Supreme Court Rules Against Trump’s Use of IEEPA for Global Tariffs
The US Supreme Court has determined that President Donald Trump exceeded his authority by imposing broad global tariffs last year. In a 6-3 decision, the court ruled that Trump could not rely on the 1977 International Emergency Economic Powers Act (IEEPA) to impose taxes on imports from nearly every country worldwide.
The ruling leaves open the possibility that consumers and businesses may seek refunds for the estimated $130 billion generated by these tariffs, although the Supreme Court did not address this issue directly. This matter is expected to be resolved in subsequent court proceedings.
Shortly after the ruling, Trump issued a proclamation invoking an alternative statute, Section 122 of the 1974 Trade Act, to impose a new 10% temporary tariff on goods from all countries. On Saturday, he announced via social media his intention to raise these tariffs to 15%.
Below is a detailed overview of the tariffs affected, the legal context, and the implications moving forward.
What Tariffs Were Found Unlawful and Why?
The Supreme Court decision issued on 20 February pertains exclusively to tariffs enacted under the IEEPA, which empowers the president to regulate trade during emergencies.
Trump initially invoked IEEPA in February 2025 to impose tariffs on goods from China, Mexico, and Canada, citing fentanyl trafficking from those countries as an emergency. Months later, on what he termed "Liberation Day," Trump expanded tariffs ranging from 10% to 50% on goods from nearly every country, justifying this by claiming the US trade deficit constituted an "extraordinary and unusual threat."
The court emphasized that the authority to create new taxes resides with Congress, not the president, and that IEEPA does not authorize raising revenue.
Nonetheless, several tariffs imposed by Trump over the past year were not linked to the emergencies declared under IEEPA and remain in effect despite the ruling. These include industry-specific tariffs on steel, aluminum, lumber, and automotive products, which were enacted under Section 232 of the Trade Expansion Act of 1962, based on national security concerns.
Trump Imposes New Temporary Tariffs Under Different Law
Following the Supreme Court's decision on Friday, Trump issued a proclamation imposing a 10% global tariff on nearly all US imports under Section 122 of the Trade Act, a provision rarely used before.
On Saturday, Trump announced on Truth Social his plan to increase these tariffs from 10% to 15%.
Section 122 authorizes the president to impose tariffs up to 15% for 150 days, after which Congress must act. However, according to the Cato Institute, a right-leaning think tank, Trump might circumvent Congress by allowing the tariffs to expire after 150 days and then declaring a new emergency to reinstate them.
The White House stated that Trump is employing Section 122 "to address fundamental international payments problems" and to rebalance American trade. Additionally, the administration is exploring the possibility of imposing tariffs under Section 301 of the Trade Act of 1974.
Section 301 empowers the US Trade Representative (USTR), currently Jamieson Greer, to investigate foreign trade practices and impose tariffs if those practices are found to be "discriminatory" or "unfair."
The administration can also continue to apply tariffs under Section 232 of the Trade Expansion Act of 1962, which Trump extensively used during his first term. This statute permits tariffs on imports deemed a national security threat but requires an investigation, which can delay implementation.
An economist interviewed by the BBC noted that the investigative requirements under these laws can make tariffs more difficult to challenge or remove once imposed.
US Treasury Secretary Scott Bessent indicated that combining Section 122 tariffs with enhanced Section 232 and Section 301 tariffs "will result in virtually unchanged tariff revenue in 2026," effectively compensating for the loss of IEEPA-based tariffs.
Will Consumers and Businesses Be Refunded for the Unlawful Tariffs?
One rationale Trump provided for imposing tariffs was that the revenue collected would benefit the US Treasury and bolster the economy.
The US government has reportedly collected tens of billions of dollars from companies importing foreign goods, with estimates around $130 billion (£96 billion).
Although the Supreme Court ruled the IEEPA tariffs unlawful, it did not provide guidance on whether those who paid the tariffs should receive refunds.
Trump told reporters he expects any refund litigation to be prolonged.
Following the decision, Treasury Secretary Bessent also suggested that the refund issue could take years to resolve.
At a Dallas event, Bessent stated that revenues collected under the IEEPA tariffs are "in dispute" since the Supreme Court did not address refunds.
The matter is anticipated to be adjudicated by the US international trade court. Experts believe that refunds will likely be accessible mainly to larger companies, as smaller businesses may lack the resources to navigate the refund application process.
Alex Jacquez, chief of policy and advocacy at the liberal think tank Groundwork Collective, told CBS, the BBC's media partner, that over 1,000 businesses had already requested tariff refunds prior to the ruling, and this number is expected to increase.
Democratic Illinois Governor JB Pritzker has called on the White House to issue a $1,700 refund check to each American household in response to the unlawful tariffs.
Trump has previously hinted publicly at the possibility of issuing tariff rebate checks to Americans.
What Tariffs Are in Effect Now?
The new tariffs were scheduled to take effect on all imports to the US starting 24 February at 12:01 EST (05:01 GMT), according to the White House.
A White House official informed the BBC that countries with trade agreements with the US, including the UK, India, and the EU, will be subject to the global tariff under Section 122 rather than the previously negotiated tariff rates.
The administration expects these countries to continue honoring the concessions established under their trade agreements.
Certain goods will be exempt from the tariff "because of the needs of the U.S. economy" or to better target the duty.
Exemptions cover major categories such as critical minerals, metals, energy products, natural resources, food crops, pharmaceuticals, electronics, vehicles, and aerospace products.
Additionally, "informational materials (e.g., books), donations, and accompanied baggage" will not be taxed, according to a White House fact sheet.
For many exempt categories, the proclamation is broad and does not specify exact items.
Another significant exemption applies to goods covered by the USMCA trade agreement between the US, Mexico, and Canada. These goods were also exempt from the IEEPA tariffs. Prime Minister Mark Carney has noted that Canada benefits from some of the world's lowest tariff rates due to the USMCA exemption.
Similarly, textiles and apparel from Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua remain duty-free under the Dominican Republic-Central America Free Trade Agreement.
Meanwhile, Trump has maintained tariffs on low-cost goods. Last year, he ended the de minimis exemption, which previously allowed goods valued at $800 or less to enter the US without tariffs.
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