Supreme Court Curbs President's Tariff Authority
The U.S. Supreme Court ruled that the president does not have the legal authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA). The decision follows tariffs imposed by the Trump administration. Accounting and advisory firm Wipfli is advising businesses to re-evaluate their tariff exposure in light of the ruling.
- The 6-3 decision was issued in the consolidated cases of *Learning Resources, Inc. v. Trump* and *Trump v. V.O.S. Selections, Inc*. The majority opinion, authored by Chief Justice John Roberts, reasoned that the power to "regulate... importation" granted under the IEEPA does not include the distinct constitutional power to tax, which belongs to Congress. - The ruling invoked the "major questions doctrine," which requires Congress to speak clearly when it assigns to the executive branch decisions of vast economic and political significance. The Court noted that in nearly 50 years since the IEEPA was enacted in 1977, no president had previously used it to impose tariffs. - This decision invalidates several broad tariff programs, including the "reciprocal tariffs" applied to nearly every country and specific "fentanyl tariffs" on goods from China, Canada, and Mexico. These tariffs had been justified by declared national emergencies related to trade deficits and illicit drug smuggling. - The ruling opens the possibility for U.S. importers to receive refunds on an estimated $175 billion in tariffs collected under the IEEPA. The Supreme Court did not outline a specific process for these refunds, which is expected to be complex and require further action from U.S. Customs and Border Protection (CBP). - Immediately following the decision, the Trump administration announced its intent to impose a new 10% global tariff, citing a different authority: Section 122 of the Trade Act of 1974. - This ruling does not impact tariffs imposed under other statutes. Tariffs authorized by Section 232 of the Trade Expansion Act of 1962 (related to national security) and Section 301 of the Trade Act of 1974 (related to unfair trade practices) remain in effect. - Without the IEEPA tariffs, the average effective tariff rate for the U.S. is expected to be 9.1%, which is still the highest rate since 1946, excluding 2025. The invalidated tariffs had a significant impact on apparel and food products, in addition to metals, vehicles, and electronics.
