Supreme Court Curbs Presidential Tariff Power
The U.S. Supreme Court ruled on February 20 that the President does not have the legal authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA). The decision follows actions taken by former President Trump. Advisory firm Wipfli is now advising businesses to re-evaluate their tariff exposure in light of the ruling.
- The 6-3 majority opinion, authored by Chief Justice John Roberts, reasoned that the power to levy taxes and tariffs is constitutionally vested in Congress and that the IEEPA's language to "regulate" imports does not explicitly grant tariff authority. - This ruling invalidates tariffs that had generated an estimated $160 billion to $175 billion in revenue, opening the possibility for importers to seek refunds, though the court did not specify the process or requirement for repayment. - The case, *Learning Resources, Inc. v. Trump*, centered on the 1977 International Emergency Economic Powers Act (IEEPA), a law historically used for sanctions like freezing assets, not for imposing broad-based tariffs. - This decision does not impact other major tariffs levied under different laws, such as the Section 232 tariffs on steel and aluminum or the Section 301 tariffs targeting unfair trade practices with China. - In response to the ruling, former President Trump immediately announced his intention to use a different law, Section 122 of the Trade Act of 1974, to impose a temporary 10% global tariff. - The invalidated tariffs included so-called "reciprocal tariffs" on most U.S. trading partners and levies linked to national emergencies declared over fentanyl trafficking. - Lower courts, including the U.S. Court of Appeals for the Federal Circuit, had previously ruled against the use of IEEPA for these tariffs, characterizing them as "unbounded in scope, amount, and duration."
