Supreme Court: IEEPA Case
The $133 Billion Question: Can the President Impose Tariffs Without Congress?
Category: constitutional law, trade, Supreme Court, separation of powers
The Supreme Court is sitting on what may be the most consequential separation-of-powers case in a generation. At issue in V.O.S. Selections, Inc. v. Trump is whether the President of the United States can bypass Congress and unilaterally impose sweeping tariffs on virtually every trading partner in the world. The answer will shape the balance of federal power for decades, and it carries an immediate price tag north of $133 billion.
Background
A Statute Designed for Sanctions, Not Tariffs
In early 2025, the Trump Administration imposed broad tariffs on imports from nearly every U.S. trading partner. Unlike previous tariff actions under trade-specific statutes like Sections 201, 232, or 301, these tariffs were imposed under the International Emergency Economic Powers Act of 1977, better known as IEEPA.
IEEPA was originally enacted as a successor to the Trading with the Enemy Act. It authorizes the President to "regulate ... importation" of goods during a declared national emergency involving an "unusual and extraordinary threat" to national security, foreign policy, or the economy. The statute has historically been used for economic sanctions, asset freezes, and embargoes. As Stanford Law School's analysis of the case notes, IEEPA "never had anything to do with tariffs" and "no president has ever used it for tariffs in the past."
The Executive Orders at Issue
The Administration declared that persistent trade deficits constituted a national emergency and issued a series of executive orders imposing two categories of duties. The first targeted Canada, Mexico, and China, framed as a response to drug trafficking. The second imposed baseline "reciprocal tariffs" on imports from virtually all other trading partners, citing unfair trade practices.
The Lower Courts Strike Down the Tariffs
Multiple lawsuits followed. In May 2025, the Court of International Trade struck down the tariffs, holding that IEEPA does not grant the President the power to levy taxes. The Federal Circuit affirmed en banc in August 2025, in a 7-4 decision. The Supreme Court agreed to hear the case on an expedited basis and held oral argument on November 5, 2025.
No decision has been issued. The wait has itself become a story.
The Core Legal Questions
Question One: Does "Regulate" Mean "Tax"?
The first question is statutory. Does the phrase "regulate ... importation" in IEEPA include the power to impose tariffs? The Administration argues it does, reading "regulate" broadly to encompass any restriction or condition on imported goods, including a duty. Challengers argue the word "regulate" does not mean "tax," and that no president has ever read it that way in the statute's nearly fifty-year history.
Question Two: Can Congress Hand Over the Taxing Power?
The second question is constitutional. Even if IEEPA does authorize tariffs, is that delegation of power lawful? The Constitution vests the taxing power in Congress. Tariffs were the primary source of federal revenue for most of American history. If Congress can hand that power to the President through a single open-ended statute, challengers argue it violates the nondelegation doctrine, which limits Congress from transferring its core legislative authority to the executive branch without meaningful constraints.
What the Justices Signaled at Oral Argument
Justice Barrett on Historical Precedent
Justice Barrett pressed the government on whether it could identify any place in the U.S. Code, or any point in history, where the phrase "regulate importation" had been used to confer tariff-imposing authority. The government could not. As CNN reported, Barrett suggested that the lack of any historical precedent was a serious concern for the Administration's position.
Justice Gorsuch on Limiting Principles
Justice Gorsuch questioned whether the government's theory had any logical stopping point, asking what would prevent Congress from "abdicating all responsibility to regulate foreign commerce — for that matter, to declare war — to the president." His questioning suggested deep skepticism of broad executive claims, though he stopped short of fully tipping his hand.
The Search for a Middle Ground
Chief Justice Roberts appeared troubled by the scope of the claimed authority but also seemed cautious about the practical consequences of invalidating tariffs that had generated tens of billions in revenue and restructured global supply chains. Several justices appeared to be searching for a narrow ruling that does not reach the constitutional question but holds that IEEPA's text simply does not authorize tariffs.
Two Doctrines Driving the Analysis
The Major Questions Doctrine
The major questions doctrine holds that Congress must speak clearly when delegating authority over matters of vast economic or political significance. The tariffs at issue affect trillions of dollars in trade and have been described as the most significant unilateral economic action by a president in modern history. As the World Gold Council's legal analysis observed, "the challengers argue that IEEPA's text is insufficiently explicit to support such a delegation." If this does not qualify as a major question, it is difficult to imagine what would.
The Nondelegation Doctrine
The nondelegation doctrine restricts Congress from handing off its core powers to the executive without intelligible standards. If IEEPA can be read to authorize unlimited tariffs for an indefinite duration, subject only to a veto-proof supermajority in Congress to terminate the emergency, challengers argue the statute fails to provide the kind of meaningful constraints the Constitution requires.
The Administration responds that IEEPA operates in the domain of foreign affairs and national security, where presidential power is at its broadest and judicial deference is traditionally at its highest. The Peterson Institute for International Economics has drawn parallels between this case and other recent separation-of-powers disputes, noting that in each instance the President "is claiming powers without limit, powers that intrude on the domains of other parts of the American government."
What Happens If the Tariffs Fall
The Refund Machinery Is Already in Place
If the Supreme Court affirms the lower courts, the practical consequences will be enormous. The Court of International Trade has already confirmed its authority to order reliquidation and refunds. The Department of Justice has stated on the record that it will not contest that authority if the tariffs are ultimately struck down.
The Scale of Potential Refunds
Estimates suggest more than 34 million entries of goods are subject to the tariffs, filed by over 300,000 importers of record. The total IEEPA tariff revenue collected is approximately $133 billion. Administering refunds of that scale would be an unprecedented logistical challenge for U.S. Customs and Border Protection. The Tax Policy Center estimates that if the tariffs are overturned and not replaced, taxes on households would be reduced by $1.4 trillion over ten years, saving families an average of $1,200 in 2026.
The Administration's Backup Plans
The Administration has already signaled it would seek alternative statutory authority. Section 122 of the Trade Act of 1974, Section 232 national security tariffs, and Section 301 unfair trade practice tariffs are all potential vehicles. But each has its own legal constraints, including rate caps, durational limits, and procedural requirements that IEEPA does not impose. As one analysis notes, Section 122 tariffs could not exceed 15 percent or last longer than 150 days without Congressional approval — a far cry from the open-ended authority claimed under IEEPA.
What This Means for Businesses and Individuals
For Importers
Companies that have been paying IEEPA duties should be documenting those payments carefully, separating IEEPA duties from tariffs imposed under other authorities, and monitoring the Court's decision closely. Forvis Mazars advises that importers review contracts for tariff refund or adjustment clauses, accumulate documentation of IEEPA duties paid, and prepare to act quickly once a ruling is issued. Many larger importers have already filed protective suits at the Court of International Trade to preserve refund rights.
For Everyone Else
This case matters far beyond trade law. It is a test of whether emergency powers can be used to permanently restructure the tax burden on American consumers and businesses without a vote in Congress. The question of who gets to impose taxes is not abstract. It determines what goods cost, which industries thrive, and how much leverage any single officeholder has over the national economy.
The Waiting Game
Three Months and Counting
As of mid-February 2026, the Supreme Court has been deliberating for over three months since oral argument. The justices began a recess and are next scheduled to take the bench on February 20. A decision could come then, or later.
What the Delay May Signal
U.S. Trade Representative Jamieson Greer has publicly acknowledged the stakes, telling CNBC in early February that the Court "is being very careful and considerate as to how they deal with this issue of extreme national interest." Analysts have offered competing interpretations of the delay. Some read it as a sign the justices are deeply divided. Others suggest the Court may be crafting a narrow ruling that avoids the broadest constitutional questions while still resolving the statutory dispute.
However the opinion comes out, it will define the outer boundary of presidential economic power for years to come.
Closing
The IEEPA tariff case is the most significant separation-of-powers dispute before the Supreme Court this term, and arguably in years. At its core is a simple question with enormous consequences: can one person decide to tax the country?
Businesses, importers, and individuals affected by the tariffs should consult experienced legal counsel to understand their exposure and prepare for the range of possible outcomes. The decision, whenever it arrives, will require swift action.
Written by Eric Rosen, founding partner of Dynamis LLP. Eric is a nationally recognized former federal prosecutor and white-collar defense attorney based in Boston and New York. A graduate of Harvard University and Columbia Law School, Eric spent nearly a decade as an Assistant United States Attorney and served as lead prosecutor in Operation Varsity Blues. His practice focuses on white-collar criminal defense, corporate investigations, and complex civil litigation.
This post is intended for informational purposes only and does not constitute legal advice. Readers should consult qualified counsel regarding their specific circumstances.
