{"id":5473,"date":"2026-02-20T17:50:56","date_gmt":"2026-02-20T21:50:56","guid":{"rendered":"https:\/\/damore-mckim.northeastern.edu\/cem\/?post_type=dmsb_resource&p=5473"},"modified":"2026-02-20T17:50:56","modified_gmt":"2026-02-20T21:50:56","slug":"supreme-court-ieepa-tariff-decision-implications-for-business-leaders","status":"publish","type":"dmsb_resource","link":"https:\/\/damore-mckim.northeastern.edu\/cem\/resources\/supreme-court-ieepa-tariff-decision-implications-for-business-leaders\/","title":{"rendered":"Supreme Court IEEPA Tariff Decision: Implications for Business Leaders"},"content":{"rendered":"\n

By Sonia E. Rolland<\/a><\/p>\n\n\n\n

Because tariffs are a form of taxation and the power to tax resides with Congress, rather than with the executive branch, the President's use of a statute regarding national security to broadly impose tariffs was a major shift in the balance of power between the branches of government. At the same time, trade relations with foreign countries pertains to the President's authority to conduct international relations on behalf of the United States. The Supreme Court tacked that tension in its opinion<\/a> released on February 20th<\/sup>, 2026: it decided that the President did not have the power to use the Emergency Economic Powers Act (IEEPA) to impose tariffs in the way it has done over the past year.<\/p>\n\n\n\n

Supreme Court Chief Justice Roberts wrote the majority opinion reasoning that the IEEPA does not give the President authority to impose tariffs and that if Congress intends to delegate its tariff authority to the Executive Branch, it needs to do so much more clearly. The Court's three Democratic appointees agreed with large parts of Chief Justice Robert's opinion to create a majority. Justice Amy Coney Barrett and Neil Gorsuch, both Trump appointees, also joined the majority opinion. By contrast, three of the most conservative judges of the Supreme Court, including Trump-appointee Brett Kavanaugh, argued that the President had the authority to impose tariffs under the IEEPA. They read the statute's words allowing the President to \u201cregulate \u2026 importation or exportation\u201d of \u201cproperty in which any foreign country or a national thereof has any interest\u201d in the case of a national emergency to include the power to impose tariffs. Amongst the range of possible outcomes for this case, the Court's decision took the most clear-cut position rejecting the imposition of tariffs by the president under the IEEPA as a matter of principle.<\/p>\n\n\n\n

What happens next?<\/p>\n\n\n\n

Over $200 billion have been collected under the IEEPA for tariffs which the Supreme Court has now decided are illegal. If the Trump Administration complies with this ruling, it will need to refund this amount to the importers that have paid the duties and to direct US Customs and Border Protection (CBP) to cease levying the illegal duties. This will be a very complex process, particularly for small businesses and individuals since the Trump administration had also eliminated last year the de minimis<\/em> duties exemption on small value shipments, which, for many years, had made direct individual purchases of foreign goods essentially duty-free. CBP has been considering how to manage this process for a few months. From a business perspective, it may also be quite difficult for companies which paid collected and paid duties on behalf of customers to backtrack how much was paid and, on whose behalf, and to process those payments back to customers, all the more so because duties varied widely throughout 2025.<\/p>\n\n\n\n

At a more systemic level, the Supreme Court decision will also have significant repercussions.<\/p>\n\n\n\n

First, the Trump administration has already announced<\/a> that it would continue to impose tariffs even as its legal authority for doing so is highly questionable. The President certainly has authority<\/a> to impose countervailing duties in response to foreign subsidies, anti-dumping duties in response to findings of dumping of imports into the US market that injures or threatens to injure the domestic industry and safeguard duties in response to surge of imports that put a domestic industry at risk. Arguably, a number of tariff surges over the past year could have been imposed on these well-established legal grounds, but the Administration did not wish to pursue the lengthier process required to impose such duties.<\/p>\n\n\n\n

Second, Congress could allow increases in tariffs or otherwise delegate its tariff authority to the Executive branch, but that is an unlikely development in the face of growing concerns regarding inflation in the United States, combined with the looming mid-term elections.<\/p>\n\n\n\n

Third, the Administration could renegotiate tariff concessions under a broad range of trade agreements, including the World Trade Organization Agreement<\/a>, with foreign counterparts, but would need to make equivalent concessions to offset the loss for the other partners. Here again, the process would be lengthier than the administration might want.<\/p>\n\n\n\n

Fourth, inasmuch as a political objective of the tariffs imposed by the Trump Administration was to bring other countries to the negotiation table and extract \u201cdeals\u201d, which have so far not materialized into formal agreements nor into foreign investment into the US, the incentives for other countries to meet the terms of these \u201cdeals\u201d may now be significantly reduced. The Administration may need to find other points of leverage to pursue its foreign trade agenda.<\/p>\n\n\n\n

For businesses, the increased uncertainty of the landscape for trade rules is not conducive to the long-term commitments required for foreign direct investment, industry reshoring and other forms of investment into the United States.<\/p>\n\n\n\n

Sonia E. Rolland is a Professor of Law and Business at Northeastern University, a Faculty Fellow with the <\/em>Center for Emerging Markets<\/em><\/a> and recently published the <\/em>Research Handbook on Trade Law and Development<\/em><\/a>.<\/p>\n\n\n\n

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    The Supreme Court's February 20th ruling that the President lacked authority under the IEEPA to impose tariffs marks a major shift in trade policy \u2014 with over $200 billion in collected duties now in question. 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