U.S. Supreme Court Holds IEEPA Does Not Authorize Presidential Tariffs; Clarifies Exclusive Jurisdiction of the Court of International Trade

In a significant separation-of-powers decision, the Supreme Court of the United States has held 6-3 in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (“IEEPA”) does not authorize the US president to impose tariffs. The ruling immediately invalidates emergency tariff programs implemented under IEEPA and carries far-reaching implications for importers, ongoing trade negotiations, and the future scope of presidential emergency economic powers.

The Court also clarified that challenges to tariff-related measures must proceed in the United States Court of International Trade (“CIT”), reinforcing that court’s exclusive jurisdiction over actions arising from amendments to the Harmonized Tariff Schedule.

Key Takeaways

1. IEEPA does not authorize tariffs

The Court concluded that IEEPA’s authority to “regulate” or “prohibit” importation does not implicitly include the power to impose taxes or duties. Tariffs fall within Congress’s Article I taxing power, which the Constitution vests in the legislative branch, and therefore require a clear legislative statement. Because IEEPA contains no express delegation of tariff authority, the President may not rely on that statute to impose duties.

Additionally, the Court addressed the Trump administration’s argument that the power to “regulate imports” necessarily encompassed the authority to impose tariffs as a form of regulation.  The Court observed that reading “regulate … importation” to include a tariff power would create constitutional tension, because IEEPA also authorizes regulation of exports while the Constitution expressly forbids export taxes. If “regulate” were construed to include the power to levy tariffs, the statute would effectively authorize an export tax, something plainly unconstitutional. Since similar words in a statute must be accorded similar meaning, and adopting a reading of “regulate” that would include tariffs would have an unconstitutional effect, that reading had to be rejected.

The Court also dismissed the dissent’s position that tariffs are a “lesser included action” of the President’s authority to engage in other extreme actions (such as embargos or blocking all trade with specific countries). The administration argued before the court that if the statute permitted extreme measures, it must also permit the comparatively more modest, “lesser” step of imposing tariffs, statements echoed by the President on social media after the release of the decision. The Court found this reasoning unpersuasive. As an emergency powers statute, IEEPA was deliberately structured with what opponents of the tariffs described as a “donut hole”: it authorizes drastic measures in genuine emergencies but withholds authority for more routine or incremental trade tools like tariffs. That design, the Court concluded, reflected a deliberate congressional choice to confine emergency powers to circumstances of true necessity rather than to provide a general trade-regulation mechanism.

2. The “major questions” doctrine applies

Invoking the major questions doctrine, the Court reasoned that granting the President unilateral authority to impose broad-based tariffs, potentially generating trillions of dollars in revenue, constitutes a matter of vast economic and political significance. Such authority, the Court held, requires clear and specific congressional authorization and cannot be inferred from general statutory language.

In his concurring opinion, Gorsuch, J. rejected the dissent’s argument that emergency or foreign‑affairs statutes are categorically exempt from the major questions doctrine, emphasizing that emergencies do not diminish Congress’s constitutional control over taxation.

It is worth noting that three of the judges that joined in the majority decision specifically declined to rely upon the major questions doctrine in isolation, preferring instead the statutory interpretation tools and arguments.

3. Historical practice supports a narrow reading

For nearly fifty years, US presidents have relied on IEEPA to freeze assets, block transactions, and impose targeted sanctions, but never to levy tariffs. By contrast, when Congress intends to delegate tariff authority, it does so expressly, including in:

• The Trade Act of 1974 (e.g., Sections 201 and 301)
• Section 232 of the Trade Expansion Act of 1962
• Section 122 surcharge authority under the Trade Act

The Court viewed this statutory pattern as further confirmation that IEEPA does not confer tariff-imposing authority.

4. Exclusive jurisdiction of the Court of International Trade

The Court held that challenges to tariff actions arising out of amendments to the Harmonized Tariff Schedule fall within the exclusive jurisdiction of the CIT, not federal district courts. As a result, the district court action was vacated and ordered dismissed, and the Federal Circuit’s judgment in the CIT case was affirmed.

This jurisdictional clarification is significant for parties considering litigation related to tariff measures; underscoring that forum selection is not discretionary in tariff disputes.

5. Refund of tariffs

As it was not an issue on appeal, the Court provided no guidance regarding the mechanics of unwinding the invalidated programs, leaving open questions about refund procedures, protest requirements, statute-of-limitations issues, and the potential impact on trade agreements negotiated under the now-invalidated tariff regime.

The dissent warned unwinding the invalidated tariffs could involve billions of dollars in potential refunds and pose significant administrative and logistical challenges for both the government and the private sector.

Several major companies, including some large shipping entities, have already publicly begun the refund process.

6. Other statutory tariff authorities remain intact

Importantly, the decision is limited to IEEPA. The Court emphasized that the President retains authority to impose tariffs under other statutes that expressly authorize duties and include procedural safeguards, including Section 232 of the Trade Expansion Act of 1962, as well as Sections 122, 201 and 301 of the Trade Act of 1974.

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The Supreme Court’s decision sharply limits the use of emergency economic powers to impose tariffs and reinforces Congress’s exclusive constitutional role over taxation. While the ruling preserves the President’s ability to impose tariffs under other, expressly authorized statutes, it sends a clear signal that IEEPA cannot be used as a shortcut around established trade‑law frameworks. Importers and other market participants should closely monitor next steps, including potential refund processes, renewed reliance on alternative statutory authorities, and possible legislative responses.

The President has already announced a new 10 to 15% tariff under Section 122 of the Trade Act. As with the IEEPA tariffs, Canadian products that are CUSMA originating have a carve out. It remains to be seen if other countries that previously cut deals with the administration under the threat of IEEPA honour their prior deals. It is also likely that there will be significant litigation against the imposition of tariffs under Section 122.

The ongoing volatility in global trade and the Canadian government`s response to this changing dynamic can make it extremely difficult for Canadian business to stay up to date on the latest developments and how these changes may impact their business. McCarthy Tétrault’s International Trade and Investment Law Group has and, through our Cross-border Trade & Tariffs Roundup, will monitor and share updates on these developments. We continue to advise a large number of clients in a variety of industries on how to navigate the uncertainty caused by this volatility. For assistance with addressing these changes or for further analysis on the legal and economic implications of the recent trade measures ― and assistance navigating them ― please contact our team.