If The U.S. Supreme Court Strikes IEEPA Tariffs – A Primer
Last month, the U.S. Supreme Court (SCOTUS) heard oral arguments in the case against tariffs imposed under the International Emergency Economic Powers Act (IEEPA). Most observers believe that the Supreme Court justices were largely skeptical of the government’s argument that IEEPA’s emergency powers give the President broad tariff authority. On the other hand, the Court has been hesitant to unilaterally dismantle largescale policies (like the ACA or the Tax Cuts and Jobs Act) and is also hesitant to do the work of Congress.
While it is impossible know how the Supreme Court will rule, we can look at some of the major questions that would arise for American business and consumers if IEEPA tariff authority were overturned. Below we explore some of the potential outcomes if SCOTUS were to strike down IEEPA tariff authority in more detail below.
Which Tariffs Are Impacted by Supreme Court Review?
The following tariffs were implemented using authority under IEEPA, including reciprocal tariffs on all nations. All the following tariffs could presumably be ruled unconstitutional and stricken down immediately by the Supreme Court.
On February 1, 2025, President Trump signed an executive order implementing a 15% additional tariff on imports from Canada and Mexico, and a 10% additional tariff on imports from China, in response to the “extraordinary threat posed by illegal aliens and drugs.”
On March 3, 2025, President Trump signed an executive order citing IEEPA to implement an additional 10% tariff on China, related to China's failure to “blunt the sustained influx of synthetic opioids.” (NOTE: These tariffs were temporarily removed during recent negotiations between China and the U.S.)
On April 2, 2025, the President signed an executive order using his powers under IEEPA to implement a 10% reciprocal tariff on all countries. Over the last few months, the amount of these tariffs has varied country-by-country, ranging from 11-50%.
The President signed an executive order citing IEEPA in implementing an additional 40% tariff on Brazil in July 2025, arguing that “recent policies” of the country threatened the “national security, foreign policy, and economy of the United States.” Some of the reciprocal tariffs on Brazil were recently removed by executive action.
Are There Other Potential Mechanisms to Apply Tariffs?
Although the Court may be prepared to rule against the tariffs and prohibit the President from using IEEPA’s “emergency power” for these tariffs going forward, it is almost certain that the President will look to other authorities and powers to implement his trade agenda. Below is a reminder of the additional
Section 232 of the Trade Expansion Act of 1962
Section 232 gives the authority to impose tariffs on specific products if the Department of Commerce determines that the products are “being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.”
Section 232 has been successfully used by the President to impose other duties throughout his first and second terms.
This includes tariffs on aluminum, steel, automobiles, copper, furniture, lumber, and timber. A full list of current investigations can be found here.
This authority is used on specific products, rather than on a country-by-country basis.
Using Section 232 requires an investigation by the Department of Commerce.
Using it as an immediate replacement for reciprocal tariffs would be complicated because of necessary investigations, but any tariffs on products could be applied worldwide.
Section 301 of the Trade Act of 1974
Section 301 gives the U.S. Trade Representative (USTR) the authority to investigate and enforce U.S. rights under trade agreements or respond to unfair foreign trade practices.
Section 301 tariffs are usually applied against a broad swath or products from a particular country.
Trump’s first term tariffs against Chinese products were authorized under Section 301.
The Administration has already initiated Section 301 investigations into countries like Brazil and China, and on digital services taxes from the European Union.
The same federal circuit court that ruled the use of IEEPA for tariffs an overreach also upheld the legality of Section 301 tariffs on Chinese imports earlier this year.
Section 301 also requires an investigation, public hearings, and other processes that would slow the process of imposing any duties.
Section 122 of the Trade Act of 1974.
The law gives the president the authority to temporarily tariff “when necessary to address large and serious United States balance-of-payment deficits.”
The provision is intended to be temporary, with a time limit of 150 days.
Section 122 tariffs are limited to 15%, which is below many rates in place via IEEPA.
Experts disagree over whether or not “balance-of-payment deficits” authorize the President to impose tariffs in response to U.S. trade deficits. The legislative history seems to suggest that it does not and the law’s phrasing was very intentional.
This is an untested provision of law and would likely face legal challenges if utilized.
Section 338 of the Tariff Act of 1930.
The law allows the president to impose tariffs if a foreign country imposes “unreasonable” charges not equally enforced upon all other countries, or if they discriminate and disadvantage U.S. commerce.
Under the law, tariffs may not exceed 50% of the value of the goods.
Section 338 does not require lengthy investigations like Section 301.
Like Section 122, this provision of law has never been used to impose tariffs, and as a result, could be subject to additional legal challenges.
Though untested, Section 338 could be the quickest replacement for IEEPA tariffs.
Section 201 grants the president the authority to apply tariffs to certain products or industries in order to safeguard domestic industries.
This provision of law was recently used to protect washing machines and solar panels made in the U.S.
The implementation of tariffs under Section 201 is subject to an International Trade Commission (ITC) determination that takes 60 days.
Domestic industries can request that the ITC initiate an investigation under Section 201.
Given the targeted nature of 201 tariffs and the 60-day review timeline, Section 201 seems insufficient to replace IEEPA tariffs but could certainly be expanded to supplement revenue.
Would SCOTUS Require Tariff Refunds?
After oral arguments, some observers believe that SCOTUS is primed to reject the tariffs. However, one of the concerns raised by SCOTUS during oral arguments is the complexity of unwinding the tariffs, many of which have been in place for nearly a year.
Under one scenario, SCOTUS could require refunds to all importers who paid tariffs subsequently deemed unconstitutional. The Court could instead simply require that no tariffs be imposed going forward. Should the Court require that refunds be paid to importers, this would likely be an incredibly long and drawn-out process and could potentially result in additional litigation that could take years. Notably, importers have since come out and said that the process would be “relatively simple” in order to dispel concerns about complexity.
In some cases we are seeing that tariff payers do not want to leave the decision about refunds up to SCOTUS. Instead, some companies are hoping to win affirmative determinations that they will receive refunds before a ruling is handed down. This week, Costco filed a lawsuit with the U.S. Court of International Trade in an effort to help ensure they can receive a refund if SCOTUS rules against the Administration’s tariffs.
The Administration has reported $195 billion in tariff revenue as of mid-November, including non-IEEPA tariffs. The potential refund total is one of the reasons the Administration has asked for an expedited decision from the Court. Bessent has said that if the decision is held until next June, that number could rise to anywhere between $750 billion and $1 trillion. If SCOTUS does rule against the President’s tariff authority, the simplest answer would be to stop the tariffs going forward and ignore the refunds from the past.
Background on IEEPA and Tariffs
President Trump and his Administration have a long history of supporting tariffs on U.S. trading partners, and tariffs have become a central component of his second term. The Administration has relied on different powers granted under different laws to implement these tariffs, including the IEEPA.
Originally passed in 1977, the IEEPA has been used 77 times to declare national emergencies and gives the President “sweeping powers...to control economic transactions.” However, President Trump is the first president to use the law to impose tariffs.
There are currently two legal cases challenging the tariffs, which have been consolidated for argument in front of SCOTUS. There is no deadline for SCOTUS to issue an opinion. U.S. Trade Representative Jamieson Greer has suggested that the decision could come before the end of the year, but this is not a guarantee.
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