US Supreme Court Curbs Presidential Tariff Authority
The U.S. Supreme Court ruled that the President does not have the legal authority to unilaterally impose tariffs under the International Emergency Economic Powers Act (IEEPA). The decision curtails a power previously used to set trade policy. In an analysis, national advisory firm Wipfli urged businesses to re-evaluate their tariff exposure following the ruling.
- The 6-3 ruling centered on the court's interpretation that the IEEPA does not explicitly grant the president the authority to levy taxes in the form of tariffs. The majority opinion, written by Chief Justice John Roberts, argued that the power to "regulate" imports within the act could not be stretched to include the power to tax, a power the Constitution reserves for Congress. - This case, a consolidation of *Learning Resources, Inc. v. Trump* and *V.O.S. Selections, Inc. v. Trump*, marked a significant check on presidential power over trade policy. The legal challenges were brought by small businesses and several states, arguing the tariffs imposed in 2025 on imports from China, Canada, Mexico, and later other partners, were unlawful. - Enacted in 1977, the IEEPA was intended to provide presidents with a tool to respond to foreign national emergencies by regulating international commerce, such as freezing assets. Until the recent tariffs, no president in the statute's nearly 50-year history had used it to unilaterally impose broad tariffs. - The decision invalidates tariffs related to fentanyl and those termed "reciprocal," which were based on the IEEPA. However, it does not affect tariffs imposed under other laws, such as Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974, which have been used to justify duties on steel, aluminum, and Chinese goods. - The ruling opens the possibility for companies to claim refunds on the estimated $175 billion to $200 billion in tariffs paid under the now-invalidated orders. However, the Supreme Court did not specify the process for these refunds, which will likely lead to further litigation. - The tariffs were initially imposed in February 2025, targeting Canada, Mexico, and China, citing national emergencies related to drug smuggling and illegal immigration. This was later expanded in April 2025 with "reciprocal tariffs" on almost all U.S. trading partners, justified by "large and persistent" trade deficits.
