The Supreme Court Invalidates Trump's Tariffs. But What's Next?

Earlier today, in a 6-3 decision, the Supreme Court held that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs. Several Justices wrote separately to discuss the major questions doctrine, and Justices Thomas and Kavanaugh dissented. Below, we analyze the Supreme Court’s opinion, the concurring opinions, and the dissenting opinions.  

The Majority Opinion

The Court initially acknowledged that the Government’s principal argument was that “two words separated by 16 others in Section 1702(a)(1)(B) of IEEPA” permitted the President to assert “the independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time.” It concluded that “[t]hose words cannot bear such weight.”

The Court emphasized that the Constitution specifies that “Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises” and that the power to tax was “the most important of the authorities proposed to be conferred upon the Union.” It then noted that the power to impose tariffs is very clearly a branch of the taxing power and that the Framers did not vest any part of the taxing power in the executive branch. The Court further stated (and the Government conceded) that the President enjoys no inherent authority to impose tariffs during peacetime. Therefore, the Government relied exclusively on IEEPA, reading the words “regulate” and “importation” to allow for the President to impose tariffs. The Court rejected this.

The Court looked to IEEPA’s text, which authorizes the President to “investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit . . . importation or exportation.” The Court noted that absent from the lengthy list of powers is any mention of tariffs or duties and that the “omission is notable in light of the significant but specific powers Congress did go to the trouble of naming.” Therefore, the Court concluded that if Congress intended to convey the distinct and extraordinary power to impose tariffs, it would have done so expressly.

The Court then determined that the power to “regulate . . . importation” does not include taxation. It reasoned that the term is not usually thought to include taxation and that if the definition of regulate was as broad as the dissent suggests, the other eight verbs in the statute are simply wasted ink. The Court further stated that although taxes may accomplish regulatory ends, it does not follow that the power to regulate something includes the power to tax it as a means of regulation. And when Congress addresses both the power to regulate and the power to tax, it does so separately and expressly. The Court also noted that a contrary reading would render IEEPA partly unconstitutional because it authorizes the President to “regulate . . . importation or exportation” and taxing exports is expressly forbidden by the Constitution. The Court also looked to the neighboring words with which “regulate” is associated and concluded that they suggest that Congress did not intend for “regulate” to include the revenue-raising power.

Next, the Court rejected certain arguments of the Government and the dissents. It first rejected the notion that IEEPA confers the power to impose tariffs because early commentators and the Court’s cases discuss tariffs in the context of the Commerce Clause. It stated that the question was not whether tariffs can ever be a means of regulating commerce but whether Congress, when conferring the power to “regulate . . . importation,” gave the President the power to impose tariffs at his sole discretion. It concluded that “[w]hen Congress grants the power to impose tariffs, it does so clearly and with careful constraints” and that “[i]t did neither here.” The Court then rejected the contention that because “regulate” lies between two poles in IEEPA—“compel” on the affirmative end and “prohibit” on the negative end—the term naturally includes the less extreme, more flexible tool of tariffs. It concluded that tariffs are different in kind and fall outside the spectrum entirely. The Court further rejected arguments that IEEPA’s predecessor statute (TWEA) and historical precedents established the authority to impose tariffs. Last, the Court rejected the Government’s reliance on the Court’s precedents. It declined to extend its limited holding in Federal Energy Administration v. Algonquin SNG, Inc. that Section 232(b) of the Trade Expansion Act of 1962, which allows the President to “adjust the imports” and to “take such action . . . as he deems necessary” to adjust the imports of a good, includes the power to impose “license fees” because IEEPA does not contain such sweeping, discretion-conferring language. And it concluded that Dames & Moore offered no support because that decision was exceedingly narrow, did not address the President’s power to “regulate,” and did not involve tariffs.

Justice Roberts, joined by Justices Gorsuch and Barrett, also addressed the major questions doctrine. Justice Roberts stated that the asserted power to unilaterally impose unbounded tariffs is a matter of major economic and political significance requiring “clear congressional authorization.” He concluded that no such clear authorization appears in IEEPA. He noted that the Government’s view that IEEPA gives the President power to unilaterally impose unbounded tariffs would represent a transformative expansion of the President’s authority over tariff policy and the economy, replacing the longstanding executive-legislative collaboration over trade policy with unchecked presidential policymaking. He then reasoned that Congress seldom effects such sea changes through “vague language.” He also noted that no President has invoked the statute to impose tariffs and reasoned that lack of historical precedent for these tariffs, coupled with the breadth of authority that the President now claims, is a telling indication that the tariffs extend beyond the President’s legitimate reach. He further rejected arguments that an emergency context or foreign affairs implications narrow or negate the doctrine’s application, noting that the tariff power during peacetime is vested in “Congress alone.”

The Court also agreed with the Federal Circuit that the V.O.S. Selections case falls within the exclusive jurisdiction of The Court of International Trade (CIT) because the plaintiffs’ challenges arise out of modifications to the Harmonized Tariff Schedule of the United States (HTSUS), such modifications are made under an act afecting import treatment and are considered to be statutory provisions of law for all purposes, and therefore the plaintiffs’ challenges arise out of a law of the U.S. providing for tariffs. For the same reasons, the Court found that the United States District Court for the District of Columbia lacked jurisdiction.

Ultimately, the Court affirmed the judgment of the Federal Circuit, but it vacated the decision of the DC District Court and remanded it with instructions to dismiss for lack of jurisdiction.  

The Concurrences

Justice Gorsuch concurred and underscored the major questions doctrine as a clear-statement safeguard for Article I’s vesting of legislative power in Congress. He addressed competing views on the doctrine’s scope, rejected a broad foreign-affairs exception, and explained that general language like “regulate” cannot silently convey extraordinary tariff authority. Justice Barrett concurred, agreeing that the most natural reading of IEEPA does not encompass tariffs. She characterized the major questions doctrine as situating text within context and best understood as an ordinary application of textualism. She further cautioned against turning it into a rigid, clear-statement rule. Justice Kagan, joined by Justices Sotomayor and Jackson, concurred in part and in the judgment, concluding that ordinary tools of statutory interpretation—text, structure, context, and congressional practice—are sufficient to resolve the case without invoking the major questions doctrine. Justice Jackson concurred in part and in the judgment, emphasizing legislative history.

The Dissents

Justice Thomas dissented, contending the nondelegation doctrine permits Congress to delegate the power to impose duties on imports because it does not involve core legislative power over deprivations of life, liberty, or property. He argued the historical understanding of foreign commerce supports broad delegation and that IEEPA’s “regulate . . . importation” language authorizes duties. Justice Kavanaugh, joined by Justices Thomas and Alito, dissented, asserting that text, history, and precedent make clear that tariffs are a traditional tool to “regulate . . . importation” and that IEEPA provides clear authorization. He argued the major questions doctrine is satisfied or inapplicable in foreign affairs. He further noted the Court’s decision could trigger complex issues, including refunds of collected tariffs and uncertainty regarding trade deals reached in reliance on IEEPA tariffs.

The Administration’s Response

In response to the Supreme Court’s decision, President Trump described the ruling as “deeply disappointing and contrary to our Constitution.” He then stated that he will impose a new 10% global tariff under Section 122 of the Trade Act of 1974, which permits the President to impose tariffs for up to 150 days. During that time, President Trump said he would then initiate investigations under Section 301 of the Trade Act. President Trump has also stated that he could impose additional tariffs under Section 232 of the Trade Adjustment Act of 1962. However, the President can only impose tariffs under Sections 301 and 232 after a fact-finding by the U.S. Trade Representative and the Commerce Department, respectively. Moreover, those cited authorities would likely not allow President Trump to impose some of the previously imposed tariffs, such as those imposed on countries with which the U.S. has a trade surplus.

President Trump stated that he would sign an executive order today (Friday, February 20) imposing new tariffs, but as of this publication, no executive order has been issued.

What’s Next?

The Supreme Court’s ruling is limited in that it only affirmed the decision of the Federal Circuit's decision, which affirmed the Court of International Trade’s decision that the tariffs are unlawful but vacated the permanent injunction. The Court did not grant or guarantee refunds. And the ruling provided no specific guidance on how Customs is to proceed going forward or how refunds of previously collected tariffs should be handled. This leaves importers and the government to navigate significant uncertainty around potential reimbursements. It is also unclear how this ruling impacts tariffs on goods from countries that have entered written agreements imposing specific tariff rates. The V.O.S. Selections case should now be sent back to the Federal Circuit, which would then presumably remand the case to the CIT to decide on how to handle refunds. The DC District Court will dismiss the Learning Resources case for lack of jurisdiction, and presumably, it will be refiled in the CIT.  

Whatever tariffs are imposed next will certainly cause additional confusion and litigation. But President Trump’s alternatives come with more limits and procedural restrictions, so the President presumably will be unable to act as quickly and set tariff rates as high as previously imposed.

We previously published an alert discussing steps to preserve rights to recover IEEPA tariffs. That advice stands, but we will gain additional clarity as to next steps in the coming weeks from Customs and the CIT. We will keep you informed.