In a much-awaited decision, the Supreme Court today held in Learning Resources, Inc., et al. v. Trump that tariffs President Trump imposed under the International Emergency Economic Powers Act (IEEPA) are invalid. Customs and Border Protection statistics show that about $130 billion in IEEPA tariffs have been collected since 2025. Beyond its major economic impact, this case is also a rare instance of the Supreme Court standing up to President Trump’s sweeping exertions of executive power.
IEEPA tariffs covered by this decision include “reciprocal” tariffs Trump imposed on all imports to address trade deficits; these started at 10% and climbed higher for many specific countries. They also include tariffs Trump imposed on certain Chinese, Canadian, and Mexican products (10% for China, 25% for Canada and Mexico) to address fentanyl flows from these countries into the United States. (It’s worth noting that there is no evidence that Canada is a major source of fentanyl for the U.S. market.)
The 6-3 majority opinion, authored in the main by Chief Justice Roberts, will have a large impact on the U.S. economy and has come as a relief to many U.S. businesses and importers. It remains to be seen how and whether importers who paid these tariffs before today’s decision can seek refunds.
The ruling’s reasoning focused on the Constitution’s assignment of taxation powers to Congress, not the executive. Those taxation powers, conferred in Article I, Section 8, include imposing tariffs. The Government had argued that the President nonetheless has unlimited power to impose tariffs under IEEPA if he declares a national emergency. Per the opinion, “All it takes to unlock that extraordinary power is a Presidential declaration of emergency, which the Government asserts is unreviewable. … That view, if credited, would represent a transformative expansion of the President’s authority over tariff policy.” The Court also noted that no previous president has invoked IEEPA as a basis for imposing tariffs in the more than 50 years of IEEPA’s existence.
It will also be interesting to see how False Claims Act (FCA) cases based on the evasion of IEEPA tariffs play out. While there was undoubtedly an obligation for importers to pay these tariffs while they were in effect, now that they have been declared unconstitutional there will surely be lively arguments over damages in False Claims Act cases targeting past tariff nonpayment. If there is indeed a mechanism for IEEPA tariffs to be refunded, FCA defendants will likely argue that there was “no harm, no foul” by businesses who never paid the tariffs in the first place. But that argument ignores the fraudulent intent of evading the tariffs, the fact that businesses generally don’t have the right to ignore tariffs they think are unjust, and the competitive harm to businesses that did pay the tariffs - and raised prices and lost sales accordingly. It’s important to remember that even if the government suffers no damages, it can seek penalties of between $14,308 to $28,619 per false claim against anyone found liable under the FCA. Stay tuned for more repercussions from this major decision in the coming months and years.
