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U.S. Supreme Court rules IEEPA does not authorize president to impose reciprocal or drug-trafficking tariffs

March 2, 2026
Reading Time: 4 mins read
Bank survey probes business owners’ views on tariffs

IEEPA
Learning Resources Inc v. Trump
Date: Feb. 20, 2026

Issue: Whether the International Emergency Economic Powers Act (IEEPA) authorized the president of the United States to impose “reciprocal” and “drug-trafficking” tariffs.

Case Summary: In a 6-3 decision, the U.S. Supreme Court ruled that the IEEPA does not authorize the president to impose tariffs.

In 1977, Congress enacted IEEPA, which grants the president limited economic authority to address significant foreign threats. Once invoked, IEEPA permits the president to investigate, regulate, block, or prohibit transactions involving property in which a foreign country or national has an interest, including transactions involving importation or exportation, to address that threat.

Shortly after returning to office, President Donald Trump imposed tariffs to confront what he viewed as foreign threats, including an influx of illegal drugs from Canada, Mexico and China, and large and persistent trade deficits. President Trump maintained that the drug influx created a public health crisis and that the trade deficits hollowed out the American manufacturing base and undermined critical supply chains. As a result, he declared a national emergency, deemed both threats unusual and extraordinary, and invoked his authority under IEEPA. President Trump then imposed reciprocal and trafficking tariffs to address each concern. These measures included a 25% duty on most imports from Canada and Mexico and a 10% duty on most imports from China, while setting tariffs of at least 10% on dozens of other nations, with some facing higher rates.

In June 2025, Learning Resources Inc. and V.O.S. Selections Inc. each sued Donald Trump and the U.S. government, arguing that IEEPA did not authorize the reciprocal or drug-trafficking tariffs. In Learning Resources, two small businesses sued in the United States District Court for the District of Columbia, which granted a preliminary injunction after concluding IEEPA likely did not give the president authority to impose the tariffs. In V.O.S. Selections, five small businesses and twelve States sued in the United States Court of International Trade, which granted summary judgment for the plaintiffs. The United States Court of Appeals for the Federal Circuit, sitting en banc, affirmed in relevant part and held that IEEPA’s authority to regulate importation did not permit tariffs that were unbounded in scope, amount, and duration. The government petitioned for certiorari in V.O.S. Selections, and Learning Resources petitioned for certiorari before judgment. The U.S. Supreme Court granted both petitions and consolidated the cases.

Writing the opinion for the majority, Chief Justice John Roberts concluded that Article I, Section 8 of the Constitution vests the power to lay and collect taxes, duties, and imposts — including tariffs — exclusively in Congress. The majority explained that the Framers deliberately gave Congress alone control over the taxing power and did not vest any part of that authority in the executive branch. Because the government conceded that the president has no inherent authority to impose tariffs during peacetime, it relied solely on IEEPA. The Court rejected the government’s reading of IEEPA, which interpreted the terms “regulate” and “importation” to delegate Congress’s tariff power to the president and to authorize tariffs of unlimited amount and duration on any product from any country.

The majority also applied the major questions doctrine and refused to read ambiguous statutory language as granting sweeping authority of vast economic and political significance. The Court emphasized Congress delegated tariff power only through clear and carefully limited statutes, noting that no president had invoked IEEPA to impose tariffs in the statute’s fifty-year history. The Court concluded the president’s claim of unilateral and unbounded tariff authority would dramatically expand executive power, and neither emergency powers nor foreign affairs concerns excuse the need for clear congressional authorization. Justices Neil Gorsuch and Amy Coney Barrett concurred with this specific section of Justice Roberts’ analysis.

The majority also concluded IEEPA does not authorize the president to impose tariffs because the statute lists specific powers, such as investigating, blocking and regulating importation or exportation, but never mentions tariffs or duties. In the majority’s view, Congress grants tariff authority only in clear and express terms, and the ordinary meaning of regulate does not include the distinct and extraordinary power to tax. The majority relied on IEEPA’s text, structure, historical practice, and precedent to confirm it authorizes economic controls and sanctions, not revenue-raising tariffs.

In a concurrence, Justices Elena Kagan, Sonia Sotomayor, and Ketanji Brown Jackson agreed that IEEPA does not authorize the president to impose tariffs but concluded that the Court did not need to rely on the major questions doctrine. In their view, traditional tools of statutory interpretation resolve the issue. In a separate concurrence, Justice Jackson noted she would consult legislative history, including the House and Senate reports accompanying IEEPA and its predecessor, the Trading with the Enemy Act, to confirm that Congress did not intend to grant the Executive authority to impose tariffs.

Writing for the dissent, Justice Clarence Thomas maintained that IEEPA authorizes the president to impose tariffs because the established meaning of the power to “regulate importation” includes the authority to levy duties. He explained that Congress has repeatedly delegated broad authority over foreign commerce, including tariff power. In a separate dissent, Justice Brett Kavanaugh noted that as a matter of text, history, and precedent, they are clearly lawful.

Bottom Line: There is no statutorily mandated process or timeline for administering a tariff refund program.

Document: Opinion

Tags: Banking Docket
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