In one of the most consequential decisions in modern US Supreme Court history, the court ruled on 20 February 2026 that President Donald Trump lacked the legal authority to impose tariffs on all countries and on all merchandise for any stated reason (see the trade alert dated 23 February 2026). In a decisive 6-3 vote in this otherwise straightforward case of statutory interpretation, the Supreme Court held that the International Emergency Economic Powers Act (IEEPA)—the statute the president invoked to impose “fentanyl” tariffs beginning 4 February 2025 and “reciprocal” tariffs beginning 2 April 2025—did not grant the president such unbounded power (for prior coverage of these tariffs, see the trade alerts dated 10 April 2025 and 24 July 2025).
The Supreme Court’s decision invalidating the IEEPA-based tariffs—the president’s signature economic policy initiative—has immediate impacts for importers and global supply chains. While the Learning Resources v. United States ruling creates a basis for importers to claim refunds for IEEPA tariffs, the court left several critical questions unanswered, most notably the fate of the more than USD 166 billion in tariffs already collected.
Those questions were answered by an order of the US Court of International Trade (CIT) on 4 March 2026 directing US Customs & Border Protection (CBP) to issue refunds via the normal administrative procedures—without the need for litigation at the CIT. However, two days later, CIT Judge Eaton suspended his order so that CBP could be given time to further develop a refund process via its Automated Commercial Environment (ACE), the primary CBP system used to process imports and exports for prior coverage, see the trade alert dated 17 March 2026).
Immediately following the Supreme Court decision on 20 February, President Trump issued an executive order (EO) revoking the previous IEEPA EOs mandating corresponding tariffs of various rates. He also directed the head of each executive department and agency to take appropriate steps to end the additional ad valorem duties imposed under IEEPA.
This article examines the IEEPA statute in detail (including its history, which was important to the Supreme Court in reaching its decision) and analyses the decision’s main holdings, which were delivered throughout a discordant 170-page decision with six separate writings. It also highlights “replacement” tariffs that the administration has begun imposing to replace the lost IEEPA duties and concludes with actions that importers should be taking to prepare for refunds of the USD 166 billion+ in IEEPA tariffs that have been collected to date.
IEEPA is a federal statute enacted in 1977 that authorises the president to regulate a broad range of economic transactions involving foreign interests when an “unusual and extraordinary threat” to the US has a foreign source. IEEPA authorises emergency action in response to foreign threats that affect national security, foreign policy or the economy where the threat’s source is “in whole or substantial part outside the United States.” As a prerequisite, the president must declare a national emergency under 50 U.S.C. § 1701.
The relevant text of the statute enumerating the president’s powers in response to the declared national emergency reads as follows:
Thus, after declaring a national emergency under the National Emergencies Act (NEA), the president may then, “by means of instructions, licenses, or otherwise” take actions to “regulate . . . importation . . . of . . . any property in which any foreign country or a national has any interest.”
IEEPA was enacted to provide a peacetime emergency economic authority distinct from the Trading with the Enemy Act (TWEA) of 1917, which originated as a wartime statute at the close of World War I. Over time, presidents began to use TWEA during peacetime, which led to perceived abuses. Even after amending TWEA to correct these deficiencies in 1941 and enacting new corollary statutes, Congress in 1977 passed a new statute—IEEPA—that is now considered the heart of the US government’s sanctions regimes when it, for example, seizes bank accounts or property of targeted governments, organisations, individuals, etc.
In general, the categories of cross-border economic activity involving foreign interests that the president is authorised to “investigate, regulate, or prohibit” include:
Legislative Background and Historical Foundations
TWEA was enacted in 1917 against the backdrop of World War I, with the purpose of providing the president with the authority to regulate and restrict economic transactions involving designated foreign “enemies” during wartime. Its initial language reflected the wartime needs of the US to control cross-border financial flows and commercial dealings that could undermine national security objectives.
Over time, however, the use of emergency economic controls expanded beyond traditional wartime contexts, and concerns developed regarding the breadth and duration of emergency authorities and the relative lack of procedural constraints in the original statute. Congress amended TWEA in 1941 to add the language that was central to the decision in the Learning Resources case allowing the president to “regulate . . . importation.” According to Justice Brown-Jackson, “[t]he [House and Senate] Reports explained Congress’ primary purpose for the 1941 amendment: shoring up the President’s ability to control foreign-owned property by maintaining and strengthening the ‘existing system of foreign property control’ (commonly known as freezing control).”
Between 1941 and the early 1970s, TWEA became the main legislative vehicle to impose sanctions as part of US Cold War strategy, and was used to block international financial transactions, seize US-based assets held by foreign nationals, limit foreign direct investment in US companies and restrict exports.
Concerns about TWEA were renewed following findings by several congressional investigations that the US had been in a state of emergency for more than 40 years. These concerns prompted a broader legislative effort in the mid-1970s to regularise the declaration, revocation and administration of national emergencies and to distinguish between wartime and peacetime emergency economic powers. Those efforts culminated in the passage of the National Emergencies Act (NEA) in 1976 and IEEPA in 1977.
The NEA was enacted to terminate all existing national emergencies under TWEA and to establish uniform procedures governing the declaration, publication, reporting, continuation and termination of national emergencies. The NEA functions as a kind of procedural outline for the exercise of emergency authorities contained in other statutes, including IEEPA.
Importantly, the NEA ultimately gave Congress the ability to cancel any national emergency declared by the president via a joint resolution passed by both houses of Congress. This procedure was recently used when the House passed a joint resolution ending the national emergency declared by President Trump with respect to Canada. Passage was still awaiting in the Senate as of this writing but has been mooted by the Supreme Court’s decision effectively invalidating the national emergency declared with respect to Canada and all other countries. Nonetheless, this “check” on a president’s power is diluted by the fact that a president can veto such termination, meaning that a nearly impossible 2/3 majority of Congress is needed to effectively end a national emergency—something that has never been accomplished since NEA’s enactment.
In enacting IEEPA in 1997, Justice Brown-Jackson noted that Congress retained the TWEA language regarding the president’s power to “regulate . . . importation.” The House and Senate reports accompanying the new statute further demonstrated that the intention behind this language was the same in 1977 as it was in 1941. The House report described IEEPA as empowering the president to “regulate or freeze any property in which any foreign country or any national has an interest.” The Senate report set forth similar language; Congress’ sole objective for the “regulate . . . importation” sub-section was to grant the president emergency authority “to control or freeze property transactions where a foreign interest in involved.” No mention of the power to tax (and specifically to impose customs duties) is found anywhere in the legislative history of IEEPA.
Since the enactment of IEEPA, presidents have often invoked this statute to restrict various international transactions, first starting with foreign governments but expanding targets over the years to include non-state actors and groups such as terrorist organisations and narco-criminal groups. The first national emergency declared under IEEPA was in 1979 by President Jimmy Carter when US embassy staff were taken hostage by Iran. (That national emergency is still in effect today.) Of the total of 77 IEEPA national emergencies declared by various presidents as of September 2025, 46 are ongoing. Not one of them involved using tariffs as a means of combating the declared national emergency until the current controversy, a point that was critical to the majority’s decision in Learning Resources.
In sum, the statutory language of IEEPA lacks any reference giving the president the authority to impose tariffs, despite the 16 other verbs in the statute that enumerate the powers the president has to combat national emergencies. Nonetheless, the Trump Administration construed the words “regulate” and “importation” as the power to impose tariffs on imported merchandise, notwithstanding that when Congress passes laws allowing the president to impose taxes, it does so directly and explicitly grants the Executive Branch the power to tax. As shown below, the Supreme Court soundly rejected that position and has now foreclosed presidents from ever again using IEEPA to tax imports via tariffs.
In the Supreme Court’s majority decision in the lead case concerning the legality of the IEEPA tariffs, the first sentence squarely summed up the opinion as one of pure statutory interpretation: “[w]e decide whether the International Emergency Economic Powers Act (IEEPA) authorises the President to impose tariffs.” Writing for the majority, Chief Justice Roberts then framed up the central issue of the case: “[b]ased on two words separated by 16 others in section 1702(a)(1)(B) of IEEPA—‘regulate’ and ‘importation’—the president asserts the independent power to impose tariffs on imports from any country of any product at any rate for any amount of time. Those words cannot bear such weight.”
The 170-page decision is unusual in that, while the central question is clearly answered in the majority opinion written by the Chief Justice, six separate writings were filed by other justices. The opinion was divided into Parts I, II, and II-B making up the majority coalition which focused on the text of the IEEPA statute and the constitutional background, i.e., Article I, Section 8 vests Congress with the exclusive authority to impose “taxes, duties, and excises.”
A common theme of conservative jurisprudence also found its way into the text of the decision: Parts II-A-2 and III cover the “major questions” doctrine, or the idea that “clear congressional authorisation” is needed to authorise presidential actions of any significance (and was lacking here). Justices Gorsuch and Barrett joined the Chief Justice in these sections, which makes these sections a plurality (3-0) but not a majority holding. Justice Gorsuch’s concurring opinion, in fact, clocked in at 46 pages, more than double the length of the majority’s 21-page opinion.
In addition, Justice Thomas filed his own 18-page dissenting opinion focused on the “non-delegation doctrine” in which he dismissed the justification of the majority’s decision as simply one of statutory interpretation. Under this doctrine, the separation of powers under the Constitution does not allow Congress to delegate “core” legislative power to the Executive Branch. Imposing duties on imports, Justice Thomas wrote, was not a core power of Congress and thus was able to be delegated to the President via IEEPA (as with many other statutes, he claimed).
The longest decision was penned by Justice Kavanaugh who, in 63 pages, attempted to de-construct every point in the majority opinion. He wrote “like quotas and embargoes, tariffs are a traditional and common tool to regulate imports” and covered statutory text, history and precedent in support of this assertion. He also rejected the major questions doctrine conclusions adopted by a plurality of the court.
Nonetheless, a majority of six justices joined an opinion penned by Chief Justice Roberts that was remarkable for its brevity (20 pages) but also for its clarity. After listing the powers granted by Congress to the president in the IEEPA statute, he wrote that “[a]bsent from this lengthy list of specific powers is any mention of tariffs or duties. Had Congress intended to convey the distinct and extraordinary power to impose tariffs, it would have done so expressly, as it consistently has in other tariff statutes . . . The power to ‘regulate . . . importation’ does not fill that void.”
Chief Justice Roberts also debunked the government’s claim that the power to regulate includes the power to tax, i.e., to impose taxes. The common meaning of “regulate” does not comport with the power to tax, he wrote. In addition, “[w]hile taxes may accomplish regulatory ends, it does not follow that the power to regulate includes the power to tax as a means of regulation. Indeed, when Congress addresses both the power to regulate and the power to tax, it does so separately and expressly. That it did not do so here is strong evidence that “regulate’ in IEEPA does not include taxation.”
In further support of the impact of the major questions doctrine on the outcome of this case, Chief Justice Roberts reemphasized that “[w]hen Congress grants the power to impose tariffs [to the president], it does so clearly and with careful constraints. It did neither in IEEPA.”
Another point referred to the many other powers enumerated in IEEPA (which Justice Kagan constructed into 99 variations in her concurring opinion, with only one referencing tariffs in the case at issue). At one end of the spectrum was “compel,” wrote the Chief Justice, and at the other was “prohibit.” He continued: “[a]lthough tariffs may be less extreme than an outright compulsion or prohibition [as in an import ban], it does not follow that tariffs lie on the spectrum between these poles; they are different in kind, not degree, from the other authorities in IEEPA. . . Tariffs . . . are . . . a branch of the taxing power and . . . fall outside the spectrum entirely.”
Chief Justice Roberts also rejected the premise adopted by Justice Kavanaugh that TWEA and a single case decided under this statute by the predecessor court to the U.S. Court of Appeals for the Federal Circuit (United States v. Yoshida) allowed the president to impose tariffs in “regulating . . . imports.” The genesis of that case took place in 1971, when President Nixon unilaterally imposed tariffs of 10% for a short time after he ended the gold standard for exchanging US dollars and cited the Tariff Act of 1930 and the Trade Agreements Act of 1962 as the basis for those tariffs. (Justice Kavanaugh stated in his dissent that Nixon imposed those tariffs under TWEA but that was a position not adopted by the government until after litigation had begun.) Although the Yoshida court upheld Nixon’s use of the temporary tariffs, the whole issue was mooted by enactment of Section 122 of the Trade Act of 1974 (see below). Thus, the Chief Justice wrote that “[a] single, expressly limited opinion from a specialised intermediate appellate court does not establish a well-settled meaning that the Court can assume Congress incorporated into IEEPA.”
With respect to TWEA and its influence on IEEPA, he noted that historical arguments based on the Supreme Court’s wartime precedent also failed to carry the day. “The attenuated claim of inferences from wartime presidents through multiple iterations of TWEA to IEEPA cannot support—much less clearly support—a reading of IEEPA that includes the distinct power to impose tariffs.”
Finally, the Chief Justice dismissed claims that other precedent mandated giving the power of the purse to the president via IEEPA. He cited Section 232 of the Trade Agreements Act of 1962 as a perfect example of Congress’ “sweeping, discretion-conferring language [allowing the president to impose tariffs in the event certain imports are found to threaten U.S. national security] that IEEPA does not contain, and the explicit reference to duties in section 232(a) renders it natural for section 232(b) to itself authorise duties.”
In closing, the majority unambiguously concluded that IEEPA does not grant the president the authority he claimed:
The President asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope. In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorisation to exercise it. IEEPA’s grant of authority to “regulate . . . importation” falls short. IEEPA contains no reference to tariffs or duties. The Government points to no statute in which Congress used the word “regulate” to authorise taxation. And until now no President has read IEEPA to confer such power. We claim no special competence in matters of economics or foreign affairs. We claim only, as we must, the limited role assigned to us by Article III of the Constitution. Fulfilling that role, we hold that IEEPA does not authorise the President to impose tariffs.
Despite the breadth of the discussions in the various separate writings, the main thrust of the opinion was stated clearly: IEEPA does not authorise the president to impose tariffs because the statute only grants the president the power to regulate certain economic activities (including imports), but the power to regulate does not include the power to tax, which is vested by the Constitution exclusively to Congress.
The Supreme Court’s holding clearly answered the question of whether the president has statutory authority to impose tariffs under IEEPA: he does not. However, it does not resolve the question of how importers that have already paid IEEPA tariffs will get those duties refunded. The opinion does not set out a refund mechanism, does not order restitution or any other remedy and does not address the administrative processes by which duties already paid might be recovered.
Justice Kavanaugh warned in his dissent that the refund process would be a “mess,” a point that Justice Barrett raised at some length during the oral arguments on 5 November 2025. Unlike Kavanaugh, Barrett joined the majority in voting against Trump. “The Court says nothing today about whether, and if so how, the Government should go about returning the billions of dollars that it has collected from importers,” wrote Kavanaugh. He added that “refunds of billions of dollars would have significant consequences for the U.S. Treasury.”
As of this writing, many importers have filed “protective” lawsuits at the CIT seeking to claim refunds of the IEEPA tariffs. Previously, the CIT had opined that the Protest procedure (the normal administrative vehicle for seeking duty refunds) is not available because that procedure is available only when an importer disagrees with a decision of CBP upon liquidation (closing out) of an entry. With respect to the IEEPA tariffs, the CIT opined, CBP is not making any decision but merely passively collecting the IEEPA tariffs pursuant to EOs imposing them.
However, the road to recovering illegally imposed and collected IEEPA tariffs is clearer after a decision by CIT Judge Richard Eaton on 6 March 2026. Having been defeated at the Supreme Court, it appeared that the Trump Administration was attempting to slow-walk importers’ claims for duty refunds in court, all while interest continues to accrue on the principal amounts, further driving up the cost of refunds to the federal treasury. The U.S. Court of Appeals for the Federal Circuit (CAFC) rejected the administration’s request to transfer the mandate to the CIT (claiming it needed 90 more days to evaluate options because of “political considerations”) on 2 March.
After the CAFC’s mandate transferring the cases back to the CIT took place, it took only 48 hours for the CIT to act. In a simple but sweeping order issued on 4 March 2026, the CIT directed CBP to issue refunds via the normal administrative procedures: the liquidation process by which CBP finalises the amount of duty owed on each tariff code line item of each entry for each shipment of merchandise imported into the US. About 314 days after the entry date, CBP liquidates it, i.e., closes out the entry with the final assessment of duty. The entry becomes “finally liquidated” when the 180-day post-liquidation period to file a Protest expires. The CIT ordered CBP to liquidate all unliquidated entries as of 4 March 2026 without the assessment of the IEEPA tariffs. For entries that were not finally liquidated, CBP was ordered to re-liquidate those entries without the IEEPA tariffs.
CBP responded quickly and stated via an affidavit that it could not process refunds of this magnitude through the normal liquidation process. Thus, it requested additional time to develop an administrative process utilising ACE to handle the “53,173,939 refunds involving 330,566 importers.” In response, the CIT suspended its order and allowed CBP to proceed with developing a process that will involve the following steps:
In another declaration provided to the CIT on 31 March, CBP estimates that the ACE upgrades are already 85% completed overall. The new functionality, called the Consolidated Administration and Processing of Entries (or CAPE) will be developed in phases and currently comprises four integrated components:
The subsequent phases of CAPE functionality will address more complex scenarios, including:
For this reason, importers should be utilising ACE for their refund calculations. Armed with these numbers (and factoring in the quarterly interest rate as published by the IRS in the Federal Register), importers will be well-positioned to submit any refund claims and verify any refund checks (which are now only issued electronically by CBP) issued through the new administrative process.
Despite the fact that the IEEPA tariffs have been invalidated, Congress has historically delegated its exclusive authority to impose taxes (tariffs) to the president in narrowly limited scenarios where foreign countries and producers are engaging in activities that negatively impact US national security, as well as US industries and entities, collectively referred to as “trade remedy” tariffs.
The first delegation of congressional authority in this area took place in 1911 when US antidumping duty and countervailing duty statutes were passed to allow the Executive Branch to investigate instances when foreign products were being imported into the US at prices lower than they were sold for in the country of production, thus materially injuring or threatening material injury to US industries producing the like product, or when imports from foreign producers benefited from government subsidies that allowed them to be sold in the US market at artificially low prices. Affirmative results in the investigations allowed the Commerce Department to order the collection of duties to offset these unfair pricing practices.
Since then, several other trade remedy statutes have been enacted by Congress. Four of these statutes are directly relevant to the administration’s stated plans to replace the lost IEEPA revenue with other tariffs.
Section 122 Tariffs
In another first for a US president, Trump announced on the day of the Supreme Court’s decision that his administration would begin collecting tariffs under Section 122 of the Trade Act of 1974 to address the US balance of payments issue with essentially all of its trading partners. The initial rate of 10% was announced via a Presidential Proclamation effective 24 February 2026. Unlike other trade remedy statutes, Section 122 requires no agency investigation prior to presidential imposition of the tariffs.
Congress approved the Section 122 authority in 1974 following a period of economic uncertainty in the U.S. (which had only de-coupled from the gold standard of foreign exchange in 1971). It was largely meant to protect the U.S. currency and came after many years of large US trade deficits with major trading partners. Section 122 empowers the president to address “large and serious” balance-of-payments deficits through import surcharges of up to 15%, import quotas or a combination of the two.
The central focus of Section 122 is to provide the president with emergency authority to prevent "depreciation of the dollar in foreign exchange markets" and to correct "an international balance-of-payments disequilibrium." The measure is designed to address short-term emergencies, not long-term trade policies—and the legislative history clearly distinguishes “balance of payments” issues from “trade deficits.”
Under Section 122, the president can impose duties of up to 15% for no more than 150 days to address specific countries’ balance of payments problems with the US. After this period elapses, only Congress can step in and extend the duration of these tariffs. If Congress fails to do so, the tariffs expire on day 150 after invocation. However, in theory, after the initial Section 122 tariffs lapse, the president could simply declare another emergency of balance of payments with all countries and restart the timeline.
Use of Section 122 to impose tariffs may not live beyond its current expiration date of 24 July 2026. A new lawsuit was filed at the CIT on 5 March by many US Attorneys General challenging the legality of the new Section 122 tariffs. The principal argument posits that a balance of payments crisis is a currency crisis that was of great concern when Congress enacted Section 122, but which can no longer exist following the formal end of the fixed-rate currency exchange system in 1976. The President cannot meet the statutory requirements of Section 122 by conflating “trade deficits” with “balance of payments” shortfalls, and his effort to impose tariffs under this statute exceeds the authority granted to the president under the statute.
Section 232 Tariffs
Another kind of trade remedy tariff rarely used by modern US presidents was invoked during the first Trump Administration. Under Section 232 of the Trade Expansion Act of 1962, the president is authorised to take actions (both tariff- and non-tariff-based) to restrict imports that have been found to threaten national security. In the first Trump Administration, this statute was used to impose tariffs on steel and aluminium imports. Those actions were challenged in court, with the U.S. Court of Appeals for the Federal Circuit ultimately ruling that these Section 301 tariffs were a legal exercise of the president’s power over matters of national security.
In his second administration, President Trump has expansively used this statute (in addition to the now-invalidated IEEPA statute) as the primary driver of his trade policy. Section 232 tariffs currently exist on many imported products without regard to the country of origin, including:
Indeed, on 2 April 2026, the White House issued a new proclamation adjusting the tariffs on the imports of aluminium, steel and copper into the US. The action raises tariff rates, expands the duty base and tightens enforcement for importers of metal products and metal-containing derivatives effective 6 April 2026.
Most importantly, Section 232 tariffs now apply to the entire customs value of covered aluminium, stee, and copper articles and their derivative products, regardless of actual metal content, eliminating prior valuation calculations espoused by CBP HQ that applied duties only to the metal portion of the article.
Other changes are based on the article’s tariff classification as set forth in Annex I-A, I-B and Annex III to the proclamation:
Section 301 Tariffs
A special duty attracted the most attention during the first Trump Administration: the duties imposed by Presidential Proclamation under Section 301 of the Trade Act of 1974. This law empowers the president through the Office of the U.S. Trade Representative (USTR) to investigate any act, policy or practice of a foreign government that violates an international trade agreement or is unjustified, unreasonable, or discriminatory, and that burdens or restricts US commerce.
When these duties were first imposed in 2018 on products originating in China (based on the tariff code of each individual product), they were challenged in court. Ultimately, the U.S. Court of Appeals for the Federal Circuit decided in 2025 that the imperfect administrative process by which these duties had been applied was nonetheless legal. President Biden kept these duties in place (even adding more tariff codes to the list of covered products) and increased the duty rate from 25% to up to 100% on certain items.
The administration stated that it intends to launch more Section 301 investigations (conducted by the Office of the USTR, which is part of the Executive Office of the President) to counter the lost IEEPA revenue. On 11 March 2026, the USTR announced the initiation of investigations regarding the acts, policies and practices of various economies relating to “structural excess capacity and production in manufacturing sectors” to ascertain whether they are unreasonable or discriminatory and burden or restrict US commerce. The jurisdictions subject to these investigations are: Bangladesh, Cambodia, China, the EU, India, Indonesia, Japan, Korea, Malaysia, Mexico, Norway, Singapore, Switzerland, Taiwan, Thailand and Vietnam.
On 12 March 2026, USTR launched new Section 301 investigations into the acts, policies and practices of 60 economies relating to their failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labour. USTR claimed that “governments have failed to enact or at least to enforce laws to prevent trade in goods produced by forced labour, resulting in artificially low-cost exports.” Potential Section 301 duties could be imposed to offset the pricing advantage gained by foreign producers using forced labourers to produce goods destined for the US market.
Section 338
Finally, Section 338 of the Tariff Act of 1930 (the Smoot-Hawley Act, still the basis of all current US Customs law, although the punitive tariffs have long-since been repealed) is now in play. Like Section 122, until 20 February 2026, this statute had never been deployed. It authorises the president to impose tariffs of up to 50% on imports from any country that “discriminates” against US commerce as compared to other nations.
The statute is noticeably short and ambiguous. It assigns a role to the U.S. International Trade Commission (USITC), which has a duty to “ascertain and at all times to be informed” whether discrimination is occurring and to “bring the matter to the attention of the president, together with recommendations.” The statute separately authorises the president to impose tariffs “whenever he shall find as a fact” that discrimination exists.
The text does not specify whether the president can act unilaterally or whether he must await USITC findings, nor does it define what “discrimination” means. It is possible that the administration will not await an investigation or a recommendation by the USITC but will soon decide whether to proceed unilaterally and impose whatever tariffs are deemed fit based on whatever “discrimination” it identifies.
The Supreme Court’s ruling invalidating Trump’s IEEPA tariffs can be viewed as a major decision impacting the separation of powers between the Executive and Legislative branches of the federal government. It was also the first case to rule on the complete “substance” of any of President Trump’s policy initiatives during his second term. (Other Supreme Court decisions have only addressed procedures or interim relief.)
President Trump has already invoked Section 122 of the Trade Act of 1974 to impose new tariffs of 10% ad valorem across the board to all imports from all countries, without regard to any actual analysis of any balance of payments problems with any specific country but merely to recharacterise the “trade deficits,” which prompted the IEEPA tariffs in support of the new Section 122 tariffs. These tariffs are now the subject of litigation.
Nonetheless, importers can expect significant refunds (totaling USD 166 billion) if they do their homework in ACE. While CBP’s administrative refund claim process is still evolving (through mid-April 2026 or longer), importers need to calculate their claims (including the addition of interest based on the IRS quarterly rate published in the Federal Register) to ultimately submit the claims, verify the refund amounts and keep management fully informed (see the trade alert dated 9 March 2026).
In conclusion, importers should be expecting more tariffs under the various trade remedy statutes outlined above in addition to the already announced Section 122 tariffs. While those new tariffs will only apply retrospectively, duties already paid under IEEPA will ultimately have to be refunded by CBP. What the trade policy road ahead looks like for the remainder of the second Trump administration remains unclear. But as a result of Learning Resources, the Supreme Court seems determined to keep the tariff power in the branch of government where the US Constitution vested it: with Congress, not with the Executive Branch.
Damon Pike
BDO in United States
The Supreme Court’s decision invalidating the IEEPA-based tariffs—the president’s signature economic policy initiative—has immediate impacts for importers and global supply chains. While the Learning Resources v. United States ruling creates a basis for importers to claim refunds for IEEPA tariffs, the court left several critical questions unanswered, most notably the fate of the more than USD 166 billion in tariffs already collected.
Those questions were answered by an order of the US Court of International Trade (CIT) on 4 March 2026 directing US Customs & Border Protection (CBP) to issue refunds via the normal administrative procedures—without the need for litigation at the CIT. However, two days later, CIT Judge Eaton suspended his order so that CBP could be given time to further develop a refund process via its Automated Commercial Environment (ACE), the primary CBP system used to process imports and exports for prior coverage, see the trade alert dated 17 March 2026).
Immediately following the Supreme Court decision on 20 February, President Trump issued an executive order (EO) revoking the previous IEEPA EOs mandating corresponding tariffs of various rates. He also directed the head of each executive department and agency to take appropriate steps to end the additional ad valorem duties imposed under IEEPA.
This article examines the IEEPA statute in detail (including its history, which was important to the Supreme Court in reaching its decision) and analyses the decision’s main holdings, which were delivered throughout a discordant 170-page decision with six separate writings. It also highlights “replacement” tariffs that the administration has begun imposing to replace the lost IEEPA duties and concludes with actions that importers should be taking to prepare for refunds of the USD 166 billion+ in IEEPA tariffs that have been collected to date.
IEEPA
IEEPA is a federal statute enacted in 1977 that authorises the president to regulate a broad range of economic transactions involving foreign interests when an “unusual and extraordinary threat” to the US has a foreign source. IEEPA authorises emergency action in response to foreign threats that affect national security, foreign policy or the economy where the threat’s source is “in whole or substantial part outside the United States.” As a prerequisite, the president must declare a national emergency under 50 U.S.C. § 1701.The relevant text of the statute enumerating the president’s powers in response to the declared national emergency reads as follows:
- At the times and to the extent specified in section 1701 of this title, the President may, under such regulations as he may prescribe, by means of instructions, licenses, or otherwise.…
- investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest by any person, or with respect to any property, subject to the jurisdiction of the United States….
Thus, after declaring a national emergency under the National Emergencies Act (NEA), the president may then, “by means of instructions, licenses, or otherwise” take actions to “regulate . . . importation . . . of . . . any property in which any foreign country or a national has any interest.”
IEEPA was enacted to provide a peacetime emergency economic authority distinct from the Trading with the Enemy Act (TWEA) of 1917, which originated as a wartime statute at the close of World War I. Over time, presidents began to use TWEA during peacetime, which led to perceived abuses. Even after amending TWEA to correct these deficiencies in 1941 and enacting new corollary statutes, Congress in 1977 passed a new statute—IEEPA—that is now considered the heart of the US government’s sanctions regimes when it, for example, seizes bank accounts or property of targeted governments, organisations, individuals, etc.
In general, the categories of cross-border economic activity involving foreign interests that the president is authorised to “investigate, regulate, or prohibit” include:
- transactions in foreign exchange;
- transfer of credit or payments; and
- transactions involving property in which a foreign country or national has an interest, including measures affecting trade transactions.
Legislative Background and Historical Foundations
TWEA was enacted in 1917 against the backdrop of World War I, with the purpose of providing the president with the authority to regulate and restrict economic transactions involving designated foreign “enemies” during wartime. Its initial language reflected the wartime needs of the US to control cross-border financial flows and commercial dealings that could undermine national security objectives.
Over time, however, the use of emergency economic controls expanded beyond traditional wartime contexts, and concerns developed regarding the breadth and duration of emergency authorities and the relative lack of procedural constraints in the original statute. Congress amended TWEA in 1941 to add the language that was central to the decision in the Learning Resources case allowing the president to “regulate . . . importation.” According to Justice Brown-Jackson, “[t]he [House and Senate] Reports explained Congress’ primary purpose for the 1941 amendment: shoring up the President’s ability to control foreign-owned property by maintaining and strengthening the ‘existing system of foreign property control’ (commonly known as freezing control).”
Between 1941 and the early 1970s, TWEA became the main legislative vehicle to impose sanctions as part of US Cold War strategy, and was used to block international financial transactions, seize US-based assets held by foreign nationals, limit foreign direct investment in US companies and restrict exports.
Concerns about TWEA were renewed following findings by several congressional investigations that the US had been in a state of emergency for more than 40 years. These concerns prompted a broader legislative effort in the mid-1970s to regularise the declaration, revocation and administration of national emergencies and to distinguish between wartime and peacetime emergency economic powers. Those efforts culminated in the passage of the National Emergencies Act (NEA) in 1976 and IEEPA in 1977.
The NEA was enacted to terminate all existing national emergencies under TWEA and to establish uniform procedures governing the declaration, publication, reporting, continuation and termination of national emergencies. The NEA functions as a kind of procedural outline for the exercise of emergency authorities contained in other statutes, including IEEPA.
Importantly, the NEA ultimately gave Congress the ability to cancel any national emergency declared by the president via a joint resolution passed by both houses of Congress. This procedure was recently used when the House passed a joint resolution ending the national emergency declared by President Trump with respect to Canada. Passage was still awaiting in the Senate as of this writing but has been mooted by the Supreme Court’s decision effectively invalidating the national emergency declared with respect to Canada and all other countries. Nonetheless, this “check” on a president’s power is diluted by the fact that a president can veto such termination, meaning that a nearly impossible 2/3 majority of Congress is needed to effectively end a national emergency—something that has never been accomplished since NEA’s enactment.
In enacting IEEPA in 1997, Justice Brown-Jackson noted that Congress retained the TWEA language regarding the president’s power to “regulate . . . importation.” The House and Senate reports accompanying the new statute further demonstrated that the intention behind this language was the same in 1977 as it was in 1941. The House report described IEEPA as empowering the president to “regulate or freeze any property in which any foreign country or any national has an interest.” The Senate report set forth similar language; Congress’ sole objective for the “regulate . . . importation” sub-section was to grant the president emergency authority “to control or freeze property transactions where a foreign interest in involved.” No mention of the power to tax (and specifically to impose customs duties) is found anywhere in the legislative history of IEEPA.
Since the enactment of IEEPA, presidents have often invoked this statute to restrict various international transactions, first starting with foreign governments but expanding targets over the years to include non-state actors and groups such as terrorist organisations and narco-criminal groups. The first national emergency declared under IEEPA was in 1979 by President Jimmy Carter when US embassy staff were taken hostage by Iran. (That national emergency is still in effect today.) Of the total of 77 IEEPA national emergencies declared by various presidents as of September 2025, 46 are ongoing. Not one of them involved using tariffs as a means of combating the declared national emergency until the current controversy, a point that was critical to the majority’s decision in Learning Resources.
In sum, the statutory language of IEEPA lacks any reference giving the president the authority to impose tariffs, despite the 16 other verbs in the statute that enumerate the powers the president has to combat national emergencies. Nonetheless, the Trump Administration construed the words “regulate” and “importation” as the power to impose tariffs on imported merchandise, notwithstanding that when Congress passes laws allowing the president to impose taxes, it does so directly and explicitly grants the Executive Branch the power to tax. As shown below, the Supreme Court soundly rejected that position and has now foreclosed presidents from ever again using IEEPA to tax imports via tariffs.
The Decision
In the Supreme Court’s majority decision in the lead case concerning the legality of the IEEPA tariffs, the first sentence squarely summed up the opinion as one of pure statutory interpretation: “[w]e decide whether the International Emergency Economic Powers Act (IEEPA) authorises the President to impose tariffs.” Writing for the majority, Chief Justice Roberts then framed up the central issue of the case: “[b]ased on two words separated by 16 others in section 1702(a)(1)(B) of IEEPA—‘regulate’ and ‘importation’—the president asserts the independent power to impose tariffs on imports from any country of any product at any rate for any amount of time. Those words cannot bear such weight.”The 170-page decision is unusual in that, while the central question is clearly answered in the majority opinion written by the Chief Justice, six separate writings were filed by other justices. The opinion was divided into Parts I, II, and II-B making up the majority coalition which focused on the text of the IEEPA statute and the constitutional background, i.e., Article I, Section 8 vests Congress with the exclusive authority to impose “taxes, duties, and excises.”
A common theme of conservative jurisprudence also found its way into the text of the decision: Parts II-A-2 and III cover the “major questions” doctrine, or the idea that “clear congressional authorisation” is needed to authorise presidential actions of any significance (and was lacking here). Justices Gorsuch and Barrett joined the Chief Justice in these sections, which makes these sections a plurality (3-0) but not a majority holding. Justice Gorsuch’s concurring opinion, in fact, clocked in at 46 pages, more than double the length of the majority’s 21-page opinion.
In addition, Justice Thomas filed his own 18-page dissenting opinion focused on the “non-delegation doctrine” in which he dismissed the justification of the majority’s decision as simply one of statutory interpretation. Under this doctrine, the separation of powers under the Constitution does not allow Congress to delegate “core” legislative power to the Executive Branch. Imposing duties on imports, Justice Thomas wrote, was not a core power of Congress and thus was able to be delegated to the President via IEEPA (as with many other statutes, he claimed).
The longest decision was penned by Justice Kavanaugh who, in 63 pages, attempted to de-construct every point in the majority opinion. He wrote “like quotas and embargoes, tariffs are a traditional and common tool to regulate imports” and covered statutory text, history and precedent in support of this assertion. He also rejected the major questions doctrine conclusions adopted by a plurality of the court.
Nonetheless, a majority of six justices joined an opinion penned by Chief Justice Roberts that was remarkable for its brevity (20 pages) but also for its clarity. After listing the powers granted by Congress to the president in the IEEPA statute, he wrote that “[a]bsent from this lengthy list of specific powers is any mention of tariffs or duties. Had Congress intended to convey the distinct and extraordinary power to impose tariffs, it would have done so expressly, as it consistently has in other tariff statutes . . . The power to ‘regulate . . . importation’ does not fill that void.”
Chief Justice Roberts also debunked the government’s claim that the power to regulate includes the power to tax, i.e., to impose taxes. The common meaning of “regulate” does not comport with the power to tax, he wrote. In addition, “[w]hile taxes may accomplish regulatory ends, it does not follow that the power to regulate includes the power to tax as a means of regulation. Indeed, when Congress addresses both the power to regulate and the power to tax, it does so separately and expressly. That it did not do so here is strong evidence that “regulate’ in IEEPA does not include taxation.”
In further support of the impact of the major questions doctrine on the outcome of this case, Chief Justice Roberts reemphasized that “[w]hen Congress grants the power to impose tariffs [to the president], it does so clearly and with careful constraints. It did neither in IEEPA.”
Another point referred to the many other powers enumerated in IEEPA (which Justice Kagan constructed into 99 variations in her concurring opinion, with only one referencing tariffs in the case at issue). At one end of the spectrum was “compel,” wrote the Chief Justice, and at the other was “prohibit.” He continued: “[a]lthough tariffs may be less extreme than an outright compulsion or prohibition [as in an import ban], it does not follow that tariffs lie on the spectrum between these poles; they are different in kind, not degree, from the other authorities in IEEPA. . . Tariffs . . . are . . . a branch of the taxing power and . . . fall outside the spectrum entirely.”
Chief Justice Roberts also rejected the premise adopted by Justice Kavanaugh that TWEA and a single case decided under this statute by the predecessor court to the U.S. Court of Appeals for the Federal Circuit (United States v. Yoshida) allowed the president to impose tariffs in “regulating . . . imports.” The genesis of that case took place in 1971, when President Nixon unilaterally imposed tariffs of 10% for a short time after he ended the gold standard for exchanging US dollars and cited the Tariff Act of 1930 and the Trade Agreements Act of 1962 as the basis for those tariffs. (Justice Kavanaugh stated in his dissent that Nixon imposed those tariffs under TWEA but that was a position not adopted by the government until after litigation had begun.) Although the Yoshida court upheld Nixon’s use of the temporary tariffs, the whole issue was mooted by enactment of Section 122 of the Trade Act of 1974 (see below). Thus, the Chief Justice wrote that “[a] single, expressly limited opinion from a specialised intermediate appellate court does not establish a well-settled meaning that the Court can assume Congress incorporated into IEEPA.”
With respect to TWEA and its influence on IEEPA, he noted that historical arguments based on the Supreme Court’s wartime precedent also failed to carry the day. “The attenuated claim of inferences from wartime presidents through multiple iterations of TWEA to IEEPA cannot support—much less clearly support—a reading of IEEPA that includes the distinct power to impose tariffs.”
Finally, the Chief Justice dismissed claims that other precedent mandated giving the power of the purse to the president via IEEPA. He cited Section 232 of the Trade Agreements Act of 1962 as a perfect example of Congress’ “sweeping, discretion-conferring language [allowing the president to impose tariffs in the event certain imports are found to threaten U.S. national security] that IEEPA does not contain, and the explicit reference to duties in section 232(a) renders it natural for section 232(b) to itself authorise duties.”
In closing, the majority unambiguously concluded that IEEPA does not grant the president the authority he claimed:
The President asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope. In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorisation to exercise it. IEEPA’s grant of authority to “regulate . . . importation” falls short. IEEPA contains no reference to tariffs or duties. The Government points to no statute in which Congress used the word “regulate” to authorise taxation. And until now no President has read IEEPA to confer such power. We claim no special competence in matters of economics or foreign affairs. We claim only, as we must, the limited role assigned to us by Article III of the Constitution. Fulfilling that role, we hold that IEEPA does not authorise the President to impose tariffs.
Despite the breadth of the discussions in the various separate writings, the main thrust of the opinion was stated clearly: IEEPA does not authorise the president to impose tariffs because the statute only grants the president the power to regulate certain economic activities (including imports), but the power to regulate does not include the power to tax, which is vested by the Constitution exclusively to Congress.
Path to Duty Refunds
The Supreme Court’s holding clearly answered the question of whether the president has statutory authority to impose tariffs under IEEPA: he does not. However, it does not resolve the question of how importers that have already paid IEEPA tariffs will get those duties refunded. The opinion does not set out a refund mechanism, does not order restitution or any other remedy and does not address the administrative processes by which duties already paid might be recovered.Justice Kavanaugh warned in his dissent that the refund process would be a “mess,” a point that Justice Barrett raised at some length during the oral arguments on 5 November 2025. Unlike Kavanaugh, Barrett joined the majority in voting against Trump. “The Court says nothing today about whether, and if so how, the Government should go about returning the billions of dollars that it has collected from importers,” wrote Kavanaugh. He added that “refunds of billions of dollars would have significant consequences for the U.S. Treasury.”
As of this writing, many importers have filed “protective” lawsuits at the CIT seeking to claim refunds of the IEEPA tariffs. Previously, the CIT had opined that the Protest procedure (the normal administrative vehicle for seeking duty refunds) is not available because that procedure is available only when an importer disagrees with a decision of CBP upon liquidation (closing out) of an entry. With respect to the IEEPA tariffs, the CIT opined, CBP is not making any decision but merely passively collecting the IEEPA tariffs pursuant to EOs imposing them.
However, the road to recovering illegally imposed and collected IEEPA tariffs is clearer after a decision by CIT Judge Richard Eaton on 6 March 2026. Having been defeated at the Supreme Court, it appeared that the Trump Administration was attempting to slow-walk importers’ claims for duty refunds in court, all while interest continues to accrue on the principal amounts, further driving up the cost of refunds to the federal treasury. The U.S. Court of Appeals for the Federal Circuit (CAFC) rejected the administration’s request to transfer the mandate to the CIT (claiming it needed 90 more days to evaluate options because of “political considerations”) on 2 March.
After the CAFC’s mandate transferring the cases back to the CIT took place, it took only 48 hours for the CIT to act. In a simple but sweeping order issued on 4 March 2026, the CIT directed CBP to issue refunds via the normal administrative procedures: the liquidation process by which CBP finalises the amount of duty owed on each tariff code line item of each entry for each shipment of merchandise imported into the US. About 314 days after the entry date, CBP liquidates it, i.e., closes out the entry with the final assessment of duty. The entry becomes “finally liquidated” when the 180-day post-liquidation period to file a Protest expires. The CIT ordered CBP to liquidate all unliquidated entries as of 4 March 2026 without the assessment of the IEEPA tariffs. For entries that were not finally liquidated, CBP was ordered to re-liquidate those entries without the IEEPA tariffs.
CBP responded quickly and stated via an affidavit that it could not process refunds of this magnitude through the normal liquidation process. Thus, it requested additional time to develop an administrative process utilising ACE to handle the “53,173,939 refunds involving 330,566 importers.” In response, the CIT suspended its order and allowed CBP to proceed with developing a process that will involve the following steps:
- The importer files a declaration in the ACE that includes a list of entries on which IEEPA duties were paid.
- The ACE runs a series of validations on each entry within the declaration and automatically re-calculates the duty owed without the IEEPA tariffs (with applicable interest).
- CBP verifies the declaration and processes refunds as soon as practicable.
- The ACE automatically finalises (liquidates or reliquidates) the entries.
- The ACE automatically aggregates the refunds with interest by importer and liquidation date.
- CBP certifies the refunds.
- The Department of the Treasury issues IEEPA refunds electronically.
In another declaration provided to the CIT on 31 March, CBP estimates that the ACE upgrades are already 85% completed overall. The new functionality, called the Consolidated Administration and Processing of Entries (or CAPE) will be developed in phases and currently comprises four integrated components:
- Claim portal
- Mass processing
- Review and liquidation/reliquidation
- Refund
The subsequent phases of CAPE functionality will address more complex scenarios, including:
- Entries that have been liquidated and finalised with IEEPA duties, but refunds are required through CAPE pursuant to the March 27 Order; and
- Entries for which a Protest has been filed and is open.
For this reason, importers should be utilising ACE for their refund calculations. Armed with these numbers (and factoring in the quarterly interest rate as published by the IRS in the Federal Register), importers will be well-positioned to submit any refund claims and verify any refund checks (which are now only issued electronically by CBP) issued through the new administrative process.
Replacement Tariffs
Despite the fact that the IEEPA tariffs have been invalidated, Congress has historically delegated its exclusive authority to impose taxes (tariffs) to the president in narrowly limited scenarios where foreign countries and producers are engaging in activities that negatively impact US national security, as well as US industries and entities, collectively referred to as “trade remedy” tariffs.The first delegation of congressional authority in this area took place in 1911 when US antidumping duty and countervailing duty statutes were passed to allow the Executive Branch to investigate instances when foreign products were being imported into the US at prices lower than they were sold for in the country of production, thus materially injuring or threatening material injury to US industries producing the like product, or when imports from foreign producers benefited from government subsidies that allowed them to be sold in the US market at artificially low prices. Affirmative results in the investigations allowed the Commerce Department to order the collection of duties to offset these unfair pricing practices.
Since then, several other trade remedy statutes have been enacted by Congress. Four of these statutes are directly relevant to the administration’s stated plans to replace the lost IEEPA revenue with other tariffs.
Section 122 Tariffs
In another first for a US president, Trump announced on the day of the Supreme Court’s decision that his administration would begin collecting tariffs under Section 122 of the Trade Act of 1974 to address the US balance of payments issue with essentially all of its trading partners. The initial rate of 10% was announced via a Presidential Proclamation effective 24 February 2026. Unlike other trade remedy statutes, Section 122 requires no agency investigation prior to presidential imposition of the tariffs.
Congress approved the Section 122 authority in 1974 following a period of economic uncertainty in the U.S. (which had only de-coupled from the gold standard of foreign exchange in 1971). It was largely meant to protect the U.S. currency and came after many years of large US trade deficits with major trading partners. Section 122 empowers the president to address “large and serious” balance-of-payments deficits through import surcharges of up to 15%, import quotas or a combination of the two.
The central focus of Section 122 is to provide the president with emergency authority to prevent "depreciation of the dollar in foreign exchange markets" and to correct "an international balance-of-payments disequilibrium." The measure is designed to address short-term emergencies, not long-term trade policies—and the legislative history clearly distinguishes “balance of payments” issues from “trade deficits.”
Under Section 122, the president can impose duties of up to 15% for no more than 150 days to address specific countries’ balance of payments problems with the US. After this period elapses, only Congress can step in and extend the duration of these tariffs. If Congress fails to do so, the tariffs expire on day 150 after invocation. However, in theory, after the initial Section 122 tariffs lapse, the president could simply declare another emergency of balance of payments with all countries and restart the timeline.
Use of Section 122 to impose tariffs may not live beyond its current expiration date of 24 July 2026. A new lawsuit was filed at the CIT on 5 March by many US Attorneys General challenging the legality of the new Section 122 tariffs. The principal argument posits that a balance of payments crisis is a currency crisis that was of great concern when Congress enacted Section 122, but which can no longer exist following the formal end of the fixed-rate currency exchange system in 1976. The President cannot meet the statutory requirements of Section 122 by conflating “trade deficits” with “balance of payments” shortfalls, and his effort to impose tariffs under this statute exceeds the authority granted to the president under the statute.
Section 232 Tariffs
Another kind of trade remedy tariff rarely used by modern US presidents was invoked during the first Trump Administration. Under Section 232 of the Trade Expansion Act of 1962, the president is authorised to take actions (both tariff- and non-tariff-based) to restrict imports that have been found to threaten national security. In the first Trump Administration, this statute was used to impose tariffs on steel and aluminium imports. Those actions were challenged in court, with the U.S. Court of Appeals for the Federal Circuit ultimately ruling that these Section 301 tariffs were a legal exercise of the president’s power over matters of national security.
In his second administration, President Trump has expansively used this statute (in addition to the now-invalidated IEEPA statute) as the primary driver of his trade policy. Section 232 tariffs currently exist on many imported products without regard to the country of origin, including:
- Aluminium (and derivative products)
- Autos (and parts)
- Buses (and parts)
- Copper (and certain derivatives)
- Furniture
- Lumber
- Steel (and derivative products
- Timber
- Trucks (and parts)
Indeed, on 2 April 2026, the White House issued a new proclamation adjusting the tariffs on the imports of aluminium, steel and copper into the US. The action raises tariff rates, expands the duty base and tightens enforcement for importers of metal products and metal-containing derivatives effective 6 April 2026.
Most importantly, Section 232 tariffs now apply to the entire customs value of covered aluminium, stee, and copper articles and their derivative products, regardless of actual metal content, eliminating prior valuation calculations espoused by CBP HQ that applied duties only to the metal portion of the article.
Other changes are based on the article’s tariff classification as set forth in Annex I-A, I-B and Annex III to the proclamation:
- A 50% tariff will apply to goods classified in chapters 72, and most goods in chapter 73, 74 and 76 as identified in Annex I-A;
- Derivative articles listed in Annex I-B substantially made of steel, aluminium or copper (more than 15%) will pay a flat 25% of their full value; and
- Items listed in Annex III will pay a total tariff rate of 15% (based on a combination of the Normal Trade Relations rate plus the Section 232 tariff needed to reach a ceiling of 15%).
Section 301 Tariffs
A special duty attracted the most attention during the first Trump Administration: the duties imposed by Presidential Proclamation under Section 301 of the Trade Act of 1974. This law empowers the president through the Office of the U.S. Trade Representative (USTR) to investigate any act, policy or practice of a foreign government that violates an international trade agreement or is unjustified, unreasonable, or discriminatory, and that burdens or restricts US commerce.
When these duties were first imposed in 2018 on products originating in China (based on the tariff code of each individual product), they were challenged in court. Ultimately, the U.S. Court of Appeals for the Federal Circuit decided in 2025 that the imperfect administrative process by which these duties had been applied was nonetheless legal. President Biden kept these duties in place (even adding more tariff codes to the list of covered products) and increased the duty rate from 25% to up to 100% on certain items.
The administration stated that it intends to launch more Section 301 investigations (conducted by the Office of the USTR, which is part of the Executive Office of the President) to counter the lost IEEPA revenue. On 11 March 2026, the USTR announced the initiation of investigations regarding the acts, policies and practices of various economies relating to “structural excess capacity and production in manufacturing sectors” to ascertain whether they are unreasonable or discriminatory and burden or restrict US commerce. The jurisdictions subject to these investigations are: Bangladesh, Cambodia, China, the EU, India, Indonesia, Japan, Korea, Malaysia, Mexico, Norway, Singapore, Switzerland, Taiwan, Thailand and Vietnam.
On 12 March 2026, USTR launched new Section 301 investigations into the acts, policies and practices of 60 economies relating to their failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labour. USTR claimed that “governments have failed to enact or at least to enforce laws to prevent trade in goods produced by forced labour, resulting in artificially low-cost exports.” Potential Section 301 duties could be imposed to offset the pricing advantage gained by foreign producers using forced labourers to produce goods destined for the US market.
Section 338
Finally, Section 338 of the Tariff Act of 1930 (the Smoot-Hawley Act, still the basis of all current US Customs law, although the punitive tariffs have long-since been repealed) is now in play. Like Section 122, until 20 February 2026, this statute had never been deployed. It authorises the president to impose tariffs of up to 50% on imports from any country that “discriminates” against US commerce as compared to other nations.
The statute is noticeably short and ambiguous. It assigns a role to the U.S. International Trade Commission (USITC), which has a duty to “ascertain and at all times to be informed” whether discrimination is occurring and to “bring the matter to the attention of the president, together with recommendations.” The statute separately authorises the president to impose tariffs “whenever he shall find as a fact” that discrimination exists.
The text does not specify whether the president can act unilaterally or whether he must await USITC findings, nor does it define what “discrimination” means. It is possible that the administration will not await an investigation or a recommendation by the USITC but will soon decide whether to proceed unilaterally and impose whatever tariffs are deemed fit based on whatever “discrimination” it identifies.
Preparing for What’s Next
The Supreme Court’s ruling invalidating Trump’s IEEPA tariffs can be viewed as a major decision impacting the separation of powers between the Executive and Legislative branches of the federal government. It was also the first case to rule on the complete “substance” of any of President Trump’s policy initiatives during his second term. (Other Supreme Court decisions have only addressed procedures or interim relief.)President Trump has already invoked Section 122 of the Trade Act of 1974 to impose new tariffs of 10% ad valorem across the board to all imports from all countries, without regard to any actual analysis of any balance of payments problems with any specific country but merely to recharacterise the “trade deficits,” which prompted the IEEPA tariffs in support of the new Section 122 tariffs. These tariffs are now the subject of litigation.
Nonetheless, importers can expect significant refunds (totaling USD 166 billion) if they do their homework in ACE. While CBP’s administrative refund claim process is still evolving (through mid-April 2026 or longer), importers need to calculate their claims (including the addition of interest based on the IRS quarterly rate published in the Federal Register) to ultimately submit the claims, verify the refund amounts and keep management fully informed (see the trade alert dated 9 March 2026).
In conclusion, importers should be expecting more tariffs under the various trade remedy statutes outlined above in addition to the already announced Section 122 tariffs. While those new tariffs will only apply retrospectively, duties already paid under IEEPA will ultimately have to be refunded by CBP. What the trade policy road ahead looks like for the remainder of the second Trump administration remains unclear. But as a result of Learning Resources, the Supreme Court seems determined to keep the tariff power in the branch of government where the US Constitution vested it: with Congress, not with the Executive Branch.
Damon Pike
BDO in United States