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American businesses have paid approximately $130 billion in tariffs since January 2025 under President Trump’s emergency orders. The Supreme Court had not issued a decision as of February 11, 2026, though a ruling was expected imminently after the court’s recess ended on February 20, 2026.
American businesses face uncertainty about whether they’ll need to refund money they’ve paid in billions in duties. They’ve raised prices on consumers who might be entitled to relief.
The statute at the center of this case is the International Emergency Economic Powers Act (IEEPA), a 1977 law that Congress designed to restrain presidential power, not expand it.
Congressional Intent Behind IEEPA
The post-Watergate Congress that created IEEPA was deeply suspicious of executive overreach. They’d watched Nixon abuse emergency powers for years, declaring crises that never ended and accumulating authorities that Congress never intended to delegate permanently. IEEPA was designed to address this problem—a way to give presidents emergency economic tools while building in constraints.
The law permits the president to regulate international commerce after declaring a national emergency in response to “any unusual and extraordinary threat” originating from outside the United States. For decades, presidents used it exactly as designed: freezing Iranian assets after the hostage crisis, sanctioning terrorist organizations, targeting specific hostile governments for specific threats.
No president had ever used IEEPA to impose broad tariffs on virtually all trading partners. Not Reagan. Not either Bush. Not Clinton or Obama. Not even Trump in his first term.
When Congress wants to authorize tariffs, it knows how to say so. Section 232 of the Trade Expansion Act explicitly mentions the president’s power to “adjust imports” through “duties or other import restrictions.” Section 301 of the Trade Act refers directly to the power to impose “duties” on imports. IEEPA contains no such language. It says the president can “regulate” importation during emergencies. That’s it.
IEEPA wasn’t even referred to Congress’s tariff committees when it was drafted. The legislators responsible for trade policy didn’t understand they were creating tariff power. They thought they were creating sanctions power.
Trump’s April 2025 Tariff Declaration
Trump’s executive orders in April 2025 declared that persistent U.S. trade deficits constituted an “unusual and extraordinary threat to the national security and economy of the United States.” Based on that declaration, he imposed a baseline 10 percent tariff on all imports, with higher country-specific rates for certain trading partners.
The government’s legal argument was novel: IEEPA says “regulate.” Tariffs regulate imports. Therefore, IEEPA authorizes tariffs. Courts should defer to presidential judgments about what constitutes a national security emergency.
Two lower courts found this argument unpersuasive. The U.S. Court of International Trade ruled in May 2025 that IEEPA simply doesn’t authorize tariffs and permanently banned the government from imposing them under that law. The Federal Circuit affirmed in August. Both courts emphasized that if “regulate importation” truly encompasses setting tariff rates without limit, the same language would permit virtually any economic regulation—licensing schemes, fee structures, import quotas—with no meaningful constraints.
The Constitution vests the power to levy taxes in Congress. Tariffs are taxes—on Americans, not foreigners, despite what politicians claim. If IEEPA lets any president impose any tariff on any goods from any country simply by declaring an emergency, and the president decides what counts as an emergency, then Congress has handed over its constitutional taxing power with no real limits on how that power gets used.
The Refund Problem for Importers
American importers have paid approximately $30 billion per month in tariffs under the challenged IEEPA power. Unlike a normal tax increase, where businesses can plan assuming the law will remain stable, importers face fundamental uncertainty: will they need to refund these duties if the justices invalidate them?
The refund question depends not on what the Supreme Court decides but on how it decides and what mechanisms it establishes for relief. Should the justices invalidate the tariffs on statutory interpretation grounds, does that apply retroactively to tariffs already paid, or only prospectively? In the case of retroactive application, which importers can claim refunds—those whose goods haven’t been processed and finalized by customs yet, or also those whose imports have been fully processed?
The law governing tariff refunds allows importers to file protests within 180 days after an import entry is liquidated. Customs typically finalizes imports within 314 days of arrival. By the time the Supreme Court rules, many entries subject to the IEEPA tariffs will already be liquidated, potentially blocking refund claims unless the justices or the government takes special action.
Recognizing this problem, major importers like Costco began filing protective lawsuits in late 2025 before liquidation deadlines expired. The U.S. Court of International Trade issued a blanket stay on December 23, pausing all tariff refund litigation pending the Supreme Court decision. But this stay doesn’t solve the underlying problem: every day that passes, more imports liquidate, potentially putting them beyond the reach of federal refund claims.
The government has indicated through Department of Justice filings that should the Supreme Court strike down the tariffs, it intends to cooperate with the refund process. That’s a political commitment, not a legal requirement. Should the justices rule the tariffs are unlawful but decline to require refunds for tariffs already paid—choosing instead to make the ruling prospective only—then the government may be under no obligation to refund anything.
What the Supreme Court’s Delay Reveals
Lower courts found this case relatively straightforward. IEEPA doesn’t authorize tariffs, and reading it to do so would raise grave constitutional concerns. Two courts reached this conclusion with minimal dissent. Circuit judges appointed by both Republican and Democratic presidents joined the majority.
Yet the Supreme Court has been unable to produce a decision for nearly three months following oral argument. What appeared clear to lower courts presents genuine difficulty at the Supreme Court level. Some justices might want to base a ruling against the tariffs on statutory interpretation alone. Others might see the principle that Congress must be clear when giving presidents big economic powers as the best limiting principle. Still others might prefer to rest the decision on concerns that the president has too much power.
During oral arguments in November 2025, Chief Justice Roberts suggested the major questions doctrine could apply even though some conservative justices have resisted applying it to foreign affairs. Justice Kagan pressed the government’s lawyer on a basic point: tariffs are taxes, Congress has the power to tax, and there’s no indication in IEEPA’s text that Congress intended to delegate that power. Justice Kavanaugh appeared sympathetic to the administration’s position during parts of the oral argument, though he also questioned the government’s reliance on statutory language that had never previously been used to authorize tariffs, despite Congress knowing exactly how to authorize tariffs explicitly in other laws.
Justice Alito appeared more sympathetic, suggesting that Congress often writes emergency laws using broad language, and courts shouldn’t read limitations into language that doesn’t explicitly contain them. But even skeptics of the lower court decisions seemed troubled by the breadth of the government’s position. Should “regulate importation” truly encompass setting tariff rates without limit, the same language should encompass virtually any other form of economic regulation—licensing schemes, fee structures, import quotas—with no meaningful constraints. The government responded that requiring the president to declare an emergency would be enough of a limit. But that proved unpersuasive to several justices because the president determines what counts as an emergency.
Chief Justice Roberts has shown particular sensitivity to public perception of the justices as a fair referee rather than a tool of one political side. A decision in a case where lower courts were unanimous and where legal experts widely question the government’s position could be easier to defend as law-based rather than ideology-based when the opinion is carefully written and well-reasoned.
Consumer Impact of the Tariffs
Research from Yale’s Budget Lab estimated that all 2025 tariffs combined increased the average tariff rate Americans are paying to 14.4 percent—the highest since 1939. Consumer prices rose by approximately 0.9 percent due to tariffs, equivalent to a median household cost of around $1,400.
Lower-income Americans pay a bigger share of the cost. For families earning less, tariffs take up more of their remaining money. Apparel prices rose 17 percent due to tariff impacts. Food prices rose 2.8 percent. Coffee prices: up 33.6 percent. Ground beef: up 19.3 percent.
The Tax Foundation estimated that Trump’s tariffs cost the average American household $1,000 in 2025, with costs rising to an estimated $1,300 per household in 2026 assuming tariffs remain in place.
Economic analysis shows the tariffs slowed economic growth by nearly 1 percent. The economy would stay about 0.6 percent smaller permanently—equivalent to $180 billion annually in economic losses.
Should the Supreme Court eventually rule that the tariffs were unlawful, those families might never see refunds. The government collected the money. Importers paid it. Consumers absorbed the higher prices. Unwinding all of that—figuring out who’s entitled to what, processing claims, distributing refunds—could take years, assuming it happens at all.
Alternative Tariff Authorities Available to Trump
Trump and his trade team are preparing backup plans. He has stated publicly that should IEEPA be struck down, he’ll “figure something out” using alternative statutory authorities.
The most obvious alternative is Section 232 of the Trade Expansion Act of 1962, which authorizes the president to impose tariffs to protect national security when imports threaten national defense. Trump has already invoked Section 232 multiple times to impose tariffs on steel, aluminum, and automobiles. These tariffs remain in effect, unaffected by the IEEPA litigation. However, Section 232 covers fewer situations than Trump’s tariff approach. The reciprocal tariffs attempted to address trade imbalances and “unfair” trade practices—economic concerns that aren’t clearly related to national defense. Section 232 requires findings that specific imports threaten national defense.
A second alternative is Section 301 of the Trade Act of 1974, which permits the president to investigate and respond to foreign trade practices that violate trade agreements or are unfair or unreasonable and hurt American businesses. Unlike IEEPA or Section 232, Section 301 requires the president to follow specific steps—an investigation, findings, and an opportunity for negotiation—before tariffs can be imposed.
A third alternative is Section 122 of the Trade Act of 1974, which permits the president to impose temporary tariffs up to 15 percent, lasting up to 150 days, to address serious trade imbalances. Congress specifically created this provision in 1974 as a narrowly limited response to Nixon’s 1971 tariff surcharge. Should the president want to maintain tariffs beyond 150 days, Congress must affirmatively extend the power.
Should the Supreme Court rule that IEEPA doesn’t authorize tariffs because Congress must speak clearly when delegating decisions of vast economic significance, that same principle might apply to Section 232 tariffs imposed for non-security reasons. Were the justices to rule on non-delegation grounds, holding that IEEPA is unconstitutionally vague because it provides no standards limiting presidential discretion, that concern could extend to Section 232 as well.
Expected Timeline and Possible Outcomes
February 20, 2026 appears to be the next scheduled bench session—the next time the justices are scheduled to appear in public and announce opinions. The justices may prefer to announce a decision of this magnitude in the courtroom, with the public and press present.
The most widely expected outcome is that the justices will rule against Trump, finding that IEEPA doesn’t authorize the broad tariff regime he imposed. The question is whether the ruling is narrow or broad, and what doctrinal principles the Court establishes.
A narrow ruling based on the principle that Congress must be clear about big economic powers would invalidate these particular tariffs while potentially leaving open whether Congress could be read as implicitly delegating tariff power in some contexts. A broader statutory interpretation ruling would establish more clearly that “regulate importation” simply doesn’t extend to tariff-setting. An even broader ruling based on concerns about presidential power would establish deep constraints on how expansively IEEPA can be read in any context.
There’s also a non-trivial possibility that the justices could uphold Trump’s tariff power. This outcome would be surprising given the lower court unanimity and the skepticism voiced by several justices at oral argument, but it remains legally possible. Were this to occur, the precedent for presidential emergency tariff power would be firmly established, potentially available to any future president.
When the Supreme Court finally speaks, the nation will learn how broadly or narrowly the justices understand their role in constraining presidential invocations of emergency power. The stakes are constitutional, affecting how the three branches of government interact in the 21st century.
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