The SCOTUS Ruling on Trump Tariffs : A Pause, Not an Endpoint

New SCOTUS Ruling

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 so-called “reciprocal” tariffs were aimed at addressing the United States’ “large and persistent trade deficits” with other nations. The tariffs were also 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.

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 regulate importation does not extend to the distinct power to tax or raise revenue through tariffs. It also 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.

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, as the Supreme Court’s decision does not specifically address the issue of refunds. Reports indicate that over USD 175 billion was collected under the IEEPA tariff measures [1]. Any refund relief, if available, would accrue only to U.S. importers of record and not to exporters, unless otherwise specified in contracts.

The Trump Administration subsequently issued an Executive Order revoking the IEEPA tariff measures, which does not refer to the Supreme Court’s ruling and appears to operate prospectively by discontinuing further collection of IEEPA Tariffs. Since the Court’s judgment concerned only specific Executive Orders, uncertainty may arise regarding the refund of duties collected under other IEEPA-based Executive Orders that were not directly before the Court.

S. No.	IEEPA TARIFF MEASURE	ADDRESSES IN THE SC JUDGEMENT	REVOKED UNDER THE SUBSEQUENT EXECUTIVE ORDER
01	To Address the Flow of Illicit Drugs Across the Northern Border (E.O. 14193)
02	To Address the Situation at the Southern Border (E.O. 14194)
03	To Address the Synthetic Opioid Supply Chain in the People’s Republic of China (E.O. 14195)
04	Countries Importing Venezuelan Oil (E.O. 14245)
05	Reciprocal Tariff to rectify trade deficits (E.O. 14257)
06	Addressing Threats to the United States by the Government of Brazil (E.O. 14323)
07	Addressing Threats to the United States by the Russian Federation (E.O. 14329)
08	Addressing Threats to the United States by the Government of Cuba (E.O. 14380)
09	Addressing Threats to the United States by the Government of Iran (E.O. 14382)

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 contours of the refund process are likely to evolve in the coming weeks. In addition, the procedure and timelines will largely depend on whether the entries subject to IEEPA tariffs are liquidated or unliquidated.

If the subject entries are unliquidated (i.e., the applicable duties on such entries have not been finally ascertained by CBP), the importer can file for a PSC with the CBP or request an extension of liquidation. Entries are generally liquidated after 314 days from the date of entry, but they may be liquidated earlier than 314 days as well [2]. Therefore, the importers must identify which entries remain unliquidated before taking action.

If the subject entries have been liquidated, the importer can file a suit before the CIT, pursuant to 28 U.S.C. § 1581(i), to seek a re-liquidation of the entries [3a] & [3b]. The applicable limitation for seeking a refund is two years from the publication of the respective tariffs [4]. Alternatively, the importers can file formal protests with the CBP within 180 days of the liquidation [5]. If the protest is denied, an action for judicial review may be filed

before the CIT within 180 days of such denial [6].

CIT, in AGS Co. Automotive Solutions v. CBP, had observed that filing protests for IEEPA tariffs may be futile and unnecessary [7]. Thus, a direct action under 28 U.S.C. § 1581(i) before the CIT, seeking reliquidation, appears to be the more appropriate course of action.

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.

PROVISION	STATUTORY BASIS/TRIGGER	FEDERAL AGENCY INVESTIGATION REQUIRED?	HOW LONG THE MEASURE MAY OPERATE?	STATUTORY CAP ON TARRIF
Trade Expansion Act of 1962 - Section 232	Imports that threaten U.S. national security.	Yes - investigation by the U.S. Secretary of Commerce.	No express time limit.	No statutory cap.
Trade Act of 1974 - Section 122	International payments problem.	No investigation required.	150 days; extendable with the approval of the US Congress.	15%
Trade Act of 1974 - Section 201	Serious injury or threat of serious injury to the domestic industry.	Yes - investigation by the International Trade Commission.	Four years; extendable upon review to a maximum of eight years.	50% increase. Must be phased down after one year.
Trade Act of 1974 -Section 301	Foreign acts, policies, or practices that unjustifiably burden or restrict U.S. commerce.	Yes - Investigation by the U.S. Trade Representative.	Four years; extendable upon review.	No statutory cap.
Tariff Act of 1930 -Section 338	Discrimination against U.S. commerce.	No investigation required.	No express time limit.	50%

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.

Against this backdrop, the Trump Administration's immediate invocation of Section 122 of the Trade Act of 1974 following the SC’s ruling may be viewed as a temporary step while investigative and reporting requirements under other statutes are completed. However, it is pertinent to note that the validity of Section 122 measures may also be subject to judicial scrutiny.

The Administration has cited large “trade deficit” among other concerns as justification for invoking Section 122, whereas the provision refers to “large and serious United States balance-of-payments deficits” and circumstances involving an “imminent and significant depreciation” of the dollar. Notably, during the IEEPA litigation before the Court of Appeals for the Federal Circuit, the Department of Justice had admitted that Section 122 has “no application” where the concerns identified arise from trade deficits, which it described as conceptually distinct from balance-of-payments deficits [8]. In these circumstances, demonstrating a clear nexus between Section 122 and the stated rationale may not be straightforward.

Looking Ahead

The Supreme Court’s ruling marks an important moment in clarifying the constitutional allocation of powers for imposing tariffs. However, it would be premature to regard the decision as the end of the uncertainty. With multiple statutory tools available to 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. The ruling is therefore significant, but it is unlikely to be the final word on U.S. tariff policy.

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