The SCOTUS Ruling on Trump Tariffs: The Calm before the Storm
- The Supreme Court Invalidates IEEPA-Based Tariffs
The Supreme Court of the United States, in Learning Resources Inc. v. President of the United States, has overruled the tariffs imposed by the Trump Administration under the International Emergency Economic Powers Act (“IEEPA”).
The measures at issue included the so-called “reciprocal” tariffs aimed at addressing the United States’ “large and persistent trade deficits” with other nations, as well as tariffs imposed in response to drug-trafficking threats associated with imports from Mexico, Canada, and China. These tariffs were introduced following a declaration of national emergency under the IEEPA. The Administration had asserted that persistent trade deficits had “led to the hollowing out” of the American manufacturing base and “undermined critical supply chains”, and that the influx of drugs had created a “public health emergency”. Both were characterized as “unusual and extraordinary” threats leading to the executive action under the IEEPA.
However, yesterday, in a 6-3 majority decision, the Court held that the IEEPA does not authorize the President to impose tariffs. The Court determined that the statutory language that permits the President to regulateimportation does not extend to the distinct power to tax or raise revenue through tariffs. It further held that the constitutional authority to impose tariffs rests solely with Congress, and that the President does not possess any inherent authority to impose such duties during peacetime.
2. Refunds and the Role of the Court of International Trade
A central issue arising from the ruling concerns the recovery of duties that have already been collected since the Supreme Court’s decision does not specifically address the issue of refunds. Reports indicate that over USD 200 billion was collected under the IEEPA tariff measures. However, given the U.S. Court of International Trade’s (“CIT”) jurisdiction over IEEPA tariffs, importers may consider pursuing relief through:
- Administrative procedures administered by U.S. Customs and Border Protection, including Post Summary Corrections (PSCs) and protests; and/or
- Litigation before the CIT challenging the legality of tariffs collected under the IEEPA and seeking appropriate remedies.
The operational and procedural dimensions of this process will likely evolve in the coming weeks.
3. Alternative Statutory Tools Available to the Administration
While the ruling resolves the legality of tariffs imposed under the IEEPA, the broader question before us is how U.S. tariff policy will unfold going forward. In addition to the IEEPA, several federal statutes empower the administration to take trade-restrictive measures in the national interest.
- Section 122 of the Trade Act of 1974
The provision authorizes the President to impose temporary import surcharges up to 15% on an ad valorem basis or apply import quotas, for a maximum period of 150 days to address “fundamental international payments problems”. Notably, the Administration has already resorted to this mechanism by imposing a temporary 10% ad valorem surcharge on imported articles.
b. Section 232 of the Trade Expansion Act of 1962:
Section 232 permits the President to impose tariffs, without any upper limit, on imports of goods that are determined pursuant to an investigation conducted by the Department of Commerce to threaten or impair national security.
c. Section 301 of the Trade Act of 1974:
Under this provision, the U.S. Trade Representative may impose tariffs or other import restrictions where, following an investigation, it determines that a foreign country’s act, policy, or practice is “unjustifiable and burdens or restricts United States commerce” or denies benefit to the US under any trade agreement.
d. Section 338 of the Tariff Act of 1930:
This provision authorizes the President to impose tariffs on imports from countries that discriminate against U.S. commerce in a manner that places it at a disadvantage relative to other foreign commerce.
However, unlike the IEEPA, the above statutory mechanisms incorporate procedural safeguards, including investigative processes and, in certain cases, involvement of the US Congress. As a result, tariff measures adopted under these provisions are likely to be accompanied by defined processes that allow stakeholders some opportunity to adjust.
With the persistent threat of sweeping tariffs imposed overnight now curtailed, trading partners may be less inclined to concede trade arrangements under pressure. Moreover, the ruling has afforded countries greater negotiating space to engage the United States on product-specific concessions and to explore areas of alignment without compromising their core policy interests.
4. Looking Ahead
The Supreme Court’s ruling marks an important moment in clarifying the constitutional allocation of powers in the conduct of U.S. tariff policy. However, it would be premature to regard the decision as the end of the current tariff trajectory. With multiple statutory tools available with the Trump Administration, the tariff actions are unlikely to recede altogether. Rather, they may take a more targeted, sector-specific form. Measures under Section 232, in particular, could become a central instrument for advancing the Administration’s trade agenda in the near term.
Although the ruling is significant, it is unlikely to be the final word on U.S. tariff measures, and stakeholders should anticipate further developments.
