing a Temporary Import Surcharge to Address Fundamental International Payments Problems.” The new tariffs are imposed pursuant to Section 122 of the Trade Act of 1974, which allows the President to impose tariffs for 150 days to address balance of payments emergencies. Congressional approval is required for the tariffs to be extended beyond 150 days. This EO imposes a 10% tariff on most imports effective at 12:01 a.m. on February 24. President Trump has already indicated that these 10% tariffs will increase to 15%.

The EO provides for certain exceptions to the new tariffs, which mirror the exclusions from the terminated IEEPA tariffs. This means that pharmaceuticals, semiconductor products, certain food and agriculture products, and critical minerals continue to be exempted from the additional tariffs. Similarly, as with the IEEPA tariffs on Mexico and Canada, goods qualifying for preferential treatment under the U.S.-Mexico-Canada Agreement (USMCA) will not be subject to the new tariffs. In addition, products already subject to other Trump administration tariff actions, such as steel and aluminum, are not subject to the new 10% tariffs.

There is also a short in transit exception to the new tariffs, for “Articles the product of any country that (1) were loaded onto a vessel at the port of loading and in transit on the final mode of transit prior to entry into the United States, before 12:01 a.m. eastern standard time on February 24, 2026; and (2) are entered for consumption, or withdrawn from warehouse for consumption, before 12:01 a.m. eastern standard time on February 28, 2026.” For practical purposes, this limited exclusion means that goods that were already in transit for imminent arrival at U.S. ports will not be subject to either the terminated IEEPA tariffs or the newly imposed tariffs. The in-transit exception only applies to goods shipped via ocean freight; it likely will not apply to air freight or other forms of transportation.

In the immediate term, importers will face lower tariffs under the current tariff regime. For many countries, the IEEPA tariffs were higher than the 10% tariffs imposed pursuant to Section 122. For example, IEEPA tariffs on the EU, Korea, and Japan were set at 15%, and imports from Vietnam and China faced 20% IEEPA duties. However, the Trump administration has made clear that it intends for the Section 122 tariffs to be a temporary action to maintain a baseline tariff while it conducts investigations that will allow it to impose higher and more permanent tariffs. Specifically, the administration has indicated that it plans to launch investigations pursuant to Section 301 of the Trade Act of 1974, as well as additional national security-based investigations pursuant to Section 232 of the Trade Expansion Act of 1962. Such investigations will likely result in additional tariffs and will be used by the administration to leverage continued negotiations with other countries. Thus, importers are likely to continue to face tariff obstacles going forward as well as increased uncertainty as new tariff mechanisms are deployed.

*Sally Alghazali contributed to this Advisory. Ms. Alghazali is admitted only in Minnesota; practicing law in Washington, DC during the pendency of her application for admission to Washington, DC Bar and under the supervision of lawyers of the firm who are members in good standing of the State Bar.

© Arnold & Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.