Supreme Court Limits President's Tariff Authority Under IEEPA
The Supreme Court has ruled that the President does not have the legal authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA), according to an analysis by advisory firm Wipfli. The firm is advising businesses to re-evaluate their tariff exposure following the decision. The ruling comes as a recent JPMorgan report indicated that U.S. tariffs have tripled costs for midsize firms over the past year.
- The Supreme Court's 6-3 decision in *Learning Resources, Inc. v. Trump* and *Trump v. V.O.S. Selections, Inc.*, issued on February 20, 2026, affirmed that the International Emergency Economic Powers Act (IEEPA) of 1977 does not grant the President the authority to impose tariffs. The majority opinion, written by Chief Justice John Roberts, stated that the power to levy taxes and duties is reserved for Congress under the Constitution. - This ruling invalidates tariffs imposed by President Trump since early 2025, which included "Trafficking and Immigration Tariffs" on imports from Canada, Mexico, and China, and "Reciprocal Tariffs" on imports from most trading partners. No president in the nearly 50-year history of IEEPA had previously used it to impose tariffs. - The Court's decision did not address whether the government must issue refunds to importers for the collected tariffs, which are estimated to be over $160 billion. Justice Brett Kavanaugh noted in his dissent that the federal government might be required to refund billions, potentially creating uncertainty for trade agreements. The issue of refunds is expected to be handled by the Court of International Trade. - Immediately following the ruling, President Trump announced the imposition of a new 10% global tariff under Section 122 of the Trade Act of 1974 and plans for new trade investigations under Section 301 of the same act. This indicates a shift in legal strategy rather than an end to the administration's tariff policies. - Other tariff authorities, such as those under Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974, are not affected by this ruling and remain in place. - The now-invalidated IEEPA tariffs were based on national emergencies declared by President Trump related to the influx of illicit drugs and persistent U.S. trade deficits. - A July 2025 JPMorganChase Institute report found that recent U.S. tariff policies could impose up to $187.7 billion in direct import costs for midsize firms, who are disproportionately exposed because of their reliance on imports from countries facing the highest rates. - The Supreme Court's reasoning was based on statutory language, the "major questions doctrine" (requiring explicit congressional authorization for policies with vast economic impact), and the constitutional separation of powers.
