The decision invalidates billions of dollars in tariffs collected over the past year, creates immediate refund opportunities for importers, and introduces significant legal and commercial uncertainty as the administration pivots to alternative statutory authority for imposing new tariffs.
The Court issued a 6-3 decision, authored by Chief Justice Roberts, holding that the IEEPA does not authorize the President to impose tariffs. While the ruling halts further collection of IEEPA-based tariffs, it leaves unresolved the mechanics of refunds and sets the stage for new litigation over substitute tariff regimes.
The Court’s Decision
The Court emphasized that Article I of the Constitution vests the power to impose tariffs squarely in Congress as part of the taxing power. The majority stressed that when Congress has delegated tariff authority to the Executive, it has done so explicitly and subject to strict limitations, neither of which appear in the IEEPA.
The Trump administration had relied on the IEEPA to impose tariffs by declaring national emergencies tied to alleged illegal drug importation and persistent trade deficits and arguing that the IEEPA’s grant of authority to “regulate … importation” encompassed tariff imposition. The Court rejected this interpretation, holding that the President lacks inherent authority to impose tariffs during peacetime and that Congress did not delegate such power through IEEPA. In reaching this conclusion, the Court emphasized that “[i]t is also telling that in IEEPA’s half century of existence, no President has invoked the statute to impose any tariffs, let alone tariffs of this magnitude and scope,” and that this “lack of historical precedent, coupled with the breadth of authority that the President now claims, suggests that the tariffs extend beyond the President’s legitimate reach.” Applying the “major questions doctrine,” the Court observed that “[t]he President asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope. In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorization to exercise it.”
The majority did not address the validity of tariffs that had been imposed under other statutes, nor did it prescribe procedures for refunding tariffs already collected.
Justice Kavanaugh, joined by Justices Thomas and Alito, dissented, arguing that tariffs are “a traditional and common tool to regulate importation” within the statute’s plain language. The dissent warned that “the interim effects of the Court’s decision could be substantial,” potentially requiring the government “to refund billions of dollars to importers who paid the IEEPA tariffs.”
Administration Response and Section 122 Pivot
The Trump administration moved quickly on two fronts in response to the Supreme Court’s decision. First, President Trump signed an executive order directing agencies to cease collection of IEEPA tariffs, with U.S. Customs and Border Protection halting collections as of February 24, 2026.
Second, the administration pivoted to alternative statutory authority under Section 122 of the Trade Act of 1974, which grants authority to impose limited tariffs to address “fundamental international payments problems.” On February 20, 2026, President Trump declared that the United States is experiencing just such “fundamental international payments problems” and imposed a 10% tariff on imports for 150 days, effective February 24, 2026. On February 21, he announced there would be an increase to 15%—the statutory maximum under Section 122—though the increase has not yet taken effect.
However, no president has invoked Section 122 to impose such broad tariffs before, and it is unclear whether the President’s declaration that “fundamental international payments problems” exist would be upheld by courts. Under Section 122, duties may remain in place for only 150 days unless Congress votes to extend them. The statute requires specific findings, including that import restrictions are necessary to address a large balance-of-payments deficit, imminent dollar depreciation, or international payments disequilibrium. These constraints create significant litigation risk and uncertainty regarding the durability of the replacement tariffs.
Refund Opportunities and Further Uncertainty
The Supreme Court’s decision opens the door to substantial refund opportunities for importers who paid IEEPA-based tariffs. Experts have estimated that approximately $175 billion in Treasury revenue may be subject to refund claims.1
Litigation is already underway, with many major businesses having filed suit to recover tariffs they were unlawfully compelled to pay. The Court of International Trade has yet to rule on the wave of cases before it, leaving significant uncertainty about how these disputes will unfold and whether the administration or Congress will intervene.
Key Takeaways and Implications
For importers, the decision establishes clear legal grounds to seek refunds for tariffs paid under IEEPA, but securing those refunds will require prompt action. Companies should conduct a comprehensive audit of all tariffs paid since early 2025, consider pursuing administrative refund claims, and preserve rights within applicable statutory deadlines. The scale of potential recoveries means importers should anticipate a resource-intensive process that may extend over a prolonged period.
For non-importers, the situation is more complicated. As noted above, many importers will have passed tariff costs through to upstream suppliers or downstream customers pursuant to agreements, purchase orders, or pricing arrangements, and parties that expressly allocated tariff responsibility in their contracts may now face competing claims regarding entitlements to refunds. Companies should promptly review material contracts from the past year to identify tariff allocation provisions, refund-sharing mechanisms, or related-pricing adjustment clauses, as contractual remedies may be time-limited and delay could jeopardize recovery or defense positions. And even where contracts are silent or ambiguous, disputes over the economic allocation of refunded tariffs will likely follow, and businesses should consider renegotiations or litigation to fill these gaps.
Finally, going forward, the Learning Resources decision underscores the importance of expressly allocating tariff burdens and refund rights in commercial contracts and highlights the broader volatility of the U.S. trade policy environment. The administration’s swift turn to Section 122 signals its continued commitment to tariff-based trade measures despite judicial constraints, and congressional action could yet provide new statutory authority for tariffs on firmer legal footing. Clients should track regulatory, legislative, and litigation developments closely and stand ready to adjust supply chain structures, pricing strategies, and contractual risk allocation as the post-Learning Resources landscape continues to evolve.
Footnotes
1 https://budgetmodel.wharton.upenn.edu/issues/2026/2/20/supreme-court-tariff-ruling-ieepa-revenue-and-potential-refunds
