The U.S. Supreme Court has issued a 6–3 decision significantly impacting presidential tariff authority — and it has immediate consequences for importers, manufacturers, and supply chain leaders.
Here’s what you need to know.
1. The Supreme Court Decision: IEEPA Does NOT Authorize Tariffs
The Court ruled that the International Emergency Economic Powers Act (IEEPA) does not grant the President authority to impose tariffs.
Key takeaways:
- IEEPA allows the President to regulate or block imports/exports.
- It does not explicitly authorize duties or surcharges.
- Tariffs are taxes — and the Constitution grants taxing power to Congress.
- When Congress delegates tariff authority, it does so clearly and with limits. IEEPA does neither.
- No prior President has used IEEPA to impose tariffs.
Bottom line: IEEPA tariffs are not authorized under the law.
2. What Happens to the IEEPA Tariffs?
Following the ruling:
- An executive order was issued ending the IEEPA tariffs.
- Agencies were directed to stop collection “as soon as practicable.”
What About Refunds?
Refunds remain a major question.
- There have been warnings that refund claims could lead to prolonged litigation.
- However, it is expected that Customs and Border Protection (CBP) will process refunds through standard administrative procedures.
Importers should:
- File Post-Summary Corrections (PSCs)
- Track protest deadlines
- Follow standard protest procedures unless CBP issues alternative guidance
3. A New Tariff Tool: Section 122
Immediately after the IEEPA tariffs were halted, a new tariff mechanism was invoked under Section 122 of the Trade Act of 1974.
What is Section 122?
Section 122 allows the President to impose temporary measures to address:
- Large balance-of-payments deficits
- Imminent depreciation of the dollar
- International balance-of-payments disequilibrium
It allows:
- A temporary import duty of up to 15%
- Temporary quotas
What’s Different?
- It has never before been used for tariffs.
- The new tariff is effective February 24 and expires July 24, 2026.
- The rate was first announced at 10% and then increased to 15%.
- The measure can only remain in place for 150 days unless Congress extends it.
Deadline: July 24.
4. Key Exemptions
The Section 122 proclamation includes significant exemptions, including:
- Goods already subject to Section 232 tariffs (with anti-stacking provisions)
- USMCA-compliant goods from Canada and Mexico
- Certain pharmaceuticals and ingredients
- Specific electronics
- Certain vehicles and aerospace products
- Critical minerals and energy products
- Agricultural products
- Informational materials and donations
For some importers, Section 122 may result in higher tariffs than reciprocal rates; for others, it may be lower.
5. What Comes Next?
This is unlikely to be the end of trade enforcement activity.
Potential next steps include:
- New Section 301 investigations
- Expanded Section 232 frameworks
- Other authorities (Section 201, Section 338, etc.)
- Increased trade enforcement and fraud scrutiny
- Possible new litigation
The Cross-Agency Trade Fraud Task Force remains active, and investigations may accelerate.
6. What Importers Should Do Now
- Begin preparing refund claims.
- File PSCs and protests where appropriate.
- Review sourcing strategies for the next 150 days.
- Confirm accounting treatment of duties.
- Coordinate closely with trade compliance and supply chain teams.
- Prepare for additional investigations and potential legal developments.
Final Thoughts
The Supreme Court has reasserted constitutional boundaries on tariff authority. But while one tariff tool has been removed, another has immediately taken its place.
For importers and manufacturers, this means:
- Continued volatility
- Short-term policy shifts
- A compressed compliance timeline
Now is the time for disciplined trade compliance and proactive supply chain strategy.