The Tariff Ruling Eliminated Nine Percentage Points of U.S. Trade Barriers Overnight

Last updated 2 months ago. Our resources are updated regularly but please keep in mind that links, programs, policies, and contact information do change.

In Learning Resources, Inc. V. Trump, six justices formed a majority opinion, and with it, nearly half of America’s tariff regime stopped existing. No trade negotiation produced this result. No act of Congress. The Treasury Department issued no new guidance. The effective tariff rate the United States charges on incoming goods dropped from 16.9 percent to 9.1 percent. That happened overnight, by court order alone.

The case was decided 6-to-3. It struck down tariffs imposed under the International Emergency Economic Powers Act, a 1977 statute the Trump administration had used to build the most sweeping tariff regime in modern American history. Reports suggest the federal government had collected somewhere between $130 billion and $269 billion under those authorities since IEEPA tariffs began in early 2025. That wide range reflects genuine uncertainty in methodology and which duties are counted, including bonds still pending final duty assessment (called liquidation). The Supreme Court ordered no automatic repayment — each importer must file a claim with CBP within 180 days of liquidation, and actual refunds may fall well short of collected amounts.

Nine percentage points of tariff burden, gone overnight.

The Six-Justice Coalition and the Statutory Argument

The surprise wasn’t the outcome. It was who showed up together.

Chief Justice John Roberts wrote for six justices: Sonia Sotomayor, Elena Kagan, Ketanji Brown Jackson, Neil Gorsuch, and Amy Coney Barrett. All six agreed on the core holding. Roberts, Gorsuch, and Barrett formed a three-justice plurality on the major questions doctrine rationale; the other three declined to join that section.

As Roberts wrote, the government’s reading of two words in the statute, “regulate” and “importation,” claimed for the president the power to impose tariffs “of any product, at any rate, for any amount of time.” The majority’s response was direct: “Those words cannot bear such weight.”

The statutory argument is simple once you see it. Tariffs are a tax. The Constitution assigns the taxing power to Congress in Article I, Section 8. The framers, as Roberts put it, “did not vest any part of the taxing power in the Executive Branch.”

Search the U.S. Code for statutes that grant the executive power to “regulate” something and you find plenty of them. What you don’t find is a single one where “regulate” was understood to include the power to tax. The government couldn’t name one. That’s a problem when you’re arguing that “regulate” in IEEPA secretly contains the power to impose 145 percent duties on Chinese goods.

For background on how IEEPA was designed to constrain executive power rather than expand it, see our earlier analysis of the 1977 statute’s legislative history. It covers the post-Watergate context that shaped the law.

Roberts, Gorsuch, and Barrett went further. They invoked the “major questions doctrine.” That is the principle that when Congress hands over power of vast economic or political importance to the executive branch, it must do so with clearly stated language. A claim to impose unlimited import levies on any country, any product, for any duration, is exactly the kind of sweeping authority that requires Congress to say so clearly.

Sotomayor, Kagan, and Jackson joined the six-justice majority but wrote separately. They said they didn’t even need the major questions doctrine. The plain text was enough. For a deeper look at how the major questions doctrine operates and where its limits are, see our coverage of the doctrine reshaping presidential power.

IEEPA Tariffs Struck Down; Section 232 and Section 301 Survive

The ruling didn’t eliminate all tariffs. Not even close.

What vanished were the IEEPA tariffs specifically. The “Liberation Day” baseline levy of 10 percent on all imports, announced April 5, 2025. The reciprocal duties ranging from 10 to 41 percent on dozens of countries. The fentanyl-related charges of 25 percent on Canadian and Mexican goods. The cumulative duties on Chinese goods that reached as high as 145 percent. All of it, gone.

What survived: Section 232 tariffs, imposed under the Trade Expansion Act of 1962 on national security grounds. These include 50 percent duties on steel and aluminum, 25 percent on automobiles and certain auto parts, and additional levies on lumber, copper, and other materials. Section 232 explicitly mentions “duties” in its statutory text. That gives it precisely the clear textual foundation the Court said IEEPA lacked. The Court’s opinion doesn’t touch Section 232. Those tariffs remain in full force.

Section 301 tariffs, imposed under the Trade Act of 1974 based on investigations of unfair foreign trade practices, also survived. These are the tariffs from Trump’s first term targeting Chinese goods over intellectual property theft and forced technology transfer. Country-specific, process-dependent, but durable once imposed.

The real-world impact depends entirely on which industry you’re in. A retailer importing consumer goods from Vietnam or the European Union gets sharp relief. A steel mill importing raw materials faces none. A company importing electronics from China gets partial relief: the reciprocal duty is gone, but Section 301 tariffs remain, and those have been expanding. This decision is not a free trade restoration. It is a structural fix to one particular case of executive overreach.

The Nine-Point Drop: Industry Impact and the Learning Resources Case

The Yale Budget Lab calculated that the average U.S. Import duty rate across all goods had climbed to 16.9 percent by the end of 2025. That was more than double the historical average, driven almost entirely by IEEPA additions. If the ruling is carried out fully, that rate drops to approximately 9.1 percent. A nine-percentage-point overnight drop is the single biggest tariff shift in decades.

Consider what that meant for Learning Resources, Inc. The company whose name is on the case. They make and sell educational toys and learning materials: building blocks, hands-on learning tools like counting blocks and shape sorters, products used by occupational therapists and special educators. Much of their inventory comes from China.

In 2024, before the duties hit, the company paid approximately $2.3 million in import duties annually. When the reciprocal and baseline tariffs took effect in 2025, their projected annual liability jumped to an estimated $20 million to $30 million. CEO Rick Woldenberg told CNBC in April 2025: “when it went from 20% to 145, it went completely off the rails. It’s two and a half times what [Trump] said was the maximum, and it’s way into the stratosphere that no business could possibly handle.”

With the February 20 ruling, that $20 million to $30 million bill disappears in theory. In practice, getting the money back is a different problem entirely.

The Refund Process: 34 Million Entries, No Automatic Repayment

The Court’s opinion is silent on refunds. Completely silent. Justice Kavanaugh, in his 63-page dissent, pointed out that the majority “says nothing today about whether, and if so how, the Government should go about returning the billions of dollars” it collected. He called the refund process a “mess.” Justice Barrett had used the same word during oral arguments.

They were not wrong.

More than 301,000 importers made more than 34 million entries subject to IEEPA tariffs. Each entry is a separate import shipment, possibly with different duty calculations and liquidation dates. For goods not yet formally assessed, importers can file an amended declaration with Customs before the government finalizes the duty amount.

For goods already liquidated, they have 180 days from the liquidation date to file a formal legal challenge (called a protest). A CBP denial opens the door to a lawsuit at the U.S. Court of International Trade. By December 2025, nearly 1,000 importers had already filed pre-emptive suits there to preserve their refund rights.

For a detailed breakdown of these procedural deadlines, interest calculations, and the logistics of returning collected duties, our earlier reporting on what a refund process would require covers the mechanics in depth.

The Penn-Wharton Budget Model projects actual refunds could reach $175 billion if fully processed. Even the low-end estimate, around $100 billion, is larger than many individual federal agency budgets. CBP announced on January 2, 2026 that future refunds would be sent electronically via direct bank transfers rather than paper checks, with the policy taking effect on February 6, 2026.

Processing 34 million individual entries is not a paperwork problem you solve with better technology. It’s a years-long administrative task.

Treasury Secretary Scott Bessent doubted that ordinary consumers would see direct compensation. President Trump predicted both “five years” and “ten years” of litigation over refund disputes, offering varying estimates in the same discussion. That’s probably not wrong either. It is, though, a strange opening response for an administration facing a court ruling that found its own tariff collections unlawful.

The people most likely to recover quickly are large, well-resourced importers with detailed accounting and legal teams already familiar with CBP protest procedures. Small businesses, the ones that borrowed money to pay tariffs they couldn’t absorb, may wait years to gather the records needed to support their claims. Some may not survive the wait.

Surviving Tariff Authorities: Section 122, Section 301, and Section 232

Within hours of the ruling, the Trump administration announced its shift: Section 122 of the Trade Act of 1974, a statute unused for half a century. Section 122 gives the president power to impose temporary import surcharges of up to 15 percent to address “large and serious” balance-of-payments deficits, when the U.S. is importing far more than it exports. This authority lasts only up to 150 days unless Congress votes to extend it. On February 20, 2026, Trump announced a 10 percent global levy under Section 122; the tariffs took effect on February 24, 2026, beginning the 150-day clock.

This is not a replacement for the full IEEPA regime. The 15 percent ceiling means it cannot reach the 41 percent reciprocal rates or the 145 percent China rate. It’s a bridge, not a rebuild.

The 150-day window is the deadline the administration is now racing against. Trump stated his plan to use that period to launch investigations under Section 301. Section 301 can produce more lasting tariff authority once the U.S. Trade Representative completes formal findings about unfair trade practices. Section 301 has no rate cap, but it requires a process: investigation, findings, report. The administration has signaled it will initiate “several Section 301 and other investigations” during this window.

Section 232 remains available for sector-specific tariffs with no rate ceiling, but Commerce Department investigations take months. The administration indicated it would continue or expand Section 232 authorities on steel, aluminum, vehicles, and critical minerals.

The net result: the administration retains tools for sectoral and country-specific duties. It has a temporary route via Section 122 for a modest universal levy, and is trying to build more durable authority through Section 301 during the 150-day window. What it has lost is the ability to impose sweeping, instantly changeable charges across nearly all countries and products without procedural constraints. IEEPA was uniquely flexible. Nothing that survived the ruling comes close to that flexibility.

Kavanaugh’s Dissent and the Argument for Future Executive Action

Justice Kavanaugh’s dissent, joined by Thomas and Alito, deserves attention. It does not represent current law, but it outlines the argument a future administration might try to revive under different statutory circumstances. Wiley Law’s review of the IEEPA invalidation examines the dissent’s implications for future executive action.

Kavanaugh’s core position: “regulate” in IEEPA naturally includes tariffs, because the power to regulate commerce has historically included duties. He also argued that the major questions doctrine should not apply to foreign affairs and national security statutes at all, and that courts should defer to executive judgment in these areas.

The majority rejected this exception directly. Roberts wrote that “the foreign affairs implications of tariffs do not make it any more likely that Congress would relinquish its tariff power through vague language, or without careful limits.” The government itself conceded the president has no inherent peacetime authority to impose tariffs. Any such power must come from Congress.

What the dissent does is this: it shows that three sitting justices believe the major questions doctrine has no place in foreign affairs cases. If a future administration uses a statute that clearly mentions tariffs, frames the action in narrower terms, and can point to a genuine national security or balance-of-payments finding, the Kavanaugh framework suggests at least three votes for deference. A narrower, sector-specific, time-limited action under Section 232 or a clarified Section 301 might clear the major questions bar. That is a bar that IEEPA’s sweeping claim could not meet.

The constitutional basis for why Congress holds tariff authority in the first place, and how executive tariff power expanded historically, is covered in our piece on the constitutional clause that gives Congress tariff power.

Trade Deals Negotiated Under IEEPA Threat Now Uncertain

During 2025, the Trump administration negotiated or announced reciprocal tariff reductions with 19 countries. South Korea committed to approximately $350 billion in U.S.-directed investment. The European Union announced $600 billion (approximately €550 billion) in strategic sector investment commitments. These negotiations happened under the threat of IEEPA tariffs. Countries agreed to cut their own duties on U.S. Exports and pledge resources in exchange for relief from American reciprocal charges.

With IEEPA tariffs now struck down, the status of these deals is genuinely uncertain. Countries that made concessions to avoid duties that no longer exist may demand different terms or walk away entirely. The administration can still threaten Section 122 surcharges (capped at 15 percent, expiring in 150 days) or Section 232 duties (sector-specific, requiring investigation). Neither, however, carries the same force as the ability to impose 41 percent tariffs on any country, any product, immediately and indefinitely.

This is the global political story that will unfold over months. Whether South Korea’s investment commitments materialize, whether the EU renegotiates its terms, whether countries that were in the middle of trade talks simply stop calling: these outcomes will shape U.S. Trade relationships well beyond the 150-day Section 122 window. The decision changed both domestic tariff policy and what the United States can credibly threaten in future negotiations.

Congressional Options: New Legislation, Amended Authorities, or Inaction

The ruling gave Congress a choice: restore what the Court struck down, or don’t.

Congress could pass legislation clearly authorizing the duties the Court voided. A statute saying “the President may impose tariffs up to X percent during a declared national emergency” would almost survive a major questions challenge, because clear statutory language is exactly what the doctrine requires. But this faces real obstacles: majority votes in both chambers, possible veto dynamics, and genuine disagreement within the Republican caucus about whether unlimited tariff authority is wise policy.

The Senate had voted twice to disapprove of Trump’s tariff actions before the ruling, though not by veto-proof margins. A veto-proof margin requires a two-thirds majority to override a presidential veto. Mitch McConnell and other establishment-aligned Republicans have expressed skepticism. They have cited business concerns and noted that tariffs are ultimately taxes on consumers.

Alternatively, Congress could change existing authorities. Amend Section 122 to remove the 150-day limit. Clarify Section 301 to clearly authorize broader retaliatory duties. Pass a new statute locking in reciprocal tariff authority with defined rate caps and duration limits. Any of these would be more lasting than the current patchwork.

Or Congress could do nothing, which is the path of least resistance and, historically, the most likely outcome. Midterm elections are scheduled for November 2026. If Republicans retain control of both chambers, passing a law to formally authorize tariff power becomes plausible. If control shifts, Democratic leaders would likely resist expanding presidential tariff power. The most likely near-term outcome is that Congress watches, debates, and leaves the executive branch to work within the surviving authorities. Courts would then process refund claims for years.

Illinois Governor J.B. Pritzker has already demanded that the federal government refund tariffs to state residents. He cited a Yale University estimate that the average household paid roughly $1,700 in projected tariff costs in 2025. That number will become a political talking point no matter how the refund process unfolds.

Whether individual consumers ever see a dollar of it is a different question. The honest answer is: probably not directly. The refund process runs through importers, not households. The consumer who paid higher prices for a toy or an appliance has no formal claim to a customs refund. The importer who paid the duty does.

The tariffs were paid by businesses and passed on to consumers through higher prices. The refunds will go to businesses. Whether those businesses pass the savings back through lower prices depends on market conditions, competitive pressure, and business decisions that no court order can compel. The people who felt the tariffs most sharply, working families buying school supplies and household goods at higher prices throughout 2025, are the least likely to see direct restitution. That’s not a legal problem. It’s simply how the system works, and it’s worth being honest about.

The Section 122 Expiration and the Gap in Tariff Authority

One hundred fifty days from February 24, 2026 — when Section 122 took effect — lands in late July 2026. By that point, the administration needs to have either launched Section 301 investigations far enough along to justify new authority, secured congressional action to extend or replace Section 122, or accepted a tariff regime smaller than the one IEEPA built.

Section 301 investigations carry a statutory deadline of 12 to 18 months. If the administration launched them right after the ruling, the earliest any new Section 301 duties could be in place is roughly late 2026. That means a gap between Section 122’s expiration and any replacement authority. During that gap, the universal baseline levy disappears. Countries that have been paying 10 percent under Section 122 would face only whatever Section 232 and Section 301 tariffs apply to their specific goods.

That gap, if it appears, will be the next major test of whether the administration can rebuild tariff authority through the slower, more process-bound tools that survived the Court’s ruling. The nine-percentage-point drop that happened overnight could grow larger still, at least temporarily. It depends on how the next 150 days unfold.

The Supreme Court didn’t end the tariff era. It ended one particular version of it: the version built on emergency authority that the Court concluded Congress never granted. What comes next depends on whether Congress is willing to grant that authority clearly, whether the administration can build a lasting alternative from the tools that survived, and whether the Court of International Trade can process tens of millions of refund claims before the political field shifts again. The ruling set the clock.

Our articles make government information more accessible. Please consult a qualified professional for financial, legal, or health advice specific to your circumstances.