Background: what is IEEPA, and how did Trump use it?
The International Emergency Economic Powers Act (IEEPA) is a 1977 US federal law that authorises the President to “regulate international commerce” when there is a foreign threat to national security, foreign policy, or the US economy — in a declared state of national emergency. Historically, presidents used IEEPA narrowly: to freeze the assets of hostile nations, impose sanctions on specific individuals or organisations, or cut off financial access to adversarial regimes. The precedent for using it to impose broad tariffs on multiple trading partners simultaneously did not exist before 2025.
The Trump administration relied on IEEPA to impose a minimum 10% levy on all imports, with additional tariffs of up to 41% on nations that had not successfully negotiated trade terms with the US — bypassing the traditional requirement for congressional approval of tariff legislation. China was the first target, followed by the sweeping “reciprocal” tariffs announced in April 2025. These tariff types collectively accounted for roughly half of all US customs duties since their introduction in early 2025. Holland & KnightMichigan Journal of Economics
The ruling — Learning Resources Inc. v. Trump
In a 6-3 decision authored by Chief Justice John Roberts, the Supreme Court ruled on February 20, 2026 that the International Emergency Economic Powers Act does not grant the President authority to impose tariffs. The case was brought as Learning Resources Inc. v. Trump, a legal challenge by a toy importer. By invoking the “Major Questions Doctrine,” the Court held that Congress must speak clearly if it wishes to assign to the Executive Branch decisions of “vast economic and political significance.” The Court found that the statutory language empowering the President to “regulate importation” does not constitute a clear authorisation to impose new taxes or tariffs. BrookingsMichigan Journal of Economics
The ruling affirmed the US Court of Appeals for the Federal Circuit’s August 2025 decision on the same question — meaning the legal direction of travel had been clear for months, but the Supreme Court’s confirmation made it definitive and binding. The ruling invalidates tariffs previously imposed under IEEPA on goods from Canada, Mexico, and China, as well as the global 10% and country-specific tariffs introduced under that authority. It also removes the legal basis for tariff actions linked to executive orders involving Venezuela, Russia, Iran, Brazil, and Cuba. EYBrookings
The fiscal numbers — $211 billion in tariff revenue, up to $175 billion in potential refunds
The financial scale of this ruling is genuinely remarkable. Since their introduction through January 2026, IEEPA tariffs generated an estimated $211 billion in revenue, with an annualized run rate of roughly $300 to $350 billion. Without IEEPA-based measures, that annual revenue flow declines by approximately $170 billion, and retroactive refund claims could surpass $130 billion. Brookings
The Penn Wharton Budget Model’s cumulative tracking showed IEEPA monthly collections rising from $810 million in February 2025 to $20.8 billion in January 2026, with total collections of approximately $164.7 billion through that month. The average US tariff rate fell from roughly 16.8% to approximately 9.0% as a result of the ruling. Brookings
Critically, importers can expect significant refunds totalling approximately $166 billion if they file the necessary customs claims in the Automated Commercial Environment (ACE) system. However, the Supreme Court’s decision does not explicitly order immediate refunds, and the administration may pursue administrative or legal strategies to limit retroactive payouts, creating uncertainty not only for firms awaiting reimbursement but also for federal revenue projections and broader fiscal planning. Penn Wharton Budget ModelYahoo!
The Trump administration’s immediate response — Section 122
The administration did not accept the ruling passively. Within hours of the decision on February 20, President Trump issued a proclamation imposing a 10% “temporary import surcharge” on all countries under Section 122 of the Trade Act of 1974, effective February 24, for 150 days — a rapid pivot to a different legal authority. Section 122 tariffs exempt USMCA-qualifying goods from Canada and Mexico, critical minerals, pharmaceuticals, and certain electronics. Section 232 tariffs on metals and vehicles remain fully intact and are unaffected by the IEEPA ruling. Thomson Reuters TaxThomson Reuters Tax
In March 2026, the USTR launched new Section 301 investigations targeting China, the EU, Singapore, Switzerland, Norway, India, Vietnam, Taiwan, Bangladesh, Mexico, Japan, and 15 other countries — a slower but more durable legal pathway to tariffs that requires documented evidence of unfair trade practices rather than a presidential emergency declaration. J.P. Morgan
What this means in practice for global trade
Brookings scholars noted that the ruling removes the fastest tool for imposing broad country-level duties, but it does not end the tariff debate — other statutory authorities remain in play, and businesses and trading partners are left assessing what comes next. US trading partners are taking a “wait and see” attitude to whether or when they might renegotiate, given the more limited tariff threats Trump can credibly make right now. BDO
The EU, America’s largest commercial partner, expressed relief. EU leaders described Washington’s trade approach as “chaos” and welcomed the ruling as a check on executive overreach, though they noted that Section 232 tariffs on steel, aluminium, and autos — which are not affected by the IEEPA ruling — continue to generate bilateral trade friction. BDO
For risk professionals and supply chain managers, the ruling shifts the planning horizon: IEEPA-based tariff risk was immediate and unlimited in scope; Section 301-based tariff risk is slower, more targeted, and somewhat more predictable. The transition from one regime to the other does not eliminate tariff uncertainty — it changes its character.