Tariffs Ruled Unconstitutional: Section 122 and $166B in Refunds

On February 20, 2026, the Supreme Court ruled 6–3 that the International Emergency Economic Powers Act does not give the president authority to impose tariffs, striking down the sweeping import duties the Trump administration had put in place beginning in April 2025. The Supreme Court tariff ruling, issued in Learning Resources, Inc. v. Trump, held that the power to tax imports belongs to Congress under Article I and cannot be claimed through an emergency statute that never mentions tariffs, duties, customs, taxes, or imposts.¹

What the Court Decided

Chief Justice John Roberts wrote the opinion for a six-justice majority. IEEPA’s grant of power to “regulate . . . importation” does not encompass the power to tax, the Court held, and tariffs are a form of taxation. The opinion drew on Gibbons v. Ogden (1824) to classify tariffs as “a branch of the taxing power,” which the Constitution vests in Congress alone. Because IEEPA contains no reference to tariffs, duties, or revenue, and because the government could not identify any other statute in which the word “regulate” had been read to authorize taxation, the textual argument was dispositive.¹

The Court flagged a second problem with the government’s reading. IEEPA covers both imports and exports, but the Constitution expressly forbids taxing exports. Reading “regulate” to mean “tax” would render part of the statute unconstitutional on its face.¹

The duties struck down were substantial. Beginning April 2, 2025, Trump had invoked IEEPA to declare a national emergency over persistent trade deficits and imposed a 10% baseline duty on goods from every trading partner, country-specific rates climbing as high as 50%, and separate 25% duties on most Canadian and Mexican goods and duties on Chinese imports that were later raised to 125%. The combined effect pushed the average U.S. tariff rate to roughly 22.5%, the highest since the early 1930s.²³

How the Justices Split

All six justices in the majority agreed that IEEPA does not authorize tariffs. They divided sharply on how to get there.

The Roberts Plurality

Roberts was joined in full by Justices Gorsuch and Barrett in applying the “major questions doctrine,” under which courts do not read decisions of vast economic and political significance into ambiguous statutory language. The plurality noted the government’s own estimate that the tariffs would have a $4 trillion fiscal impact, dwarfing prior major-questions cases. No president in IEEPA’s nearly fifty-year history had ever invoked it for tariffs, and the plurality rejected the argument that emergency or foreign-affairs contexts exempt the executive from the doctrine.⁴

The Liberal Concurrence

Justice Kagan, joined by Sotomayor and Jackson, concurred in the result but rejected the major questions doctrine outright. Ordinary statutory interpretation was enough, Kagan wrote, and the doctrine put an unnecessary judicial “thumb on the scale.” Jackson also wrote separately to point to House and Senate committee reports showing Congress never intended IEEPA to authorize tariffs.⁴⁵

Gorsuch and Barrett on What the Doctrine Is

Gorsuch and Barrett both joined Roberts in full but wrote separately to disagree about the doctrine’s foundations. Gorsuch defended the major questions doctrine as rooted in the Constitution’s separation of powers and the nondelegation principle. Barrett pushed back, calling the doctrine not a constitutional command but “ordinary textualism”: Article I supplies interpretive context that makes it unlikely Congress would quietly hand off enormous authority, but that is how language works in context, not a separate rule. Using policy canons to override the most natural reading of a statute, she warned, would be a “judicial flex” inconsistent with textualism.⁶⁷

The Dissents

Justice Kavanaugh, joined by Thomas and Alito, dissented. Kavanaugh argued that “regulate” is broad enough to cover tariffs, which he described as “a traditional and common tool to regulate importation,” and contended that the major questions doctrine should not apply to foreign-affairs statutes. He also warned the government “may be required to refund billions of dollars to importers,” a process he called a “mess.”⁵

Thomas dissented separately, arguing from Founding-era dictionaries and English royal prerogatives that “regulatory duties” on imports were historically an executive function distinct from internal taxation. No other justice joined his reasoning.⁸

What the Ruling Does Not Touch

The decision was limited to IEEPA. Tariffs imposed under other statutes remain in force, including duties on steel and aluminum under Section 232 of the Trade Expansion Act of 1962 and duties on Chinese goods under Section 301 of the Trade Act of 1974. The administration has signaled heavy reliance on these authorities going forward.⁹

In March 2026, the U.S. Trade Representative launched 60 Section 301 investigations targeting countries the administration alleges have failed to prohibit importation of goods made with forced labor. USTR proposed additional duties of 10% to 12.5% on their products, with a public comment period running through July 2026. The Bureau of Industry and Security also has active Section 232 national-security investigations spanning semiconductors, critical minerals, robotics, and commercial aircraft.¹⁰⁹

The Court also did not decide whether the executive can use IEEPA for other, non-tariff measures related to specific threats such as fentanyl trafficking, and it declined to address whether courts can review a president’s determination that a national emergency exists.⁹

The Section 122 Replacement Tariffs

The White House responded within hours. On the day the ruling came down, Trump signed a proclamation imposing a new 10% global tariff under Section 122 of the Trade Act of 1974, a provision allowing temporary import surcharges of up to 15% for 150 days to address balance-of-payments deficits. He raised the rate to 15% the next day, effective February 24, 2026.¹¹

Trump publicly attacked the ruling as “terrible” and “ridiculous,” calling the justices who voted against him “fools” and “unpatriotic” and singling out Gorsuch and Barrett, both his appointees, saying their votes were “an embarrassment to their families.” U.S. Trade Representative Jamieson Greer stated that “the policy hasn’t changed.”¹²¹³

The replacement tariffs drew their own lawsuit. Oregon led a coalition of 24 states, joined by importers Burlap and Barrel and Basic Fun, arguing that Section 122 was designed for currency crises under a fixed exchange-rate system that ended in 1976 and that the president had conflated a goods trade deficit with an actual balance-of-payments deficit.¹⁴¹⁵⁹

Refunds: $166 Billion in Play

Roughly $166 billion in tariffs plus interest was collected under the invalidated orders, and over 2,000 refund lawsuits are pending in the Court of International Trade. A CIT judge ordered U.S. Customs and Border Protection to issue refunds with interest, which is accruing at an estimated $650 million per month.⁹

CBP began accepting refund requests in late April 2026 through a system called CAPE (Consolidated Administration and Processing of Entries). As of June 2026, CBP had processed refunds on approximately 8.5 million entries, with about $23 billion approved and transmitted to Treasury for disbursement and over $95 billion queued. The government expected to have paid out over $40 billion by the end of June. It also told the court it can process refunds for only about $127 billion of the $166 billion total, with the remaining $39 billion involving complications from goods finalized earlier in the trade war.¹⁶

Who gets a refund is contested. On June 3, 2026, the Department of Justice appealed the CIT’s refund orders, arguing they amount to “impermissible universal injunctions” and that refunds should be limited to importers who filed their own lawsuits. Under the government’s current policy, a final phase of refunds covering already-liquidated entries will be processed only for the roughly 4,000 importers who have filed suit. The CIT ordered the head of CBP to appear at a compliance hearing in June 2026.¹⁷¹⁶

What Is Still Unresolved

The ruling left several structural questions open. The Court did not define the outer limits of the president’s authority to “regulate importation” short of tariffs, did not decide whether IEEPA can support other kinds of trade measures tied to specific threats, and did not address judicial review of the president’s underlying emergency determination.⁹

The methodological split among the six justices in the majority is likely to generate further litigation. With the three liberal justices rejecting the major questions doctrine, Barrett describing it as ordinary textualism, and Gorsuch grounding it in constitutional separation of powers, the Court has not settled on a single framework for when courts should demand clear congressional authorization before the executive acts on ambiguous statutory text. That debate will shape the law of executive emergency powers well beyond tariffs.⁷

1
Supreme Court of the United States. Learning Resources, Inc. v. Trump, 607 U.S. ___
2
Council on Foreign Relations. A Year After Liberation Day, Experts Review the Costs of Trump’s Tariffs
3
Brookings Institution. Brookings Experts on the Supreme Court’s Tariff Decision
4
SCOTUSblog. A Breakdown of the Court’s Tariff Decision
5
SCOTUSblog. How and Why the Conservative Justices Differed on Tariffs
6
Lawfare. Article I and the Major Questions Doctrine After Learning Resources
7
SCOTUSblog. The Major Debate Over Major Questions Is Only the Beginning
8
Law & Liberty. Thomas’s Confusion of Terms
9
SCOTUSblog. The Remaining Questions After the Supreme Court’s Tariffs Ruling
10
Office of the U.S. Trade Representative. USTR Makes Findings and Proposes Action in 60 Section 301 Investigations
11
BBC News. Trump Responds to Supreme Court Tariff Ruling
12
The Hill. Live Updates: Trump, Supreme Court, Governors
13
New York Times. Supreme Court Trump Tariffs Updates
14
New York Attorney General. Oregon et al. v. Trump, Section 122 Complaint
15
U.S. Court of International Trade. Oregon v. United States, Slip Op. 26-47
16
New York Times. Trade Court Customs Chief, Tariff Refunds
17
Holland & Knight. IEEPA Tariff Refund Update: Government Appeals