IEEPA Tariffs Ruled Illegal by US Supreme Court

Ben Cannon

Author

Tariff Recovery Litigation: What US Importers Need to Know

A set of tariffs imposed under the International Emergency Economic Powers Act (IEEPA) has now been ruled illegal, and many U.S. importers are looking at what that decision means for money they paid during that period. These IEEPA tariffs were issued by the Trump administration under 50 U.S.C. § 1701(a), and the administration quickly collected over $166 billion as result.

The United States Supreme Court has since held that IEEPA does not authorize the administration to impose such tariffs. This leaves importers with large, documented payments made under a statute that did not grant that power.

In this Tariffs Lawsuit presentation video, Attorney Mikal Watts breaks down the court record to explain three things in a straightforward way: first, how and why these particular IEEPA tariffs were found to be unlawful; second, what the Supreme Court’s decision actually did and did not do; and third, what happens now that the legal question is settled but the administration has said refunds will not come quickly or automatically.

For all these reasons and more, Watts Law Firm LLP is spearheading litigation in the U.S. Court of International Trade to compel refunds for U.S. businesses that paid these unlawful IEEPA tariffs.

Who Has the Power to Levy Tariffs Under the US Constitution?

Under Article I, Section 8 of the United States Constitution, the power to levy tariffs belongs to Congress and only to Congress. That power remains with Congress unless Congress, by statute, delegates tariff authority to another actor, such as the president.

The central question in this litigation is whether Congress, through a particular statute, actually delegated the power to impose these tariffs in the way they were imposed. The statute at the center of the dispute is the International Emergency Economic Powers Act, found at 50 U.S.C. sections 1701 through 1706, in the war and national defense portion of the United States Code.

President Trump had several statutory tools available for tariffs, including Section 232 of the Trade Expansion Act of 1962 and various provisions of the Trade Act of 1974. Instead of relying on those tools, his administration chose to impose these particular tariffs under section 1701(a) of the International Emergency Economic Powers Act (IEEPA). That provision requires a finding of “unusual and extraordinary threats” as the basis for action. The tariffs imposed under this statute were widely described as “reciprocal tariffs,” and they quickly became the overwhelming majority of all tariffs issued by the administration at that time.

The Tariff Issue Makes Its Way Through the Court System

Over time, a series of lawsuits tested whether these particular tariffs were lawful under the IEEPA. One of the lead cases was Learning Resources, Inc. v. Donald J. Trump, which directly challenged the president’s use of IEEPA to impose these tariffs.

Those cases were filed in two different courts: the United States Court of International Trade and the United States District Court for the District of Columbia. On two consecutive days in May 2025, both courts reached the same bottom line: the IEEPA‑based tariffs were not legal.

The administration appealed, and the challenges were consolidated before the United States Court of Appeals for the Federal Circuit. On August 29, 2025, sitting en banc, the full panel of the Federal Circuit judges issued a combined decision affirming the lower courts’ rulings.

In that opinion, the Federal Circuit agreed that Congress has the exclusive power to impose tariffs under Article I, Section 8, and that the key question was whether Congress had delegated that power back to the president in the 1977 International Emergency Economic Powers Act. The Federal Circuit concluded that Congress had not done so and held that President Trump’s use of IEEPA tariffs was illegal.

The US Supreme Court Rules the Tariffs Are Illegal

The administration then sought review by the United States Supreme Court. Recognizing the significance of the issue, the Court placed the case on an expedited schedule in the fall of 2025, ordering compressed briefing and setting arguments for November 5, 2025. On February 20, 2026, the Supreme Court issued its decision, ruling against the administration by a 6–3 vote in a court opinion written by Chief Justice John Roberts.

Looking closely at IEEPA, the Supreme Court held the law gives the president power to “regulate importation” in response to certain emergencies, but it contains no reference to tariffs or duties. The Court noted that the government could not point to any statute where Congress had used the term “regulate” to authorize taxation, and that, until this litigation, no president had read IEEPA as a source of tariff‑imposing authority.

As a result of this final ruling, the IEEPA‑based tariffs issued in 2025 and through February 20, 2026 were illegal. On the same day, the Court also answered a separate procedural question: it identified the United States Court of International Trade, located in New York City, as the exclusive court of jurisdiction for disputes over these IEEPA tariffs. That means businesses seeking refunds for these specific tariffs must bring their claims in the Court of International Trade rather than in other federal courts.

Although the ruling was a major setback for the administration’s use of IEEPA, the Supreme Court’s decision was limited to legality, not policy. The Court did not decide whether tariffs in general are good or bad tools of economic or foreign policy and did not order the administration to begin writing refund checks. It held only that Congress had not delegated this particular tariff power under IEEPA and that the tariffs issued under that statute during the relevant period were unlawful.

What Happens Now That the Tariff Ruling is Final

The Supreme Court’s decision resolved the central legal question: it held that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose tariffs, and that the specific IEEPA‑based tariffs issued in 2025 and through February 20, 2026 were illegal.

But the ruling did not order the federal government to immediately refund the $166 billion in tariffs that importers paid under those orders. The Court’s role under Article III is limited to deciding what Congress has and has not authorized; it does not administer refund programs or supervise the Treasury’s checkbook.

In the weeks that followed, it became clear that the administration did not view the decision as the end of the story. The president publicly signaled that he did not intend to simply return the money collected under the unlawful IEEPA tariffs. According to reporting, the administration stated that the refund process would take years and additional litigation, even though businesses were more likely than not to win their cases.

There Will Not Be Automatic Refunds; Litigation Will Be Necessary

Given the administration’s public stance and the complexity of the refund process, it is clear that litigation against this administration will be necessary.

Watts Law Firm LLP intends to use a mass‑tort style approach. Instead of a single class action, the plan is to file individual lawsuits for each client in the Court of International Trade. The firm expects to work together with other lawyers to force a resolution and to seek payment of the illegal IEEPA tariffs as quickly as the courts will allow.

For businesses, the choice is largely between funding that effort on an hourly basis or retaining contingency‑fee counsel. While some large firms are handling tariff matters at hourly rates, many smaller and mid‑sized importers, however, cannot absorb that level of ongoing legal expense for contested litigation with an uncertain outcome.

Watts Law Firm LLP positions its model as an alternative: it advances the costs of litigation and only collects a contingent fee if it succeeds in recovering tariff money for the client, with a sliding scale that depends on the size of the recovery.

Narrow Focus: Legal Remedies for Illegal Tariffs

To qualify for the tariff refund litigation, companies confirm that they paid IEEPA‑based tariffs during the relevant period, and evaluate whether they meet the firm’s eligibility criteria, including the $50,000 minimum claim size. It also means filing and prosecuting individual cases in the Court of International Trade until there is a path, whether through court orders or negotiated settlements, for those companies to receive refunds through other avenues.

This litigation is about enforcing the Constitution’s limits on tariff power and securing concrete refunds for businesses that paid money under tariffs the Supreme Court has now declared unlawful. By focusing only on these illegal IEEPA tariffs and the remedies the law provides, the litigation aims to turn a constitutional ruling into real relief for affected importers.

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.