The US Supreme Court ruled on Friday, February 20, 2026, that the International Emergency Economic Powers Act (IEEPA) does not empower the president to impose tariffs, striking down the bulk of President Donald Trump's second-term tariff program and remanding the refund question to the US Court of International Trade.

The 6-3 decision in Learning Resources, Inc. v. Trump and V.O.S. Selections v. United States held that "IEEPA does not authorize the President to impose tariffs." Chief Justice John Roberts wrote for the majority, joined by Justices Sotomayor, Kagan, Gorsuch, Barrett, and Jackson. Justices Thomas, Kavanaugh, and Alito dissented.

The ruling voids every tariff imposed under the emergency statute — the first time any president had used IEEPA to levy duties. That includes the "Liberation Day" reciprocal tariffs of 10 to 50 percent covering nearly every US trading partner, the fentanyl and border-security tariffs on China (10 percent on all imports), Mexico (25 percent on non-USMCA goods), and Canada (35 percent on non-USMCA goods, or 10 percent for certain energy products and fertilizers), tariffs on Indian imports tied to Russian oil, tariffs on Brazil, and the termination of the de minimis exemption for low-cost imports.

Procedural Trail

The case began when small businesses — American manufacturers and retailers — and several state attorneys general sued, arguing the tariffs exceeded presidential authority under IEEPA. On May 28, 2025, a panel of the US Court of International Trade unanimously ruled the tariffs illegal. The Court of Appeals affirmed on August 29, 2025. The tariffs remained in effect while the administration pursued its Supreme Court appeal. The justices heard oral argument on November 5, 2025.

The Refund Question

The Court remanded the case to the Court of International Trade to address refunds. According to CBP trade statistics, the government had collected $133.5 billion in IEEPA tariff payments from US importers as of December 14, 2025, the latest available data. Through the date of the decision, the Tax Foundation estimates the total exceeds $160 billion.

Full refunds would erase nearly three-fourths of the new revenue generated by Trump-era tariffs. The Tax Foundation urges the government to make the refund process for importers as simple and transparent as possible.

The stakes are substantial. The IEEPA tariffs were projected to raise $1.4 trillion in federal revenue from 2026 through 2034. Altogether, Trump's tariffs represented the largest US tax increase as a share of GDP in more than 30 years — an average increase of $1,000 per US household in 2025 and $1,300 in 2026, driven primarily by the now-invalidated IEEPA duties. The struck-down tariffs raised the applied US tariff rate by 7 percentage points and the effective rate by nearly 5 percentage points.

What Survives

The ruling does not touch the industry-specific Section 232 tariffs, which cover steel, aluminum, autos, and heavy trucks. Those remain in force. The Tax Foundation estimates the Section 232 tariffs will raise $635 billion over the next decade — an average tax increase of $400 per US household in 2026.

Practical Consequences for Practitioners

For trade counsel, the immediate task is refund litigation before the Court of International Trade, where questions of procedure, scope, and eligible claimants will now play out. Clients who paid IEEPA duties — including the fentanyl, border, reciprocal, India, and Brazil tariffs — should preserve import records and payment documentation. The removal of the tariffs also restores the de minimis exemption for low-cost imports. Counsel should also track pending alternative authorities: the administration is currently conducting 12 Section 232 investigations covering products including copper, lumber, heavy trucks, semiconductors, and pharmaceuticals. Section 301 tariffs, used in 2018 to impose duties of up to 25 percent on Chinese imports that remain in place, could be raised or extended to other countries. The administration may also consider Section 122 (capped at 15 percent, with a 150-day limit before congressional approval is required) or Section 338 (capped at 50 percent) — neither of which has ever been invoked.

Economic Effect

The Tax Foundation estimates that had the IEEPA tariffs remained in place, US GDP would have shrunk by 0.3 percent. Their removal eliminates that drag by lowering marginal tax rates on work and investment.

Uncertainty persists, however. If the administration replaces the IEEPA tariffs with duties imposed under other statutory authorities — Section 232, 301, 122, or 338 — tariff-related headwinds to the economy could increase. The president retains broad powers to impose more product-focused tariffs through those channels.