Supreme Court Limits President's Tariff Authority
The U.S. Supreme Court ruled 6-3 that the International Economic Emergency Powers Act (IEEPA) does not grant the President unilateral power to impose tariffs during emergencies. Chief Justice Roberts, writing for the majority, stated that the power to tax and impose tariffs is vested in Congress. The decision means the executive branch must now seek congressional authorization for new tariff policies, a move that could reduce market unpredictability from sudden trade actions.
- The case, a consolidation of *Learning Resources, Inc. v. Trump* and *Trump v. V.O.S. Selections, Inc.*, was decided on February 20, 2026. The majority opinion argued that the power to "regulate...importation" in the IEEPA does not explicitly grant the power to tax, a power the Constitution reserves for Congress. - This was the first time in the nearly 50-year history of the IEEPA that a president had used it to impose tariffs. The Act, passed in 1977, was intended to clarify and restrict presidential emergency powers, primarily for actions like freezing assets or imposing sanctions. - The ruling specifically invalidates the "Trafficking and Immigration Tariffs" applied to imports from Canada, Mexico, and China, as well as the "Reciprocal Tariffs" that were applied to most U.S. trading partners. It does not affect tariffs imposed under other laws, such as Section 232 of the Trade Expansion Act of 1962, which covers national security threats. - Justices Brett Kavanaugh, Samuel Alito, and Clarence Thomas dissented. Justice Kavanaugh's dissent argued that the historical context of the phrase "regulate...importation" at the time the IEEPA was passed would have been understood to include the power to set tariffs. - In response to the ruling, the President announced the immediate imposition of new global tariffs of 10% (later suggesting 15%) under a different authority, Section 122 of the Trade Act of 1974, which can be used to address balance-of-payment issues. However, tariffs under this authority are limited to 150 days unless extended by Congress. - The decision opens the possibility for importers to receive refunds for the tariffs paid under the IEEPA, estimated to be over $160 billion. However, the Supreme Court did not specify the process for these refunds, which is expected to lead to further litigation. - The majority opinion, in part, invoked the "major questions doctrine," asserting that if Congress intended to delegate a power of such vast "economic and political significance" as setting tariffs, it must do so with explicit and clear language, which it found lacking in the IEEPA.
