U.S. Supreme Court Strikes Down IEEPA Tariffs

On February 20, 2026, the U.S. Supreme Court in a 6-3 decision concluded that the International Emergency Economic Powers Act (IEEPA) did not authorize President Trump to impose 25% tariffs on Mexico and Canada, 10% tariffs on China, and 10% tariffs (some higher) on other trading partners.¹ Notably, the Court did not address a remedy for importers and how the government will refund the billions of dollars already collected.

Writing for the majority, Chief Justice Roberts explained that the power to “lay and collect taxes, duties, imposts and excises” (which includes tariffs) is vested with Congress by Article I, Section 8 of the Constitution. No part of this power was vested in the Executive Branch. IEEPA was enacted in 1977 to give the President economic tools to address significant foreign threats. When invoking the IEEPA, the President must identify an “unusual and extraordinary threat” to American national security, foreign policy, or the economy, originating primarily “outside the United States,” and declare a national emergency under the National Emergencies Act to deal with such threat. Specifically, IEEPA allows the President to “...regulate…importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest.”

The President declared a national emergency with respect to both drug trafficking and trade deficits, which instigated the tariffs imposed on Mexico, Canada, and China as well as reciprocal tariffs on other trading partners. Subsequently, the tariffs at issue have undergone modifications per a series of presidential orders. The Government argued that the words “regulate” and “importation” amounted to a sweeping delegation of congressional power to set tariff policy, “authorizing the President to impose tariffs of unlimited amount and duration, on any product from any country.” The Court disagreed and ruled in favor of the plaintiffs.

The Court noted its longstanding reluctance to read into ambiguous statutory text any extraordinary delegations of Congress’s power, particularly where the purported delegation involved the “core congressional power of the purse.” Insofar as IEEPA is concerned, the Court said that the Government’s reading of IEEPA would give the President power to unilaterally impose unbounded tariffs, “unconstrained by the significant procedural limitations in other tariff statutes.” All it takes to unlock that extraordinary power is a presidential declaration of emergency, which the Government asserts is “unreviewable.” The result would represent a “transformative expansion of the President’s authority over tariff policy,” the Court said.

The Court noted that before these tariffs were imposed, IEEPA had not been used to impose tariffs. In fact, the delegation language of IEEPA did not mention tariffs or duties. The terms “regulation” and “importation” do not fill that void. The Government pointed to no other statute that equated the power to regulate with the power to tax. When Congress granted the power to impose tariffs, it did so clearly and with constraints. IEEPA did not do so. The case was remanded to the lower court.

Ryan’s Take and Action Steps

Observers of last year’s oral arguments are likely not surprised by the ruling. Nevertheless, numerous issues remain. This decision only impacts tariffs imposed under the IEEPA. The administration has other tools at its disposal. For instance, after the decision, the administration announced it will impose another worldwide tariff that will last up to 150 days, pursuant to Section 122 of the Trade Act of 1974.

The majority opinion did not address remedies for those importers who paid the tariffs. Billions have been collected, and the issuance of refunds and the process for securing them may prove contentious―a fact noted in the dissent. Because the tariff was paid by the Importer of Record (IOR), only the IOR is technically entitled to a refund, even where the IOR entered into tariff-sharing agreements with purchasers. IORs can pursue refund claims with Customs and Border Protection, which collected the tariff, depending on when entries were liquidated. In addition, an IOR may wish to pursue a claim with the U.S. Court of International Trade. In any event, IORs must have the necessary documentation in place while in pursuit of the refund. The process will not be easy.

If your business has paid tariffs imposed under the IEEPA, please contact one of the Ryan representatives listed below for guidance on the next steps.

¹ Learning Resources Inc., et al. v. Trump, President of the United States, U.S. Sup. Ct., No. 24-1287 (February 20, 2026).

The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals.