Tariff Lawsuit at the Supreme Court: IEEPA Ruling and Refunds

In February 2026, the Supreme Court tariff ruling in Learning Resources, Inc. v. Trump struck down President Trump’s sweeping import duties, holding 6-3 that the International Emergency Economic Powers Act does not give the president authority to impose tariffs. The decision invalidated a tariff regime that had collected roughly $133.5 billion from U.S. importers in about a year and forced the administration to pivot to other statutes within hours.¹²

What the Court Decided

The case consolidated two challenges: one from Learning Resources, a family-owned educational toy company whose CEO estimated the tariffs would push its annual tariff bill from $2.3 million to over $100 million, and one from wine importer V.O.S. Selections together with a coalition of 22 states and two governors.³⁴ The duties at issue included 25% tariffs on most Canadian and Mexican goods, Chinese duties that had climbed to an effective 145% on most products, and the April 2025 “reciprocal” tariffs that imposed a 10% baseline on imports from nearly every country with higher individualized rates on dozens of nations.⁵⁶

Chief Justice Roberts announced the judgment on February 20, 2026, joined on the core statutory holding by Justices Sotomayor, Kagan, Gorsuch, Barrett, and Jackson. The vote was 6-3, with Justices Kavanaugh, Thomas, and Alito in dissent.⁷

Why IEEPA Did Not Authorize the Tariffs

Roberts grounded the decision in the Constitution’s assignment of the taxing power to Congress. Citing Gibbons v. Ogden (1824), he described tariffs as “a branch of the taxing power” and a legislative function under Article I. IEEPA grants the president authority to “regulate… importation,” but it never mentions tariffs or duties, and the government could not point to any statute in which Congress used the word “regulate” to authorize taxation.⁵

The majority treated the president’s position as a claim to “the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope,” which required “clear congressional authorization.” No president in IEEPA’s 50-year history had ever read the statute to confer tariff power, and when Congress does delegate tariff authority it uses specific language and defined limits, as in Section 232 of the Trade Expansion Act and Sections 122 and 301 of the Trade Act of 1974.⁸ At oral argument, the government also conceded that the president has no inherent authority to impose tariffs during peacetime.⁵

Roberts invoked Justice Robert Jackson’s concurrence in Youngstown Sheet & Tube Co. v. Sawyer (1952) for the proposition that “emergencies can ‘afford a ready pretext for usurpation’ of congressional power.” The majority declared there is no emergency exception to the requirement of clear statutory authorization before the president can exercise the taxing power.⁹

The six justices in the majority did not all reach the result the same way. Roberts, Gorsuch, and Barrett used the major questions doctrine, holding that IEEPA’s ambiguous language could not support a “transformative expansion” of presidential power over an issue of vast economic significance. Justice Kagan, joined by Sotomayor and Jackson, agreed IEEPA does not authorize tariffs but argued “ordinary tools of statutory interpretation” were sufficient without reaching for the doctrine. Jackson’s separate concurrence pointed to the legislative history of IEEPA and its predecessor, the Trading with the Enemy Act, as confirming that Congress never intended to hand the executive tariff power.⁵

The Dissents

Justice Kavanaugh, joined by Thomas and Alito, argued that IEEPA’s broad language, the ordinary meaning of “regulate,” historical practice, and precedent all supported presidential tariff authority under the statute. He contended that the major questions doctrine was either satisfied or inapplicable to foreign-affairs actions. Justice Thomas filed a separate dissent arguing that the nondelegation doctrine does not apply to foreign commerce, so Congress may delegate tariff-making to the president without violating the separation of powers.¹⁰

Which Tariffs Fell and Which Stayed

The ruling reached only tariffs imposed under IEEPA. The February 2025 duties on China, Canada, and Mexico tied to drug-trafficking emergencies, and the April 2025 “reciprocal” tariffs tied to the trade-deficit emergency, all fell. Section 232 duties on steel and aluminum and Section 301 duties on Chinese goods were untouched by the decision because they rested on different statutory authority.¹¹

Within hours, Trump signed Executive Order 14389, “Ending Certain Tariff Actions,” revoking nine prior executive orders that had imposed IEEPA duties on China, Canada, Mexico, and dozens of other countries, along with sanctions-related tariffs on Russia, Cuba, Venezuela, and Iran. Customs and Border Protection halted collection of all IEEPA tariffs effective February 24, 2026.¹²¹¹

The Section 122 Replacement

On the same day the Court ruled, Trump signed a proclamation imposing a new 10% “temporary import surcharge” under Section 122 of the Trade Act of 1974. The next day he announced the rate would rise to 15%, the maximum the statute allows, effective February 24. The proclamation exempted USMCA-qualifying goods from Canada and Mexico, items already covered by Section 232 duties, critical minerals, pharmaceuticals, and certain electronics.¹³¹¹ Section 122 caps such tariffs at 150 days unless Congress votes to extend them. The administration also announced plans for new Section 301 investigations targeting “most major trading partners” as a basis for future country-specific tariffs.¹⁴

The Section 122 tariffs have already run into their own legal problems. On May 7, 2026, the Court of International Trade ruled 2-1 that the 15% global tariffs were “invalid” and “unauthorized by law.” Judges Mark A. Barnett and Claire R. Kelly concluded the president had overstepped the authority Congress granted under that statute; Judge Timothy C. Stanceu dissented. The ruling blocked collection from the plaintiffs in that case: the state of Washington, spice company Burlap & Barrel, and toy company Basic Fun. The administration is expected to appeal to the Federal Circuit.¹⁵¹⁶

Refunds for Importers

The Supreme Court did not address what should happen to the money already collected, and that question has become a separate fight. On March 4, 2026, the Court of International Trade ordered CBP to strip the IEEPA tariffs from import records and issue refunds to all importers of record, whether or not they had sued. The government stayed the order two days later to build an administrative system to process the claims.¹⁷

CBP built a new platform called CAPE (Consolidated Administration and Processing of Entries) to handle refunds in phases. As of June 2026, roughly $95 billion was queued, with about $23 billion approved and transmitted to the Treasury, and CBP expected more than $40 billion to be disbursed by late June. V.O.S. Selections owner Victor Schwartz was among the first paid, receiving a deposit of about $110,000, roughly 95% of what his business was owed.¹⁸¹⁹

On June 3, 2026, the Department of Justice appealed the universal refund order to the Federal Circuit, arguing it amounts to an impermissible universal injunction and that refunds should go only to importers who individually filed protective actions at the CIT. The administration intends to restrict a later phase, covering entries that have been “finally liquidated,” to importers who filed their own lawsuits. Counsel estimates roughly $30 billion in refunds is at risk for importers who did not file.¹⁸

Separately, class actions have been filed against major importers including FedEx, UPS, Costco, and Lululemon, alleging those companies passed the illegal tariff costs to customers and should not be allowed to keep the refunds. The “pass-through” suits rely on unjust enrichment, breach of contract, and state consumer protection theories.²⁰

What Is Still Unsettled

Challenges to tariffs of this kind must be filed in the Court of International Trade, not in ordinary federal district courts. The Supreme Court vacated and remanded Learning Resources with instructions to dismiss for lack of jurisdiction, and affirmed the V.O.S. Selections judgment, which had come up through the CIT and Federal Circuit.⁵

For importers and consumers, tariff rates have not fallen as sharply as the ruling might suggest. The 15% Section 122 surcharge, Section 232 steel and aluminum duties, and Section 301 duties on Chinese goods remain in force, and the Section 122 rate sits close to the earlier baseline. Businesses still face elevated input costs and significant policy uncertainty.²¹

The ruling also undermined the legal foundation of 21 bilateral trade agreements the administration had negotiated using IEEPA tariffs as leverage, and the Office of the U.S. Trade Representative is pursuing Section 301 investigations to rebuild that bargaining position.¹¹ The Section 122 surcharge, meanwhile, carries its own 150-day clock and faces an active appeal, so the shape of U.S. tariff policy over the next year will depend on what Congress does, how the Federal Circuit rules on both the Section 122 challenge and the refund order, and whether the Supreme Court takes either case next.²²

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