Tariffs Ruled Illegal by US Supreme Court

Ben Cannon

Author

Oral Arguments, Key Justices, and Tariff Recovery Litigation

A recent video on our website features Attorney Mikal Watts walking through how a specific set of tariffs imposed under the International Emergency Economic Powers Act (IEEPA) made its way through the courts and was ultimately struck down by the United States Supreme Court in 2026. In that video presentation, Mikal explains the constitutional question at the heart of the case, the lower‑court rulings, and how the justices’ questions during oral argument signaled that the administration’s position on IEEPA‑based “reciprocal tariffs” faced serious obstacles.

Watts Law Firm LLP is now filing tariff recovery litigation in the U.S. Court of International Trade on behalf of U.S. importers and other businesses that paid these IEEPA‑based tariffs. Other articles on this website describe the overall lawsuit and eligibility requirements in more detail. Here we are taking a deeper look at what happened at the Supreme Court, both during the November 5, 2025 oral argument and in the Court’s February 20, 2026 opinion.

This discussion is not a statement for or against tariffs as a matter of policy. The litigation focuses on a narrower point: after the Supreme Court ruled that the IEEPA‑based tariffs were imposed without the authority Congress requires, the firm’s sole objective is to seek refunds for businesses that paid those illegal tariffs, not to support or oppose the current administration or its broader tariff agenda.

How Did the Tariff Dispute Get to the Supreme Court?

The IEEPA tariff dispute began with a straightforward constitutional problem. Under Article I, Section 8 of the United States Constitution, the power to levy tariffs belongs to Congress and only to Congress, and it stays there unless Congress clearly delegates that authority by statute to someone else, such as the president.

The administration relied on the International Emergency Economic Powers Act (IEEPA), codified at 50 U.S.C. §§ 1701–1706, a statute located in the war and national defense portion of the United States Code. The core legal issue was whether IEEPA actually delegated tariff‑imposing power back to the president in the way it was used here, or whether tariff authority remained with Congress.

Lawsuits Start in the Lower Courts

The legality of the tariffs was first tested in two trial courts: the United States Court of International Trade and the United States District Court for the District of Columbia. In these cases, plaintiffs argued that IEEPA had never before been used as a source of tariff‑imposing authority and that Congress had not delegated such power in that statute.

On two consecutive days, May 28 and May 29, 2025, the Court of International Trade, sitting en banc, and District of Columbia each held that the IEEPA‑based tariffs were not legal. Both courts concluded that Congress retains the exclusive power to impose tariffs and that the 1977 IEEPA did not clearly give that power back to the president.

The administration appealed, and those rulings were reviewed by the United States Court of Appeals for the Federal Circuit. On August 29, 2025, the Federal Circuit, sitting en banc, issued a combined decision affirming the lower courts.

The appellate court agreed that Congress has the exclusive power to impose tariffs under Article I, Section 8 and framed the key question as whether Congress had delegated that power back to the president in IEEPA. It concluded that Congress had not done so and held that President Trump’s use of IEEPA tariffs was illegal.

With three courts now aligned against the administration’s reading of IEEPA, the dispute moved to the final step: the administration petitioned the United States Supreme Court for review. Recognizing the importance of the case, the Supreme Court put it on an expedited schedule, and the case was set for arguments before the nine justices of the Supreme Court.

Attorney Mikal Watts Reports on Supreme Court Justices in Tariff Case

Mikal Watts closely monitored the Supreme Court hearing and offered his perspective on the tariff litigation video available on this website. Mikal describes the argument as turning on a simple but important question: whether the president could rely on IEEPA to claim the power to impose tariffs of unlimited amount, duration, and scope.

Mikal commented that Chief Justice John Roberts made clear that a case the administration was relying upon did not support the broad power the government was trying to extract from it. In Mikal’s view, that exchange suggested the Chief Justice was not with the administration.

Mikal also noticed Justice Amy Coney Barrett signaled serious skepticism. She asked whether the administration could identify any place in the U.S. Code, or any point in history, where the phrases the government relied on had ever been used to give the president tariff‑imposing authority.

Justice Sotomayor was even more direct. According to Mikal, she said she did not understand the administration’s argument because tariffs are, at bottom, a congressional power, not a presidential power to tax. She also rejected the effort to distinguish tariffs from taxes, saying that a tariff is a tax. Mikal reads her comments as showing little patience for the administration’s position.

Justice Jackson added to that pressure by pointing out the tension in the statute itself. Mikal says she questioned how a law designed to constrain presidential authority could be read as giving the president essentially unlimited power. She pushed the administration hard on that inconsistency, which, in Mikal’s view, made the government’s position even harder to defend.

Justice Kagan reinforced the same theme. Mikal recalls her saying that IEEPA contains many verbs and many actions, but not the one the administration needed: anything about raising revenue. She also noted that emergency powers are a recurring feature of government and that emergencies are far too common to justify such an expansive reading of the statute. By that point in the argument, Mikal believed there were already five votes lined up against the administration.

Justice Gorsuch was the wild card. Mikal points out that Gorsuch asked no questions at all during oral argument, which stood out because he is usually highly engaged.

On the other side, Mikal saw Justices Thomas, Alito, and Kavanaugh as much more sympathetic to the administration’s position in their questioning and comments. Mikal predicted that the case was headed toward a 6–3 or 5-4 ruling against the administration, a prediction that proved true.

The 6–3 Decision and What the Supreme Court Held

On February 20, 2026, the Supreme Court issued the decision: a 6–3 ruling against the administration. The Court held that IEEPA does not authorize the president to impose tariffs and rejected the claim that a general power to regulate importation includes the power to levy tariffs of unlimited amount, duration, and scope.

Mikal emphasizes that the Court treated this as a question of congressional authorization, not a question about whether tariffs are good policy. In other words, the justices were not weighing the wisdom of tariffs; they were deciding whether Congress had actually given the president this particular power.

The Court said the president was asserting extraordinary power and that, given the breadth, history, and constitutional context of that claim, he needed clear congressional authorization. The statute did not provide it. IEEPA contains no reference to tariffs or duties, and the government could not point to a statute where Congress had used the word “regulate” to authorize taxation.

From Court Ruling to Real Recovery for US Businesses

The Supreme Court’s ruling answered the legal question, but it did not create a refund system, and that is the part businesses are dealing with now. The tariffs were held illegal, but there is still no automatic process that will simply send money back to importers who paid them. That is why Mikal emphasizes that litigation is necessary: not to argue over policy, but to force a remedy for businesses that paid unlawful tariffs and now need a path to recover those funds.

That is the practical point of the lawsuit. The goal is to turn the Court’s ruling into actual refunds for businesses, using the Court of International Trade and the records companies already have from the tariffs they paid. For businesses that were hit hard by these charges, the ruling is important, but it is only the first step. The rest depends on filing the claims, proving eligibility, and pushing the case through the system until refunds are paid.

This article is provided for informational purposes only and is not intended as legal advice. It is based on publicly available sources, including published court opinions. Reading this information does not create an attorney–client relationship with Watts Law Firm LLP or any of its lawyers. Legal outcomes depend on the specific facts of each situation, and businesses should consult their own counsel regarding questions about IEEPA tariffs, potential refund claims, or any other legal matter.