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. The decision strikes down the tariffs President Trump imposed on imports from Canada, Mexico, China, and other trading partners after declaring national emergencies over drug trafficking and trade deficits.
The key points:
- The Court ruled 6-3 that IEEPA does not authorize the President to impose tariffs.
- The Court did not address how tariffs will be refunded to importers. That process is now in the hands of the lower courts.
How the tariffs came about
Shortly after taking office, President Trump declared national emergencies concerning the influx of illegal drugs from Canada, Mexico, and China, and concerning large and persistent trade deficits that he argued had hollowed out the American manufacturing base.
Invoking IEEPA, the President imposed a 25 percent duty on most Canadian and Mexican imports, a 10 percent duty on most Chinese imports, and at least a 10 percent duty on all imports from all trading partners, with dozens of nations facing higher rates. Several small businesses and 12 states sued, challenging the President's authority to impose those tariffs under IEEPA.
Why the Court ruled as it did
The decision rests on two principles. First, the Constitution reserves tariff authority to Congress. Under Article I, Section 8, 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 vested no taxing power in the Executive Branch. The Government conceded that the President has no inherent authority to impose tariffs in peacetime.
Second, IEEPA's text does not grant tariff authority. The Court found that the statute's power to regulate importation does not include the power to impose tariffs. IEEPA authorizes the President to investigate, block, regulate, compel, nullify, void, prevent, or prohibit importation, but it makes no mention of tariffs or duties. When Congress has delegated tariff powers in the past, the Court emphasized, it has done so in explicit terms and subject to strict limits.
What happens now
The tariffs imposed under IEEPA are no longer in effect. The Court did not address how importers will receive refunds, leaving that to the lower courts. Businesses that adjusted operations, pricing, or supply chains in response to the tariffs should reassess their strategies and prepare to obtain refunds. The steps that matter, mapping entries by liquidation status, protests, and Court of International Trade actions, are set out in our earlier article on IEEPA tariff refunds.
Whiteford's attorneys are well positioned to guide importers through the refund process. Contact us, or reach Michael March at 410.347.8730 or Curtis Paul at 410.347.8732 directly.