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On February 20, 2026, the U.S. Supreme Court issued its hotly anticipated decision in Learning Resources, Inc. v. Trump, holding that the Trump administration did not have the authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA). This decision has significant practical consequences for importers that previously paid billions of dollars in tariffs and might now be eligible for refunds for the money they've paid.
Case background and the Supreme Court's decision
In 2025, the Trump administration issued sweeping tariffs on a wide swath of countries. The administration claimed that the tariffs were authorized by IEEPA, a 1977 law that gives the president certain emergency powers in international economic crises. The administration claimed that the tariffs were responding to two unusual and extraordinary threats: drug trafficking and trade deficits. A group of states and businesses challenged the tariffs in court, eventually reaching the Supreme Court, arguing that IEEPA did not authorize the Trump administration's tariffs.
The Supreme Court issued its decision on February 20, 2026. In a 6-3 ruling, it held that the Constitution gives only Congress the authority to impose tariffs and that IEEPA's authorization to the president to "regulate . . . importation" did not include the authority to impose tariffs. IEEPA did not constitute a delegation of Congress's constitutional authority to levy taxes, but the holding in this case is statutory, not constitutional.
What's next?
The Supreme Court said nothing about whether importers that paid the tariffs are owed refunds and the process by which refunds should be issued. Indeed, Justice Brett Kavanaugh's dissenting opinion noted the practical concerns of potentially refunding billions of dollars to importers, concluding that the refund process is likely to be a "mess."
The U.S. Court of International Trade (CIT) will likely consider whether refunds are owed and how refunds will practically work in the first instance. In a prior decision from December 2025, the CIT hinted how it will address those issues. In that case, a business sought a preliminary injunction to avoid having to pay IEEPA tariffs while the Supreme Court's decision on the legality of the tariffs was pending. The business raised concerns that if it paid the tariffs and then the tariffs were held unlawful by the Supreme Court, the business might not be refunded. The CIT rejected the preliminary injunction because if the tariffs were ultimately held unlawful, the court could order a refund of any IEEPA tariffs paid, so there was no irreparable harm to the business if it paid the tariffs in the meantime. In particular, the court relied on the government stating that it would "not object to the [c]ourt ordering reliquidation of plaintiffs' entries subject to the challenged IEEPA duties if such duties are found to be unlawful." In other words, the government conceded that the CIT could order it to refund IEEPA tariffs if the Supreme Court deemed the tariffs unlawful. Based on the government's statements in that and similar cases, the CIT said that the government would be judicially estopped from reverting on its position and later arguing that the CIT could not order refunds. Now that the Supreme Court has held the tariffs unlawful, the CIT is likely to conclude that importers are entitled to refunds for unlawfully levied IEEPA tariffs, and the government is estopped from arguing otherwise.
Though the Supreme Court's ruling ends the Trump administration's tariffs under IEEPA, importers are not completely in the clear from tariffs altogether. The Supreme Court's decision did not consider whether the president has the authority under other laws to enact similar tariffs. And the Trump administration has previously signaled that if the Supreme Court ruled its tariffs unlawful under IEEPA, it would seek to impose tariffs through other means. The administration has announced that it will impose a temporary 10% global tariff under Section 122 of the Trade Act of 1974, which can only last for 150 days, and is beginning investigations under Section 301 that are needed to support more long-lasting tariffs. However, these authorities come with significant limitations as compared to the administration's attempted use of IEEPA emergency powers.
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