Supreme Court Strikes Down IEEPA Tariffs; Refund Process to Be Determined

Earlier today, the U.S. Supreme Court (“Court”) determined that the International Emergency Economic Powers Act (“IEEPA”) does not authorize the President to issue tariffs in response to “unusual and extraordinary threats” to American national security and foreign policy. Chief Justice Roberts, joined by Justices Gorsuch and Barrett in full, and Justices Sotomayor, Kagan, and Jackson in part and as to the judgment, concluded that the President’s ability to “regulate … importation” under IEEPA did not give to the President “the independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time.”

The Court’s decision provides no guidance on how the federal government is to issue refunds for IEEPA tariffs already paid. Nor does it decide whether the Administration may seek to invoke different legal authorities to impose similar tariffs. Importers may need to file or join a claim in the U.S. Court of International Trade or utilize the administrative procedures of U.S. Customs and Border Protection (“CBP”) to fully preserve their right to a refund.

What Did the Decision Say?

Enacted in 1977, IEEPA authorizes the President to take certain measures to address an “unusual and extraordinary threat” to American national security and foreign policy. Specifically, IEEPA authorizes the President to “investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent, or prohibit” any “importation or exportation of … any property in which any foreign country or a national thereof has any interest.” 50 U.S.C. §§ 1701(a), 1702(a)(1)(B).

President Trump invoked this authority to issue two sets of tariffs: one to address an asserted influx of illegal drugs from Canada, Mexico, and China; the other to address “large and persistent trade deficits.” Dozens of nations faced higher rates based on the President’s assertions of authority. The government argued that the tariffs could be imposed based on the President’s power in IEEPA to “regulate ... importation.”

The Court rejected that view. In his opinion for the majority, the Chief Justice noted that the power to impose tariffs is “a branch of the taxing power,” which belongs squarely to Congress, not the Executive Branch. While the word “regulate” is a broad term that “captures much of what a government does on a day-to-day basis,” the Court held that the term does not “usually” cover “taxation,” and it expressed skepticism that “in IEEPA—and in IEEPA alone—Congress hid a delegation of its birth-right power to tax within the quotidian power to ‘regulate.’” “When Congress grants the power to impose tariffs,” the Court explained, “it does so clearly and with careful restraints. It did neither here.”

The six-Justice majority agreed in full about the bottom-line result in the case and was divided only on an issue of interpretive methodology: i.e., whether to decide the case under the “major questions” doctrine, which the Court has previously held imposes a limit on the ability of the Executive Branch to rely on ambiguous delegations of authority on matters of great significance. The Chief Justice, Justice Gorsuch, and Justice Barrett concluded that Congress did not intend to give the President “extravagant” powers of “economic and political significance” with “ambiguous statutory text,” such as the word “regulate.” Justices Sotomayor, Kagan, and Jackson were of the view that the case could be decided on “ordinary principles of statutory interpretation” without any “major questions” presumption. The division on this methodological issue does not affect the ultimate decision reached by the six Justices—that IEEPA does not authorize tariffs.

Justice Kavanaugh authored the principal dissent, which was joined by Justices Thomas and Alito. He began by noting that, “[s]ince the Founding,” a number of federal statutes had authorized the President “to impose tariffs and other foreign import restrictions.” In his view, IEEPA allowed the President to do so “more efficiently to deal with foreign threats during national emergencies.” The dissenters disagreed with the majority’s conclusion that the word “regulate” did not include the power to impose tariffs, reasoning that tariffs had historically been used as a means of regulating importation. Justice Kavanaugh observed that earlier trade laws had allowed the President to impose “monetary exactions” using terms and phrases as broad as the word “regulate.” Responding to the three Justices who would declare the tariffs invalid under the major questions doctrine, Justice Kavanaugh stated that Congress “clearly authorized tariffs in IEEPA when it empowered the President to ‘regulate … importation,’” and that, in his view, the major questions doctrine should not apply anyway in the context of foreign affairs.

Justice Thomas wrote a separate dissent on the nondelegation doctrine.

Which Tariffs Are Affected?

The Court overturned all the President’s tariffs imposed under IEEPA, including the “reciprocal” and “fentanyl” tariffs (the “IEEPA tariffs”). The reciprocal tariffs applied to the vast majority of products from almost every foreign country (but not Canada or Mexico), and generally ranged from 10% to 50%. The fentanyl tariffs applied to products from Canada, China, and Mexico, and generally ranged from 10% to 35%. Administratively, CBP will need to update the Automated Commercial Environment (“ACE”) system to remove the IEEPA tariffs. After that, importers will no longer need to declare these tariffs.

Which Tariffs Are Staying the Same?

The Court’s opinion did not address product-specific tariffs or China-specific tariffs that the President has imposed under other authorities, including Section 232 of the Trade Expansion Act of 1962 (“Section 232”) or Section 301 of the Trade Act of 1974 (“Section 301”). Accordingly, nothing in the decision impacts CBP’s authority to assess the Section 232 and Section 301 tariffs.

Section 232 tariffs are product-specific and apply to imports from all countries, unless exemptions apply. Currently, the following products are subject to Section 232 tariffs: aluminum & aluminum derivatives; automobiles & auto parts; copper & copper derivatives; steel & steel derivatives; timber, lumber & derivatives thereof (including certain upholstered furniture); semiconductors; and trucks and heavy-duty vehicles. Some countries have negotiated trade deals with the United States that limit application of certain Section 232 tariffs. The Court’s decision does not affect these tariffs.

Section 301 tariffs currently apply to many Chinese products. They also are not affected by the Court’s decision.

What About Refunds of Tariffs?

The Court was notably silent on the applicability of refunds. In his dissent, Justice Kavanaugh expressed concern that the Court’s ruling would lead to “interim effects” that “could be substantial,” noting that the government may owe billions in refunds to importers who paid the IEEPA tariffs. “The refund process,” he explained, “is likely to be a ‘mess,’” yet the majority’s decision said “nothing today about whether, and if so how, the Government should go about returning the billions of dollars that it has collected from importers.”

Now that the Court has invalidated the IEEPA tariffs, CBP does not have authority to assess them. The process for obtaining refunds depends on the “liquidation” status of the applicable entry within CBP’s system. Liquidation is CBP’s final assessment of tariffs, which generally occurs within 315 days after importation.

• For unliquidated entries imported within the previous 300 days: importers can file a post summary correction (“PSC”), removing the IEEPA tariff codes. CBP should process refunds once it accepts the PSC.
• For unliquidated entries imported more than 300 days ago: no PSC is available. Importers will need to wait until the entry liquidates. After that, the importer can submit an administrative “protest” to CBP challenging the assessment of IEEPA tariffs.
• For entries that liquidated prior to the issuance of the Court’s decision: no PSC is available and administrative protests may not be successful. Importers can file suit in the U.S. Court of International Trade requesting reliquidation of the entries for which IEEPA tariffs were paid.

What About De Minimis Shipments?

The Court’s opinion did not address the President’s cancellation of the de minimis exception, which had assessed a 0% tariff on products valued at $800 or less. Since cancellation, regular tariffs have applied to these products (except for international postal shipments until February 28, 2026). The One Big Beautiful Bill Act of 2025 ends de minimis treatment for all commercial shipments starting on July 1, 2027.

Although the President’s executive orders cancelling the de minimis exception relied on his authority under IEEPA, the plaintiffs in the Supreme Court litigation did not challenge the President’s cancellation of the de minimis exception. (And there may be an independent statutory basis for the exception, in any event.) It is possible, however, that the Court’s decision could be relevant to a future challenge.

What Tariffs Are Coming Next?

The Court’s decision leaves open whether the Administration may reimpose some or all of the IEEPA tariffs under different statutory authorities. Trump Administration officials have publicly stated that tariffs are a critical part of the President’s trade agenda. And we expect the Trump Administration will use other means to impose tariffs. The President has already announced that he intends to impose a 10% global tariff under Section 122 of the Trade Act of 1974, which sets a 150-day limit for these tariffs, and to initiate new tariff investigations under Section 301 of the 1974 Act.

Justice Kavanaugh suggested in his dissent that the Court’s decision would not “greatly restrict Presidential tariff authority going forward.” He identified a number of federal statutes by which the President could potentially impose tariffs, such as the Trade Expansion Act of 1962, the Trade Act of 1974, and the Tariff Act of 1930. For its part, the Court majority declined to “speculate on hypothetical cases not before us.” The Court noted, however, that these alternative statutes “contain various combinations of procedural prerequisites, required agency determinations, and limits on the duration, amount, and scope of the tariffs they authorize.” Thus, any attempt to reimpose the IEEPA tariffs under other authorities may be subject to certain built-in limits regarding scope and flexibility.

The Trump Administration has also completed Section 232 investigations (but not yet imposed any tariffs) on the following products: critical minerals, medical devices and products, pharmaceuticals, robotics and industrial machinery, commercial aircraft, polysilicon, unmanned aircraft systems, and wind turbines. The Supreme Court’s decision does not itself restrict the President’s ability to impose Section 232 tariffs on these products based on those investigations, or his ability to initiate new investigations.

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee similar outcomes.