Supreme Court overturns IEEPA tariffs

On November 5, 2025, the U.S. Supreme Court heard oral arguments for and against the tariffs established under the International Emergency Economic Powers Act (IEEPA). On February 20, 2026, the court decided IEEPA does not authorize President Donald J. Trump to impose tariffs.

• The Supreme Court ruled 6–3 that IEEPA does not authorize the president to impose tariffs.
• Now that the Supreme Court overturned the IEEPA tariffs, the U.S. government will likely be required to refund the duties collected.
• The Supreme Court ruling is legally effective as of February 20, 2026. However, the operational impact will hinge on the federal government’s official guidance.

The International Emergency Economic Powers Act of 1977 empowers the president of the United States to regulate economic transactions following a declaration of national emergency.

IEEPA “may only be exercised to deal with an unusual and extraordinary threat with respect to which a national emergency has been declared.” It may not be exercised for any other purpose.

IEEPA has typically been used to set sanctions on adversaries. President George W. Bush invoked IEEPA after September 11, 2001, to financially hobble terrorists. President Barack Obama used IEEPA in 2015 to authorize economic sanctions on foreign-based hackers.

Trump is the first president to invoke IEEPA to establish tariffs and he has relied on it extensively since returning to the Oval Office. IEEPA is behind the “fentanyl tariffs” on Canada, China, and Mexico as well as the “reciprocal tariffs” on virtually all other countries. The IEEPA tariff rates ranged from 10% to 50%, and they could stack on top of other tariffs.

Two groups of businesses and a group of 12 states argued that IEEPA does not authorize the president to impose tariffs.

The U.S. Supreme Court consolidated the two IEEPA cases, Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections, and heard nearly three hours of oral arguments for and against the IEEPA tariffs on November 5, 2025. On February 20, 2026, the court decided IEEPA does not authorize the president to impose tariffs.

The Trump administration argued IEEPA does grant the president the authority to impose tariffs. President Trump claimed the nation’s trade deficit is a national emergency that merited the use of IEEPA. The U.S. has had a trade deficit since 1975.

The lower courts all rejected the president’s interpretation of IEEPA, but some judges dissented. “We do not see IEEPA as anything but an eyes-open congressional choice to confer on the president ‘broad authority’ to choose tools to restrict importation when the IEEPA … standards are met,” Justice Richard Taranto of the U.S. Court of Appeals for the Federal Circuit wrote in the dissenting opinion.

During the Supreme Court’s oral arguments, several members of the court’s conservative majority asked the administration’s lawyer “sharp and skeptical questions,” according to The New York Times.

The attorney for the plaintiffs also faced some tough questions. Justice Brett Kavanaugh asked why Congress would give the president power to shut down trade but not take a less severe step, like imposing a 1% tariff. Kavanaugh was one of the three dissenting justices.

Historically, U.S. tariffs are established under Section 232 of the Trade Expansion Act of 1962, Sections 201 or 301 of the Trade Act of 1974, or another law. President Trump has relied on these laws as well as IEEPA. He initiated more than a dozen Section 232 investigations and imposed Section 232 tariffs on numerous products, including aluminum, copper, steel, and certain trucks. He’s also requested Section 201 and Section 301 investigations. His use of Sections 201, 232, and 301 is not in dispute.

The administration isn’t without recourse. Responding to the Supreme Court decision on February 20, 2026, President Trump said he would impose a 10% global tariff under Section 122 effective immediately. 

Although the Supreme Court has ruled against IEEPA tariffs, there are still tariffs, and cross-border compliance is still challenging. Avalara helps alleviate compliance burdens by automating tariff code classification and calculating customs duties in real time. Learn about cross-border solutions from Avalara.

What is IEEPA? 

IEEPA refers to the International Emergency Economic Powers Act of 1977, which authorizes the president to regulate economic activity after declaring a national emergency following an unusual and extraordinary threat.

How has President Trump used IEEPA to impose tariffs?

President Trump claims the country’s long-standing trade deficit constitutes a national emergency. He’s the first U.S. president to invoke IEEPA to impose tariffs.

Why are businesses and states challenging the IEEPA tariffs?

Challengers argue that IEEPA was never intended to be used for trade policy and that using it to set tariffs exceeds presidential authority. They contend it shifts too much power from Congress to the executive branch.

What happens now that the Supreme Court ruled against Trump’s use of IEEPA for tariffs?

The Supreme Court decided that IEEPA does not authorize tariff imposition, but it did not address refunds. This decision may require the U.S. government to refund the IEEPA duties collected. It may also prompt the administration to rely on other trade laws like Section 122, Section 232, and Section 301. 

This blog post has been updated to reflect recent developments. It was originally published on November 5, 2025.