The Supreme Court's Tariffs Ruling: What Companies Need to Know

On Friday, February 20, the U.S. Supreme Court ruled 6-3 in Learning Resources, Inc. v. Trump, No. 24-1287 and 25-250, that the International Emergency Economic Powers Act (“IEEPA”) did not authorize the President to tariff imports from foreign countries based on a declared “national emergency” regarding the influx of illegal drugs into the U.S. and its trade deficits.

The majority held that while the IEEPA allows the President to “regulate…importation” of foreign property in the event of a national emergency, this did not mean Congress delegated power to the President to “impose tariffs on imports from any country, of any product, at any rate, for any amount of time.” The Court explained that the delegated power to “regulate” is not the same as the power to collect taxes, including tariffs, which lies solely with Congress under Article I, Section 8 of the Constitution. A dissent written by Justice Kavanaugh reached the opposite conclusion and noted that the majority decision might require a refund process for the billions of dollars paid in IEEPA tariffs, which is “likely to be a ‘mess.’"