Congress Handed Presidents Tariff Power Decades Ago. The Court Just Took It Back.

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Rick Woldenberg paid millions in legal fees to sue the federal government. He described his willingness to put his name on the lawsuit in blunt terms: “I didn’t do anything wrong.” On February 20, 2026, the Supreme Court agreed with him, 6 to 3.

The ruling in Learning Resources, Inc. V. Trump is, on its face, a statutory interpretation case about a 1977 emergency law called the International Emergency Economic Powers Act. But what it did was answer a question that had been growing since April 2025. That was when the Trump administration imposed sweeping tariffs on nearly every trading partner in the world by declaring a national emergency, raising the question of whether a president can use emergency powers to tax Americans without Congress explicitly saying so. The answer, from six justices spanning the ideological spectrum, was no.

The immediate consequences are enormous. CBP data put IEEPA tariff collections at roughly $133.5 billion through mid-December 2025. The administration rushed within hours to announce replacement tariffs under older, narrower statutes. And the Court left enough legal questions open that lawyers will be arguing about this decision for years.

What IEEPA Says, and What It Doesn’t

IEEPA was passed in 1977 as a post-Watergate limit on executive emergency power. (For the full legislative history of how Congress designed it to constrain presidents, our earlier piece on IEEPA’s original intent and limits covers the background.) The statute lets the president, after declaring a national emergency, “regulate, direct and compel, nullify, void, prevent or prohibit” any “importation or exportation” of property in which a foreign country has an interest. That language is genuinely broad. The Trump administration argued it was broad enough to include tariffs.

Chief Justice John Roberts, writing for the majority, rejected that argument through a method so simple it barely registers as controversial: he looked at what Congress said and what it chose not to say. IEEPA lists eight distinct powers. Nowhere in that list does Congress mention tariffs or duties. Roberts noted that this gap matters precisely because Congress knows how to delegate tariff authority when it wants to.

Section 301 of the Trade Act of 1974 explicitly authorizes tariffs. Section 232 of the Trade Expansion Act uses the word “adjust” imports. Section 122 of the Trade Act mentions “import surcharges.” These are not drafting accidents. They are evidence that Congress, when it hands presidents tariff power, says so in plain terms.

The constitutional structure reinforces this. Tariffs are a form of taxation, and the Constitution vests the taxing power in Congress, not the executive. The Trump administration’s own solicitor general, John Sauer, did not rest the government’s case on inherent presidential tariff authority — according to accounts of the oral argument, the whole dispute turned on whether Congress had delegated that power in IEEPA.

Three things all pointed the same direction: the word “tariff” not appearing in the text, the parallel statutes using explicit language, and no historical precedent for reading IEEPA to authorize tariffs in nearly fifty years of the statute’s existence. “Those words cannot bear such weight,” Roberts concluded.

That holding commanded six votes: Roberts, plus Justices Sonia Sotomayor, Elena Kagan, Ketanji Brown Jackson, Neil Gorsuch, and Amy Coney Barrett. Two of those six are Trump appointees. That detail matters.

The Coalition That Killed the Tariffs

This was not a conservative-versus-liberal split.

Roberts built his majority on the core statutory holding. But when he went further, applying the major questions doctrine to argue that vast economic delegations require explicit congressional authorization, only Gorsuch and Barrett followed him. One formulation of the doctrine — associated with Justice Gorsuch — holds that when Congress tries to delegate significant economic or political power to the executive, it must do so in unmistakably clear language, though Justice Barrett’s contextual approach does not impose such a strict requirement, and the doctrine’s precise formulation remains contested among the justices. Roberts applied it here, reasoning that even if IEEPA’s language were unclear, the sheer size of what the president claimed would require explicit authorization. That claim was the unilateral power to impose tariffs of any amount on any country for any duration.

Justices Kagan, Sotomayor, and Jackson did not join this reasoning. In a concurrence, Kagan was blunt: “Straight-up statutory construction resolves this case for me.” The power to regulate does not include the power to tax. The major questions doctrine, in her view, added nothing. She has criticized the doctrine in prior opinions as an invention lacking a sound legal foundation, and she was not about to endorse it here when the statute’s text already settled the question.

Gorsuch, by contrast, wrote a 46-page concurrence defending the major questions doctrine as a structural principle rooted in separation of powers, not a recent invention. He pushed back against Kagan’s doubts and against Justice Brett Kavanaugh’s suggestion that courts should defer to executive interpretations in foreign affairs simply because foreign affairs are involved.

The result: a majority on the core holding, a plurality on the legal theory behind it. This distinction matters for future cases. A future litigant challenging some other executive action under the major questions framework cannot use this decision’s plurality reasoning as settled law they must follow. They can only cite the statutory holding, which is narrow and specific to IEEPA and tariffs.

Roberts appears to have structured the opinion this way on purpose. He held together enough justices on the essential point while leaving the broader doctrinal question open for future development.

Gorsuch’s vote is worth noting. His record of siding with liberal justices on statutory interpretation established him as a textualist willing to reach conclusions that went against presidential preference when the text demanded it. That record includes his majority opinion in Bostock v. Clayton County, which applied the federal law banning workplace sex discrimination to LGBTQ employees, and his opinion in McGirt v. Oklahoma, honoring treaty language over state preferences. Barrett’s record showed similar instincts: when the statute is clear, textualists follow it.

Kavanaugh’s Dissent: The Strongest Case for Broad Executive Authority

Justice Brett Kavanaugh, joined by Justices Clarence Thomas and Samuel Alito, dissented. His 63-page opinion was longer than Roberts’s majority and laid out a clear alternative view of both the statute and the proper judicial role.

Kavanaugh’s textual argument: tariffs are a tool for regulating importation, the same as quotas and embargoes. The phrase “regulate. Importation” is broad. It naturally includes the full range of tools presidents have historically used to control how goods cross borders. He pointed to President Nixon’s 1971 use of TWEA (IEEPA’s predecessor statute) to impose a 10 percent worldwide tariff using identical statutory language. The legal history of that action was contested: the U.S. Customs Court initially held the surcharge illegal in 1974, and while the appellate court ultimately upheld it in 1975, it did so with explicit limitations and warnings against broader application, with litigation over refund claims continuing throughout the period. If “regulate. Importation” does not include tariffs, Kavanaugh argued, the result is absurd: the president could block all imports from China entirely, but could not impose even a one-dollar tariff. The statute does not use the word “quota” either, yet everyone agrees IEEPA authorizes quotas.

His sharpest argument concerned the major questions doctrine’s application to foreign affairs. According to SCOTUSblog’s analysis of the decision, Kavanaugh asserted that the doctrine had never before been applied to a foreign affairs statute. He also noted that courts have traditionally read foreign affairs statutes to give presidents broad discretion. Applying a clear-statement rule in this area, he argued, breaks new doctrinal ground and would likely reshape prior decisions in ways the majority did not intend.

Then Kavanaugh did something notable for a dissenter: he conceded the majority’s practical point. “Although I firmly disagree with the Court’s holding today, the decision might not substantially constrain a President’s ability to order tariffs going forward,” he wrote, because numerous other federal statutes authorize the president to impose tariffs and might justify most of the tariffs at issue. He named Section 232, Section 301, and Section 338 as alternatives, along with at least one other provision — readers should consult the dissent directly to confirm the full list. The president, he suggested, “checked the wrong statutory box.”

That line reads almost like a concession wrapped in a dissent. Kavanaugh was defending broad executive authority while at the same time acknowledging that Congress had, through other statutes, explicitly delegated tariff authority when it chose to. IEEPA simply was not one of those statutes. Even the dissent, in its final pages, accepted the majority’s core premise.

The Refund Problem: $175 Billion and a Byzantine Process

The Supreme Court’s opinion addressed what happens next only briefly. Roberts noted that the question of whether refunds “must be issued or how any reimbursement should operate” was not addressed by the majority. The Court did not order the Treasury to issue refunds. It did not specify a deadline or a mechanism. That, the opinion implied, was someone else’s problem.

It is, in fact, everyone’s problem.

The legal authority for refunds exists in statute. Under federal customs law, U.S. Customs and Border Protection can reprocess import records, recalculating duties owed based on correct tariff rates, and issue refunds for duties paid in excess of what the law required. Nearly 1,000 companies had already filed preemptive refund claims at the Court of International Trade before the Supreme Court’s ruling. They anticipated this outcome, according to WilmerHale’s post-ruling client alert.

The process, though, is genuinely complicated. For shipments that have not yet been finalized by Customs, importers can file an amended customs form removing the IEEPA tariff component. For entries that have already been liquidated, importers must file formal legal challenges with CBP within 180 days of liquidation.

If CBP rejects the challenge, the importer must file suit at the Court of International Trade within two years. Each step has its own timeline, evidence requirements, and procedural hurdles. A customs attorney speaking on background to trade law firms acknowledged that “the exact mechanism for repayment is uncertain, but there are substantial economic consequences.”

Treasury Secretary Scott Bessent told Reuters before the ruling that the Treasury could cover potential refunds, and Treasury’s official borrowing announcement projected cash balances of $850 billion in March 2026 — though whether Bessent explicitly linked that figure to refund coverage in that interview cannot be fully verified. The Penn-Wharton Budget Model projected up to $175 billion in potential refund exposure, while actual IEEPA tariff collections through mid-December 2025 were approximately $133.5 billion according to CBP data cited by Penn-Wharton. If refunds are issued on all of these, it would represent the largest tariff refund in U.S. History.

The only remotely comparable precedent is the 1998 Supreme Court decision in United States v. U.S. Shoe Corp., which struck down the Harbor Maintenance Tax on exports. That refund process stretched for years, with claimants required to provide detailed documentation and facing strict deadlines.

CBP has never processed a nationwide reprocessing of import records and refund at this scale. Whether it has the capacity to carry it out quickly is genuinely uncertain. For importers who paid six figures or more in IEEPA duties, the ruling offers legal grounds for recovery but an uncertain timeline for receiving it.

Victor Schwartz, the owner of V.O.S. Selections and the lead plaintiff, had continued operating his wine import company during the lawsuit, though with significantly reduced activity due to tariff impacts. He now has a legal path to recovery. Whether that path is six months or six years is a different question.

Section 122: The Replacement Tool and Its Hard Limits

Within hours of the ruling, President Trump announced a tariff under Section 122 of the Trade Act of 1974, effective February 24, 2026, initially at 10 percent but raised to 15 percent — the statutory cap — the following day. This was not improvised. Trade policy advisers had been preparing this backup plan for months as the Supreme Court case proceeded, according to Holland and Knight’s post-ruling analysis.

But Section 122 is a tightly limited statute, and the limits are not minor. It was passed in 1974 and designed explicitly as a response to Nixon’s 1971 emergency tariff use. Section 122 grants the president authority to impose temporary import surcharges to address “large and serious” balance-of-payments deficits. The statute caps tariffs at 15 percent of the goods’ value. It limits them to 150 days unless Congress votes to extend them. It requires a finding that balance-of-payments problems exist and that import restrictions are necessary to address them. And critically, Section 122 tariffs must generally be applied uniformly across all countries as a baseline principle, though the statute contains explicit provisions permitting country-specific exceptions under defined circumstances.

Trump announced a 10 percent rate on February 20 but raised it to 15 percent on February 21, maxing out the statutory cap, with expiration set for July 24, 2026. But the uniformity requirement means Section 122 cannot replicate the country-specific reciprocal tariffs that formed the backbone of the IEEPA regime. It also cannot serve as the basis for targeted tariffs on China related to intellectual property theft, tariffs on Canada, Mexico, and China related to fentanyl trafficking, or tariffs targeting countries that buy Iranian oil.

For those country-specific and sector-specific actions, the administration announced reliance on Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962. Section 301 authorizes the U.S. Trade Representative to investigate “unjustifiable” or “discriminatory” acts by foreign countries and recommend tariffs. It carries no rate cap and no time limit beyond a required review every four years. But Section 301 requires a formal investigation process, public hearings, and written findings before tariffs can be imposed.

Section 232 authorizes the president to adjust imports that threaten national security, following a Commerce Department investigation. It carries no rate cap but applies to specific products rather than specific countries.

The simple unilateralism of IEEPA, declare an emergency, issue a proclamation, implement tariffs, is gone. In its place is a patchwork of older statutes, each with its own procedural requirements, each with its own limitations. Gary Hufbauer at the Peterson Institute for International Economics noted that Section 122’s 150-day limit and 15 percent cap make it insufficient for sustained trade pressure. The White House’s Section 122 proclamation emphasized that the overall direction of trade policy would not change. Whether the available tools can deliver that direction is a separate question.

Trade Agreements Built on IEEPA Tariff Threats Now in Doubt

The Trump administration had negotiated provisional or final trade agreements with 19 countries, using the threat of IEEPA tariffs as leverage. South Korea had committed $350 billion in U.S. Investment as part of one such agreement. The European Union had committed $600 billion through 2028 — the largest investment pledge among all the deals — while Japan had committed $550 billion. These were not trivial concessions. They were extracted, in significant part, because trading partners believed the IEEPA tariffs were real and durable.

With IEEPA authority now gone, how long those deals will hold is uncertain. If the replacement tariff regime under Section 122 and Section 301 proves insufficient as a bargaining tool, trading partners may reconsider whether their commitments remain attractive. South Korea agreed to $350 billion in investment partly because it faced tariffs that no longer exist in their original form. The EU’s $600 billion commitment was similarly conditioned on a tariff environment that has now changed. As Holland and Knight’s trade team noted, the ruling has introduced “uncertainty regarding various trade agreements” that extends well beyond the courtroom.

Kavanaugh raised this in his dissent, calling the practical consequences a “mess.” He was not wrong about the complexity, even if the majority concluded that complexity was Congress’s problem to solve, not the Court’s.

What the Ruling Leaves Unresolved, and Why That Matters

The major questions doctrine, having now been applied to a foreign affairs statute by a three-justice plurality, sits in an odd legal position. It is not binding precedent on the question of whether the doctrine applies to foreign affairs statutes. Kavanaugh’s dissent argued that applying it here marks a significant shift in doctrine. If that view gains ground in future cases, the effects extend far beyond tariffs. Export controls, sanctions, frozen foreign assets, and other IEEPA-authorized emergency actions could all face challenges grounded in major questions reasoning. Or they might not, because the plurality reasoning commands only three votes.

Congress itself may also act. The Court’s decision removes IEEPA as a foundation for presidential tariff authority but does not prevent Congress from passing new legislation explicitly authorizing emergency tariffs under clearly defined conditions. Whether Congress will do so depends on political calculation. Republican lawmakers might seek to pass a law explicitly granting reciprocal tariff authority, but they would likely face Democratic opposition. The question of whether to hand any president broader emergency economic powers is genuinely disputed within both parties. Our earlier analysis of why Congress is unlikely to reclaim tariff authority covers the political dynamics in more detail.

The Yale Budget Lab estimated that removing IEEPA tariffs would leave an average tariff rate of 9.1 percent across all imports, down from the 16.9 percent that would have prevailed had IEEPA authority been upheld. But the administration’s announced Section 122 tariff of 10 percent applies globally and uniformly starting February 24. That means importers face partial relief relative to the prior IEEPA rate of 16.9 percent, but not full relief.

The 10 percent Section 122 rate is slightly higher than the 9.1 percent baseline that would prevail with no replacement tariff at all. The shift is from IEEPA tariffs that varied by country to Section 122 tariffs that apply to everyone equally. For a wine importer waiting on a Monday shipment from Europe, the question of whether that shipment crosses the Atlantic before or after February 24 is not theoretical. It is the difference between one tariff regime and another.

For Revolution Brewing in Chicago, which uses aluminum for cans in amounts that rival the cost of the beer inside them, the ruling offered nothing at all. The aluminum tariffs it faces were imposed under Section 232, not IEEPA, and Section 232 was untouched by the decision. The ruling’s scope is real but bounded. It removed one set of tariffs. The others remain.

The National Retail Federation, representing thousands of retail companies, responded to the ruling by calling for “a seamless process to refund the tariffs to U.S. Importers.” The word “seamless” is doing a lot of work in that sentence. The process will not be seamless. It will be legal challenges, reprocessed customs records, court filings, and years of administrative back-and-forth. What the ruling provided is a legal right. The practical use of that right is a different, slower, more bureaucratic story. It is the story that will determine whether importers like Woldenberg and Schwartz see their money again, and when.

The Court has answered the constitutional question clearly: Congress handed presidents tariff power through specific statutes with specific limits, and IEEPA was not one of them. What comes next — the refunds, the replacement regime, the trade deals, the doctrinal questions left open — is still being written.

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