Supreme Court Strikes Down IEEPA Tariffs: What Importers Need to Know Now

The U.S. Supreme Court on February 20, 2026, held that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose tariffs, affirming the U.S. Court of Appeals for the Federal Circuit's August 2025 ruling.

The Supreme Court's decision has immediate and significant trade implications, but several critical issues remain unresolved. First, implementation will require executive action. U.S. Customs and Border Protection (CBP) cannot cease collecting tariffs based solely on the Supreme Court's opinion but must receive a directive from the executive branch. This could take the form of a modification or rescission of prior executive orders imposing the tariffs. Second, the Court did not address whether refunds must be issued or how any reimbursement should operate. Third, President Donald Trump announced today that he will impose new tariffs under Section 122 of the Trade Act of 1974, effectively replacing the IEEPA tariffs, and that he will launch country-specific investigations under Section 301 of the Trade Act of 1974 that could be the basis of further tariffs.

Holland & Knight is closely monitoring and engaging with key executive branch officials to learn what steps they will take on all these issues.

Background

Shortly after taking office, President Trump declared national emergencies under IEEPA to address 1) the influx of illegal drugs from Canada, Mexico and China, and 2) "large and persistent" trade deficits. Acting under those emergency declarations, the administration implemented two major sets of tariffs:

• "Trafficking and Immigration Tariffs" on nearly all imports from Canada, Mexico and China
• "Reciprocal Tariffs" imposing baseline duties on imports from virtually all trading partners, with higher rates on certain products and countries

Small businesses (including V.O.S. Selections Inc.) and a coalition of states challenged these measures in the U.S. Court of International Trade (CIT) and in district court. Both the CIT and U.S. Court of Appeals for the Federal Circuit held that IEEPA did not authorize the tariffs and granted summary judgment to the plaintiffs. In August 2025, the U.S. Court of Appeals for the Federal Circuit, sitting en banc, affirmed in relevant part and characterized the tariffs as "unbounded in scope, amount, and duration." The Federal Circuit's decision was stayed to allow U.S. Supreme Court review.

In Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections, Inc., argued November 5, 2025, and decided February 20, 2026, the Supreme Court held that IEEPA does not authorize the president to impose tariffs.

The Court's Reasoning

Constitutional Framework

The Court began with Article I, Section 8 of the U.S. Constitution, which grants Congress the power "To lay and collect Taxes, Duties, Imposts and Excises." Tariffs, the Court stressed, have long been understood as a "very clear … branch of the taxing power," historically providing the federal government with much of its revenue. The framers gave "Congress alone … access to the pockets of the people" and vested no part of that taxing power in the executive branch.

The government conceded that the president has no inherent Article II authority to impose tariffs and relied solely on IEEPA's statutory language authorizing the president to "regulate … importation" to justify the IEEPA tariffs.

Statutory Interpretation

The Court concluded that IEEPA's authority to "regulate … importation" of property does not include the power to impose tariffs.

The Court concluded that it cannot for several reasons:

• No Reference to Tariffs. The statute is silent on tariffs: IEEPA does not mention "tariffs," "duties," "taxes" or similar terms. By contrast, when Congress delegates tariff authority, it typically uses explicit revenue-related language (e.g., "duty," "surcharge") and pairs that delegation with caps on rates, temporal limits and procedural preconditions. None of those features appear in IEEPA.
• Ordinary Meaning of "Regulate." The Court held that "regulate" ordinarily means to control or govern, not to raise revenue. Many statutes authorize the executive branch to "regulate," yet the government could not identify any in which that word has been understood to grant taxing authority.
• Statutory Structure. IEEPA's operative provision lists nine verbs (e.g., investigate, block, direct, compel, nullify, void, prevent, prohibit, regulate) and 11 types of transactions (e.g., acquisition, use, transfer, transportation, importation, exportation). These verbs and objects collectively authorize a range of controls, freezes and prohibitions on foreign property and related transactions – none of which raises revenue. Reading "regulate … importation" to include tariffs would make that phrase the only one among 99 verb-object combinations to confer revenue-raising authority.
• Export Concerns. Because IEEPA authorizes regulation or exportation, interpreting "regulate" to include taxation would render part of IEEPA unconstitutional. The Court declined to adopt a construction that would implicitly authorize export taxes.
• Historical Practice. In nearly 50 years, no president has used IEEPA to impose tariffs, instead relying on tariff statutes such as Section 301 of the Trade Act of 1974 or Section 232 of the Trade Expansion Act of 1962. The lack of historical precedent for using IEEPA to levy tariffs, coupled with the sweeping authority claimed here, confirmed for the Court that tariffs fall outside IEEPA's intended scope.

Major Questions Doctrine

Three justices (Chief Justice John Roberts, joined by Justices Neil Gorsuch and Amy Coney Barrett) concluded that the case also implicates the "major questions" doctrine. They reasoned that Congress must clearly authorize delegations of authority involving "vast economic and political significance," particularly where a "core congressional power," such as taxation, is at issue.

Allowing the president to impose tariffs of any rate on any product for an unlimited duration based solely on an emergency declaration would represent a transformative expansion of executive authority – the stakes of which "dwarf" other major questions doctrine cases – unsupported by clear statutory language.

The Court viewed this as a "transformative expansion" of presidential authority over tariffs that Congress would not have delegated via general language about "regulat[ing] … importation." The long, unbroken practice of using IEEPA for nontariff measures, coupled with Congress' habit of speaking clearly and narrowly when delegating tariff powers elsewhere, provided "reason to hesitate" before reading IEEPA to confer such an extraordinary authority.

Other Concurrences

Three justices (Justices Elena Kagan, Sonia Sotomayor and Ketanji Brown Jackson) agreed that IEEPA does not authorize tariffs but relied solely on conventional statutory interpretation – text and context – without invoking the major questions doctrine. In their view, the word "regulate" in IEEPA, read in light of the statute's structure, legislative history and the way Congress typically delegates tariff powers, is best understood as authorizing control over foreign property transactions (e.g., blocking, freezing, licensing), not raising revenue through duties.

Justice Jackson emphasized committee reports accompanying both the 1941 amendments to the Trading with the Enemy Act of 1917 and 1977 enactment of IEEPA, which focus on "freezing" and controlling foreign property, not taxing imports.

The Dissent

Justice Kavanaugh, joined by Justices Thomas and Alito, dissented. He argued that the authority to "regulate … importation" historically includes tariffs, as well as quotas and embargoes.

In the dissent's view, when Congress enacted IEEPA in 1977 using the same "regulate … importation" language, following those precedents, Congress and the public would have understood that phrase to encompass tariffs.

Justice Clarence Thomas added a separate dissent, arguing that under his reading of the nondelegation doctrine, Congress may broadly delegate tariff and foreign commerce powers to the president and that the Court's reliance on separation-of-powers and major-questions principles was misplaced in this context.

Next Steps

Reimbursement of IEEPA Tariffs

With the Court's decision, the IEEPA-based Reciprocal Tariffs and Trafficking and Immigration Tariffs are unlawful. A key question is how previously collected duties will be addressed. The Court did not specify whether refunds must be issued or how they would be processed.

The opinion makes clear that:

• IEEPA tariffs paid are, in principle, subject to reimbursement. The Federal Circuit and Supreme Court acknowledged that a ruling against the government could open the door to recovery of IEEPA duties.
• The mechanics are unresolved. The Supreme Court did not address remedial details or direct how refunds should occur.

In this environment, importers seeking to preserve rights to reimbursement should act promptly and methodically:

• Contact counsel to discuss the most efficient and expeditious path to assert a right for refunds.
• Preserve and organize records of all entries subject to IEEPA tariffs, including entry summaries, duty payment records and internal allocation of tariff costs.
• Monitor and, where necessary, utilize existing administrative mechanisms – post-summary corrections, protests, requesting extension of liquidation and other remedies under 19 U.S.C. § 1514 and related provisions – with close attention to statutory and regulatory deadlines.
• Follow forthcoming guidance from CBP, the U.S. Department of Justice and U.S. Department of the Treasury on refund procedures and documentation requirements.

Potential New Tariff Measures

• Section 122 of the Trade Act of 1974, which authorizes a "temporary import surcharge" to address "large and serious United States balance-of-payments deficits." That authority, however, is expressly constrained by a 15 percent cap and 150‑day duration limit. Any attempt to recreate the Reciprocal Tariffs under Section 122 would need to conform to those limits and satisfy the statute's balance-of-payments criteria.
• Section 338 of the Tariff Act of 1930, which authorizes increases (up to 50 percent) in duties when the president finds that a foreign country imposes burdens or disadvantages on U.S. commerce.
• Section 301 of the Trade Act of 1974, under which the U.S. Trade Representative (USTR) investigates and determines whether foreign acts, policies or practices are "unjustifiable" or "discriminatory" and burden or restrict U.S. commerce and may recommend duties or other actions.
• Section 232 of the Trade Expansion Act of 1962, which empowers the president to "adjust the imports" of an article where the U.S. Department of Commerce Secretary finds that imports threaten to impair national security, again following an investigation and report.
• Section 201 of the Trade Act of 1974, which allows duties or other measures if the U.S. International Trade Commission (ITC) finds that increased imports are a "substantial cause of serious injury" or threat thereof to a domestic industry. This safeguard mechanism requires a formal ITC investigation, public hearing and report before the president may act.

White House Response

Shortly after the decision was released, President Trump held a press conference in response. The president announced he would impose tariffs under Section 122 to replace the IEEPA tariffs invalidated by the Supreme Court's decision. The new tariffs, which have not been announced through a written executive order, will apply globally at rate of 10 percent.

Two aspects of Section 122 are worth noting. First, Section 122 provides for tariffs of up to 15 percent. By announcing tariffs today of only 10 percent, the administration has left itself room to increase tariffs if it needs to ratchet up pressure on a particular trading partner. Second, Section 122 tariffs are time-limited to 150 days. The president made clear that he intended to use that 150-day period to start a host of investigations under Section 301 of the Trade Act of 1974. Those investigations could be the basis for additional tariffs that – unlike the Section 122 tariffs announced today – are not time-bound or capped at a certain percentage. In the end, Section 301 tariffs could offer the president what he wants in a replacement tariff regime: the ability to adjust tariffs up or down, country-by-country specificity and a statutory foundation that has held up to court challenges in other circumstances.

The president's comments regarding tariff refunds were also instructive. He noted that the Supreme Court opinion did not address refunds, and he suggested that potential tariff refunds will be the subject of future litigation. This suggests that the administration may intend to fight the issuance of some or all IEEPA tariff refunds in court, a process that could take years to complete.

Broader Political and Geopolitical Impact

The political consequences of the decision could be meaningful, particularly because global tariffs have been a prominent component of the president's domestic economic and foreign policy agenda. By removing a key source of executive tariff authority, the Court's ruling introduces practical and political uncertainty that may affect how the administration advances its trade priorities going forward. The president is expected to address the ruling during the upcoming State of the Union on February 24, providing a nationally televised platform to frame the decision and outline the administration's path forward.

The Court's opinion underscored Congress' exclusive constitutional authority over tariff-making, raising immediate questions regarding legislative next steps. In an election year, with midterm elections scheduled for November, the decision also introduces a heightened political dimension, as trade policy may become more directly intertwined with campaign messaging, congressional positioning, and broader debates over executive authority and economic security. Though Republican lawmakers may pursue statutory codification of reciprocal tariff authority, the current partisan alignment makes meaningful Democratic support unlikely, rendering near-term legislative action uncertain.

Beyond Washington, the decision carries broader geopolitical implications. To date, the administration has reached or announced full or preliminary reciprocal tariff arrangements with 19 countries. In exchange for reductions of IEEPA-based tariffs, counterpart governments agreed to lower tariffs on U.S. exports, remove non-tariff barriers (including commitments related to critical minerals, rare earth supply chains, vehicle emission standards alignment and digital trade access) and undertake substantial investment pledges in the U.S. South Korea publicly committed to approximately $350 billion in U.S.-directed investment, and the European Union announced a $550 billion commitment on strategic sectors including military and defense.

With the principal source of executive leverage underpinning these agreements now deemed unconstitutional, their durability is uncertain, even as the administration is unlikely to voluntarily unwind them. Countries still engaged in negotiations may reassess their incentives to conclude agreements absent credible tariff authority. Moreover, the administration has deployed IEEPA-based tariffs as a broader national security instrument, including in connection with countries maintaining commercial ties with Iran and Cuba – raising additional questions about how those policy objectives will be pursued under alternative statutory authorities.

Conclusion

The Supreme Court's ruling removes IEEPA as a legal basis for tariff programs and reinforces that tariff authority must come from Congress or statutes that clearly delegate such power. For importers, the decision creates a potential opportunity to pursue recovery of IEEPA‑based duties, though the refund process is likely to be complex. At the same time, the administration has announced the use of multiple alternative tools – including Sections 122, 301 and potentially others – that it plans to use as a basis for new tariffs. Companies should evaluate both potential refund strategies and ongoing tariff exposure under non‑IEEPA authorities.

If your business has paid IEEPA‑based tariffs or may be affected by "replacement" tariffs, consult experienced trade counsel to assess preservation steps and risk mitigation strategies

Holland & Knight's international trade and tariff teams are closely tracking refund developments, potential further litigation and new tariff initiatives under Sections 122, 338, 301, 232 and 201.

Please contact the authors of this alert or any member of Holland & Knight's Tariff Task Force or International Trade Group to evaluate your exposure, preservation steps, and recovery or risk‑mitigation options in light of the Supreme Court's decision.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.