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, rendering tariffs imposed under IEEPA unlawful from the outset. Chief Justice Roberts, writing for the majority, concluded that IEEPA’s grant of authority to “regulate … importation” does not encompass the power to impose tariffs, which are a form of taxation constitutionally reserved to Congress. The Court emphasized that the word “regulate” in IEEPA has never, in any federal statute, been interpreted to include the power to tax, and that Congress has consistently delegated tariff authority “clearly and with careful constraints,” using specific terms such as “duty” or “surcharge,” accompanied by rate caps, limitations on duration, and other procedural safeguards.
The ruling’s practical effect is to invalidate the tariffs the President imposed under IEEPA beginning in early 2025, including both the “reciprocal” tariffs applied to imports from virtually all trading partners and the “drug-trafficking” tariffs applied to imports from Canada, Mexico, and China.
Implications for Clients Seeking Tariff Refunds
The Court’s opinion is silent on remedies, including whether and how importers who paid IEEPA tariffs will receive refunds. Justice Kavanaugh noted in dissent that the refund process is likely to be a “mess.” Based on estimates of IEEPA tariff revenue collected since early 2025, some economists have indicated that the federal government could have refund exposure of over $175 billion. As a general matter, importers of record (i.e., the entities that actually paid IEEPA tariffs to U.S. Customs and Border Protection (CBP)) will be the most direct beneficiaries of any refund process. Companies further down the supply chain that absorbed tariff costs indirectly face a more complex picture and should examine their purchase agreements and seek counsel to determine whether they have a viable path to recovery.
Clients who have paid IEEPA tariffs should take the following steps promptly:
Preserve documentation. All records of tariff payments, importer-of-record status, entry summaries, and related correspondence should be preserved and organized. We recommend creating a data sheet identifying each relevant import entry, tracking key details such as entry date and number, HTS classification, country of origin, and liquidation status. Importers should also review their ACE portal to confirm that their banking details on file with CBP are current to avoid delays in receiving electronic refunds.
Monitor legal developments. The U.S. Court of International Trade (CIT) is expected to play a central role in administering refunds, but any refund process is yet to be determined. Separately, it is possible that refunds may be obtained through CBP’s administrative channels, including the Post Summary Correction or Protest process. Clients should monitor developments closely for any procedural guidance from the courts or from CBP.
Anticipate delays. Despite the straightforward nature and itemization of tariff payments in relevant import records, the sheer volume of claims could overwhelm the system. Clients should expect any refunds to be subject to a significant lag. Treasury Secretary Scott Bessent previously indicated refunds could potentially be spread out over a year.
The White House Response and Alternative Tariff Authorities
The Administration has signaled that it will move quickly to reimpose equivalent tariffs under other statutory authorities. Already since the Court’s ruling, President Trump has indicated he would sign an executive order to impose a 10% global tariff under Section 122 of the Trade Act of 1974.
Clients should understand, however, that these alternative statutes are more limited than IEEPA. They typically require agency investigations, public hearings, formal findings, and may impose caps on tariff rates and durations. The procedural requirements of the alternative statutes will likely slow the reimposition of tariffs and may result in rates, durations, and product coverage that differ significantly from the IEEPA tariffs. Importantly, today’s decision is limited to IEEPA’s use as a tariff authority. The President retains the ability to invoke IEEPA for other purposes — including launching investigations, freezing transactions while investigations are pending, and restricting or banning particular imports or exports.
Key Risks and Considerations
Tariff uncertainty will persist. Even with today’s ruling, the effective tariff rate on imports is expected to remain elevated due to tariffs imposed under authorities other than IEEPA (e.g., Section 232 tariffs on steel, aluminum, automobiles, and other goods). Clients should not assume a full return to pre-2025 tariff levels.
Trade deal disruption. The IEEPA tariffs were instrumental in negotiating trade agreements with numerous countries. The ruling may create uncertainty around those arrangements. Clients with cross-border supply chains or contractual commitments tied to tariff-related trade deals should review those arrangements carefully.
New tariffs may be imposed rapidly. The Administration has been exploring alternative legal pathways for months. Clients should prepare for the possibility that replacement tariffs, such as the new 10% global tariff, could take effect within days or weeks under expedited executive action, even if the procedural requirements of the underlying statutes impose some delay.
We recommend that all clients with significant import exposure consult with their Varnum attorney to assess their refund eligibility, review their supply chain and contractual arrangements, and develop a strategy for navigating the period of uncertainty ahead.
