In a significant ruling on executive power, the Supreme Court has held that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs. This decision strikes down tariffs that President Trump imposed on imports from Canada, Mexico, China, and other trading partners following declarations of national emergencies related to drug trafficking and trade deficits. Critically, the Court did not address how tariffs will be refunded to affected importers.
Shortly after taking office, President Trump declared national emergencies concerning the influx of illegal drugs from Canada, Mexico, and China, as well as “large and persistent” trade deficits that he argued had “led to the hollowing out” of the American manufacturing base. Invoking IEEPA, the President imposed a 25% duty on most Canadian and Mexican imports, a 10% duty on most Chinese imports, and at least a 10% duty on all imports from all trading partners, with dozens of nations facing even higher rates. Several small businesses and 12 states filed suit, challenging the President’s authority to impose these tariffs under IEEPA.
The Court’s decision rests on two fundamental principles. First, the Constitution reserves tariff authority to Congress. Under Article I, Section 8 of the Constitution, Congress, not the President, holds the power to impose taxes, duties, and tariffs. The Framers gave Congress “alone” access to “the pockets of the people” and did not vest any taxing power in the Executive Branch. The Government conceded that the President has no inherent authority to impose tariffs during peacetime.
Second, IEEPA’s text does not grant tariff authority. The Court found that IEEPA’s power to “regulate . . . importation” does not include the power to impose tariffs. Although IEEPA authorizes the President to investigate, block, regulate, compel, nullify, void, prevent, or prohibit importation, it makes no mention of tariffs or duties. The Court emphasized that when Congress has delegated tariff powers in the past, it has done so “in explicit terms and subject to strict limits.”
The tariffs imposed under IEEPA are no longer in effect. The Court did not address how importers will receive refunds, leaving the matter to the lower courts. Businesses that adjusted operations, pricing, or supply chains in response to these tariffs should reassess their strategies and prepare to obtain refunds. The attorneys at Whiteford, Taylor & Preston are well positioned to guide importers through the tariff refund process. Call today.
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