The Supreme Court ruled Friday that the International Emergency Economic Powers Act does not authorize the President to impose tariffs. Within hours, Trump signed a proclamation imposing a replacement 10% global tariff under a statute never before invoked. The ruling eliminates the legal foundation for hundreds of billions in collected duties but leaves unanswered who gets that money back, how refunds would work, and whether the cost reaches the consumers who ultimately paid it.
Chief Justice John Roberts wrote the 6-3 majority opinion in Learning Resources, Inc. v. Trump. IEEPA never mentions tariffs or duties. No president in the statute’s nearly fifty-year history read it to confer such power.
Trump relied on two words — “regulate” and “importation” — to claim unlimited tariff authority. Roberts held those words “cannot bear such weight.”
The opinion split on reasoning. Roberts, Gorsuch, and Barrett grounded the ruling in the major questions doctrine. The three liberal justices reached the same result on the statute’s text alone. Gorsuch wrote in his concurrence that without such doctrines, separated powers “threatens to give way to the continual and permanent accretion of power in the hands of one man. That is no recipe for a republic.”
The refund question turns on how tariffs work. Tariffs are not paid by foreign countries. They are paid by American companies at the port of entry.
U.S. Customs and Border Protection collects the duty when goods cross the border. The importing company passes the cost forward through the supply chain until it lands on American shelves as higher prices on furniture, electronics, and groceries.
A Federal Reserve Bank of New York paper published last week found U.S. firms and consumers bore roughly 90% of the tariffs’ economic burden. China did not pay the 145% tariff on Chinese goods. American importers of Chinese goods did.
The Court struck down the tariffs but said nothing about refunds. It left the question entirely to lower courts. CBP collected approximately $133.5 billion in IEEPA tariff revenue through mid-December 2025. Penn-Wharton Budget Model economists estimate the total refund liability exceeds $175 billion.
Trump signaled Friday he will not voluntarily return the money. “I guess it has to get litigated for the next two years,” he told reporters. Asked directly about refunds, he said the question was “not discussed” in the ruling and predicted courts would be tied up “for the next five years.”
Costco and hundreds of other companies have already filed claims. The Liberty Justice Center, which represented the small business plaintiffs, announced it will build a centralized database to help businesses navigate the process.
Even if importers win in court, the money stops with them. The importer paid CBP, then raised prices. The retailer raised prices. The consumer paid at the register.
No legal mechanism compels a company that recovers tariff duties to pass the refund back to customers. The consumer has no standing to sue CBP — the consumer never paid the tariff directly, just a higher price for a product. Kavanaugh flagged this in his dissent. Barrett called the refund process “a mess” during oral arguments.
Foreign governments have no refund claim either. A country cannot deduct tariff costs from debts the U.S. owes because the country never bore the cost. Some nations imposed retaliatory tariffs of their own — those are separate sovereign actions with their own economic consequences, not offsets against American collections.
Trump responded to the ruling with a White House press briefing that lasted over an hour. He called the majority justices “fools and lapdogs” and said Barrett and Gorsuch — both his own appointees — were “an embarrassment to their families.” He suggested without evidence that the Court had been “swayed by foreign interests.” He said the six majority justices were “barely invited” to Tuesday’s State of the Union address.
Then he signed the replacement. The White House fact sheet announced a 10% ad valorem duty on all imports under Section 122 of the Trade Act of 1974, effective February 24. The statute allows the President to impose tariffs to address balance-of-payments deficits but caps rates at 15%.
The tariffs expire after 150 days unless Congress votes to extend them. That time limit changes the political dynamics entirely. Under IEEPA, tariffs stayed unless Congress voted to disapprove — something the Republican majority refused to do. Under Section 122, tariffs vanish around late July unless Congress votes to keep them.
Six House Republicans already crossed over this month to vote against the Canada tariffs. Democrats hold enough votes to block an extension.
The proclamation exempts critical minerals, energy, pharmaceuticals, electronics, passenger vehicles already covered by Section 232, USMCA-compliant Canadian and Mexican goods, aerospace products, and certain agricultural items including beef, tomatoes, and oranges. Trump also directed the U.S. Trade Representative to open new Section 301 investigations — but those require formal proceedings and take months to complete.
All Section 232 tariffs survive the ruling. Steel and aluminum remain at 50%. Auto, copper, and semiconductor tariffs remain in force, as do existing Section 301 tariffs on Chinese goods.
The effective U.S. tariff rate had reached roughly 17% — the highest since the early 1930s. Without IEEPA duties, it falls to about 9%, though the Section 122 replacement will push it back up. Roberts noted in a footnote that every time Congress has delegated tariff authority, it attached “procedural prerequisites, required agency determinations, and limits on the duration, amount, and scope.” The administration chose IEEPA precisely because it had none.
Senate Minority Leader Chuck Schumer held his own press conference Friday calling the tariffs “a tax on the American people” and urging Republicans to block the replacements. “Congress has the ultimate authority to impose these tariffs,” Schumer said. “I am urging, for the sake of American families, pleading with my Republican colleagues to buck Donald Trump.”
The Court restored Congress’s constitutional authority over tariffs. The replacement tariff restored the political question of whether Congress will exercise it. The refund fight now moves to lower courts, where importers will seek to recover duties the Supreme Court ruled were never legally owed — while the consumers who absorbed those costs at the register stand outside the courtroom with no claim to file.
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