Supreme Court Tariff Cases 2026: IEEPA Ruling, Section 122, and What Comes Next

On February 20, 2026, the Supreme Court delivered its most significant check on executive trade authority in modern history. In Learning Resources, Inc. v. Trump, the Court held 6-3 that the International Emergency Economic Powers Act does not give the president power to impose tariffs. The decision immediately voided emergency tariffs covering hundreds of billions of dollars in imports and triggered what may become the largest refund proceeding in U.S. trade history.

This article explains the ruling, the constitutional framework, the administration's immediate pivot to Section 122 tariffs, which tariffs survived, and the cases still moving through the courts. For broader context on how the Court has shaped policy this term, see our Supreme Court rulings tracker.

The Case: Learning Resources, Inc. v. Trump

The case consolidated two challenges: Learning Resources, Inc. v. Trump (No. 24-1287) and Trump v. V.O.S. Selections, Inc. (No. 25-250). Learning Resources and Hand2Mind, family-owned educational toy manufacturers, sued on April 22, 2025 in the U.S. District Court for the District of Columbia. Five small businesses -- V.O.S. Selections (a wine importer), Plastic Services and Products, MicroKits, FishUSA, and Terry Precision Cycling -- sued separately on April 14, 2025 in the U.S. Court of International Trade, alleging the tariffs were driving them toward bankruptcy.

Oregon and 11 other state attorneys general brought a parallel challenge on April 23, 2025.

What IEEPA Tariffs Were at Issue

In January 2025, President Trump declared national emergencies over two threats: the fentanyl influx from Canada, Mexico, and China, and persistent trade deficits affecting U.S. manufacturing. On February 2, 2025, he signed Executive Orders 14193, 14194, and 14195 invoking IEEPA to impose 25% tariffs on most Canadian and Mexican imports, 10% tariffs on most Chinese imports, and at least 10% "reciprocal" tariffs on imports from virtually all other countries.

Lower Court Rulings

The U.S. Court of International Trade unanimously struck down the tariffs on May 28, 2025, permanently enjoining enforcement. The U.S. Court of Appeals for the Federal Circuit, sitting en banc, affirmed on August 29, 2025, calling the tariffs "unbounded in scope, amount, and duration." The Supreme Court granted certiorari in September 2025 and heard oral arguments on November 5, 2025.

The Supreme Court's 6-3 Decision

Chief Justice Roberts authored the majority opinion, joined by Justices Sotomayor, Kagan, Gorsuch, Barrett, and Jackson. The core holding was straightforward: IEEPA's phrase "regulate ... importation" does not encompass the power to impose tariffs because the power to regulate is distinct from the power to tax.

The Major Questions Doctrine Split

While all six majority justices agreed on the statutory interpretation, they split 3-3 on a secondary question. Roberts, Gorsuch, and Barrett concluded the case also triggered the major questions doctrine -- the principle that Congress must clearly authorize delegations of authority involving "vast economic and political significance." But Gorsuch and Barrett disagreed sharply on the doctrine's nature. Gorsuch wrote a 46-page concurrence arguing the doctrine derives from the Constitution itself, while Barrett viewed it as an ordinary application of textualism. Roberts sided with Barrett's framing.

Justices Kagan, Sotomayor, and Jackson concurred in the judgment but rejected applying the major questions doctrine entirely.

Kavanaugh's Dissent

Justice Kavanaugh wrote a 63-page dissent joined by Justices Thomas and Alito. His central argument: "If quotas and embargoes are a means to regulate importation, how are tariffs not a means to regulate importation? Nothing in the text supports such an illogical distinction." Kavanaugh warned the government "may be required to refund billions of dollars to importers who paid the IEEPA tariffs" and predicted the refund process would be a "mess."

The Constitutional Framework for Tariff Authority

The Constitution vests the taxing power and the power to regulate foreign commerce in Congress under Article I, Section 8. Tariffs are historically a core legislative function. Any presidential tariff power depends on a congressional delegation.

The nondelegation doctrine limits how broadly Congress can hand off legislative power. In J.W. Hampton, Jr. & Co. v. United States (1928), Chief Justice Taft established the "intelligible principle" test: Congress may delegate authority as long as it provides an intelligible principle to guide executive discretion. In Field v. Clark (1892), the Court upheld the McKinley Tariff Act because the president's role was limited to fact-finding -- Congress itself fixed the conditions.

Statutory Authorities That Remain

The Section 122 Pivot

Within hours of the February 20 ruling, President Trump signed an executive order invoking Section 122 of the Trade Act of 1974, which authorizes temporary import surcharges of up to 15% ad valorem to address "fundamental international payments problems." The initial rate was 10%, effective February 24. The next day, Trump raised it to the statutory maximum of 15%, effective immediately.

The administration cited the $1.2 trillion goods trade deficit, the first-ever negative balance on primary income in 2024, and a net international investment position of negative 90% of GDP.

Legal Vulnerability

Section 122 faces immediate legal challenges. The statute addresses balance-of-payments deficits, which are conceptually distinct from trade deficits. The administration's own DOJ lawyers argued during the IEEPA case that Section 122 was "no substitute for IEEPA" because the two types of deficits differ. The 15% tariffs expire after 150 days (July 24, 2026) unless Congress votes to extend them.

Refund Litigation: $170+ Billion at Stake

The Penn-Wharton Budget Model estimates approximately $160 billion in IEEPA tariffs were collected through February 20, 2026. Roughly 2,000 refund claims totaling over $170 billion have been filed with the Court of International Trade. Companies including L'Oreal have filed individual lawsuits seeking refunds. The Supreme Court did not detail a refund process, leaving it to the CIT.

The administration is exploring strategies to minimize refund payouts, including arguing that revenue collected should be retroactively attributed to newly imposed tariffs and offering expedited processing in exchange for partial refunds. Three U.S. senators have demanded that the full $175 billion be returned to importers.

Tariffs That Survived the Ruling

Section 232: Steel, Aluminum, and Automobiles

Tariffs of 25% on steel, 25% on aluminum, and additional duties on automobiles and auto parts remain in effect. Section 232 authorizes the president to restrict imports that threaten national security based on a Commerce Department investigation. The Supreme Court upheld this authority in Federal Energy Administration v. Algonquin SNG, Inc. (1976), finding that Section 232 "establishes clear preconditions to Presidential action." Post-Learning Resources, new challenges may be filed, but Algonquin remains good law.

Section 301: China Tariffs

Tariffs of 7.5%-25% on approximately $370 billion in Chinese imports remain in place. These originated from a 2017 USTR investigation into China's forced technology transfer and intellectual property theft. The Federal Circuit upheld these tariffs on September 25, 2025, rejecting arguments that USTR exceeded its authority under Section 307(a)(1)(C) to modify existing tariffs.

Next Case to Watch: HMTX Industries v. United States

On February 20, 2026 -- the same day as the Learning Resources ruling -- plaintiffs in HMTX Industries v. United States filed a petition for certiorari challenging Section 301 List 3 and List 4A tariffs on China. If granted, this could become the next landmark tariff case before the Supreme Court.

What This Means Going Forward

The Learning Resources decision reshapes the landscape of presidential trade authority. IEEPA can no longer be used for tariffs. Section 122 provides a narrow, time-limited alternative that faces its own legal challenges. Section 232 and 301 remain intact for now but may face emboldened challengers citing the Court's reasoning about the limits of delegated tariff power.

Congress faces a July 24, 2026 deadline to either extend or let expire the Section 122 tariffs. Legislative proposals to require full IEEPA refunds are also moving through committee. The refund litigation in the Court of International Trade could take years to resolve.

For importers, manufacturers, and businesses dependent on global supply chains, the legal uncertainty is the most immediate challenge. The tariff rate on any given product depends on which statutory authority was used to impose it, and that patchwork is now in active flux.