The End Of Liberation Day: Supreme Court Rules IEEPA Does Not Authorize Presidential Tariffs

On February 20, 2026, the United States Supreme Court struck down one of President Trump's signature second-term initiatives — the April 2, 2025, Liberation Day Tariffs — in six words: “Those words cannot bear such weight.” In a 6-3 decision, Learning Resources, Inc. v. Trump and its consolidated case, Trump v. V.O.S. Selections, Inc., the Court held that the International Emergency Economic Powers Act (IEEPA) did not authorize the President to impose the tariffs. The ruling marks a major limitation on executive trade authority and creates immediate, far‑reaching implications for the trading community. Below we explain the context and decision and discuss the practical considerations for businesses moving forward.

Background

Enacted in 1977, IEEPA has been used primarily as an economic sanctions tool to block assets, prohibit transactions and prohibit or restrict dealings with designated entities, sectors and jurisdictions.

Shortly after taking office in 2025, President Trump declared national emergencies relating to two asserted threats: the illegal influx of drugs across US borders and persistent trade deficits with major trading partners. Invoking IEEPA, the president issued a series of executive orders imposing tariffs intended to address both emergencies. The “drug trafficking” tariffs imposed a 25 percent duty on most Canadian and Mexican imports and a 10 percent duty on most Chinese imports. The “reciprocal” tariffs imposed a baseline duty of at least 10 percent on all imports from every US trading partner, with dozens of nations facing higher country-specific rates. In subsequent months, the administration has issued multiple increases, reductions, exemptions and other modifications to these tariff regimes, including raising tariffs on Chinese goods such that the total effective tariff rate on most Chinese goods reached 145 percent.

The Learning Resources plaintiffs — two small businesses — challenged President Trump's tariffs in the US District Court for the District of Columbia (D.D.C.), while the V.O.S. Selections plaintiffs — five small businesses and 12 states — challenged them in the US Court of International Trade (CIT). Both courts ruled against the administration. On appeal, the en banc US Court of Appeals for the Federal Circuit affirmed 7-4, holding that, while IEEPA may authorize some tariffs, it does not authorize tariffs as broad or large as those challenged. The Supreme Court granted certiorari  in both and agreed to consolidate for argument and decision.

The Supreme Court's Holding: IEEPA Does Not Authorize Presidential Tariffs

The Court's analysis centered on the constitutional framework, emphasizing that Article I, Section 8 of the Constitution vests in Congress alone — not the Executive Branch — the power to “lay and collect Taxes, Duties, Imposts and Excises.”

The majority opinion by Chief Justice John Roberts observed that IEEPA authorizes the President to do many things — “investigate, block, regulate, direct and compel, nullify, void, prevent or prohibit . . . importation or exportation” — but does not mention “tariffs” or “duties.” The Court rejected the government's argument that a tariff is merely a lesser form of a trade prohibition, which IEEPA does authorize. The majority explained that tariffs are “different in kind, not degree,” because they “operate directly on domestic importers to raise revenue for the Treasury” and fall “outside the spectrum entirely” of transactional controls. 

And although the term “regulate” is used broadly across the US Code, the Court noted that the government could not identify a single statute in which the power to “regulate” includes the power to tax, and Congress has historically addressed regulatory and taxing powers separately and expressly. Reading “regulate” to include tariff authority, the Court explained, would also raise constitutional issues: the same logic would imply authority to tax exports, which the Constitution expressly forbids. Finally, the Court noted that no prior President had ever found in IEEPA a power to raise revenue through tariffs.

The Chief Justice and Justices Gorsuch and Coney Barrett joined a separate plurality opinion applying the “major questions doctrine” as an additional ground for decision. The doctrine requires an Executive to point to clear congressional authorization when taking action that raises a question of vast economic and political significance; vague or general statutory language will not suffice. The plurality opinion invoked the doctrine because the government's reading of IEEPA would confer on the president an extraordinary and far-reaching delegation of authority, namely, the power to impose tariffs of any rate, on any product, from any country, for any duration.

The Chief Justice explained that the Court is reluctant to read extraordinary delegations of authority into ambiguous statutory text, reasoning that applies with “particular force” where the asserted delegation involves “the core congressional power of the purse.” The Court further held that there is no emergency-statute exception to this analysis, and that tariffs' foreign-affairs implications do not make it more likely that Congress silently relinquished its peacetime tariff power through vague statutory language.

In sum, as Chief Justice Roberts wrote for the Court: “Based on two words separated by 16 others in Section 1702(a)(1)(B) of IEEPA — ‘regulate' and ‘importation' — the President asserts the independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time. Those words cannot bear such weight.”

In dissent, Justice Kavanaugh, joined by Justices Thomas and Alito, argued that IEEPA “clearly” authorized tariffs because they are “a traditional and common tool to regulate importation.”

The White House Response: New Tariff Authority Invoked Immediately

Although the decision removed IEEPA as a basis for the tariffs, the administration made clear its intent to nevertheless pursue its tariff agenda; the administration has moved quickly to attempt to fill the void left by the Court's decision. US Trade Representative Jamieson Greer signaled in an interview with ABC News the Trump administration's intent to maintain its trade agenda through alternative legal means. “The policy hasn't changed. The legal tools that implement that may change but the policy hasn't changed,” Greer stated. Greer also indicated the administration would open new investigations into unfair trade practices under Section 301 of the Trade Act of 1974 that may result in stiff tariffs on certain countries. Greer described the new global tariff as a legally “very durable tool.” 

On February 20, the president signed a proclamation invoking Section 122 of the Trade Act of 1974 to impose a new 10 percent temporary tariff on goods from all countries. The following day, February 21, the president announced on Truth Social that the rate would be increased to 15 percent. However, this threatened increase has not been followed by any official action or writing, so it remains to be seen whether it will take effect. Section 122 gives the president the authority to impose tariffs of up to 15 percent for a period of 150 days, at which point Congress must authorize continuation.

Practical Implications for Businesses and Importers

CBP Guidance

On February 20, US Customs and Border Protection (CBP) posted an official bulletin confirming the Supreme Court's decision and stating that it is “working with other government agencies to fully examine the implications of the SCOTUS decision” and will “provide additional information and technical guidance for ACE filers as soon as it becomes available.” On February 22, CBP announced that the IEEPA tariffs will be collected until 12:01 am EST February 24, 2026.

The Refund Question Remains Unresolved

The Court's decision in Learning Resources leaves open a significant question: whether, and how, importers can recover the tariffs they have already paid. As Justice Kavanaugh noted in his dissent, the majority did not address “whether, and if so, how the Government should go about returning the billions of dollars that it has collected from importers.” The Supreme Court's ruling paves the way for companies to seek to claw back the roughly $130 billion in IEEPA tariff levies already paid since approximately April 2025. However, the question of whether and how importers can recover refunds is further complicated by the fact that many importers have already passed these costs along to consumers.

The questions surrounding refunds, which the Supreme Court did not rule on, will be decided by the US Court of International Trade (CIT), and any process would likely involve extensive litigation and take several years to resolve. Industry observers have noted that the refund question creates further contractual uncertainty, placing suppliers and customers in difficult positions as they attempt to determine where liability ultimately rests.

In seeking refunds, companies will have to make affirmative representations to the government regarding (i) duties paid, (ii) tariff applicability; and (iii) procedural compliance. Such representations can trigger exposure under 18 U.S.C. § 1001 (false statements) and, in certain circumstances, False Claims Act theories, particularly if refund positions are aggressive or inconsistent with prior internal analyses. Companies should therefore be careful in seeking recourse.

Conclusion

The Supreme Court's decision in Learning Resources  is a watershed moment in the law of executive trade authority. The Court affirmed the judgment enjoining the challenged tariffs and ended President Trump's IEEPA-based Liberation Day tariffs.

The practical landscape, however, remains complex. Tariffs imposed under IEEPA have been formally rescinded, but CBP's systems are still being updated, importers face uncertainty regarding the procedures for obtaining relief, and the question of refunds for duties already paid remains entirely unresolved before the CIT. Simultaneously, the administration has signaled a determined effort to reconstruct its tariff agenda through alternative statutory authority, and a new 15 percent global tariff is already in effect under Section 122 of the Trade Act of 1974, a provision that will expire absent congressional action within 150 days.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.