IEEPA Tariffs at the Supreme Court

A showdown over presidential taxing power, Article I, and looming refunds

The Supreme Court heard arguments in a case that could cost the Treasury up to $108 billion in refunds. But the money isn’t the story.

The story is watching six justices—including the conservatives—eviscerate the government’s legal theory that the President can tax Americans without Congressional approval, as long as he calls it a national emergency first.

This is Learning Resources v. Trump. Based on the oral arguments, the answer appears to be no.

Learning Resources Inc. makes educational toys. In 2024, they paid $2.3 million in import duties. Under Trump’s IEEPA-based tariffs, that bill was set to jump to $100 million in 2025.

They sued.

Article I of the Constitution gives Congress the exclusive power to lay and collect taxes. Tariffs are taxes. From 1789 until the income tax arrived in 1913, tariffs were the federal government.

The administration’s position? The International Emergency Economic Powers Act allows the President to regulate importation in response to national threats, and that power includes imposing tariffs.

IEEPA never mentions tariffs. It doesn’t say duties. It doesn’t say taxes.

Chief Justice John Roberts didn’t miss that. During arguments, he interrupted Solicitor General D. John Sauer and asked who actually pays these tariffs—importers or American consumers?

The answer is Americans. Roberts wasn’t asking because he didn’t know. He was making the point that calling a tax regulation doesn’t change what it is.

IEEPA was passed in 1977 to rein in executive overreach. It was meant to be narrow. A scalpel.

Trump’s lawyers are claiming it’s a sledgehammer.

Justice Elena Kagan told the Solicitor General that the natural understanding of regulate does not include duties or taxes or tariffs or anything of the kind.

Justice Amy Coney Barrett demanded any historical evidence where regulate importation alone has been used to impose tariffs.

The government couldn’t produce one. Because there isn’t one.

When Congress wants to give the President tariff power, it says so. Section 232 explicitly authorizes the President to adjust imports to protect national security, and it uses the word tariffs. Section 301 does the same.

IEEPA doesn’t.

Justice Neil Gorsuch asked whether the administration’s reading would allow the President to impose a 50% tariff on gas-powered cars to combat climate change.

The Solicitor General conceded it was probably possible.

That’s a blank check.

The IEEPA tariffs generated between $89 billion and $108 billion in revenue. The administration has warned of liabilities as high as $750 billion if struck down.

Roberts pressed the Solicitor General on why IEEPA—never before used for tariffs—should suddenly grant major authority over the tax system.

The government tried invoking Dames & Moore v. Regan, a 1981 case about settling claims with Iran after the hostage crisis.

Roberts cut that off immediately, reminding Sauer that Dames & Moore itself warned it had little precedential value.

When the Chief Justice is quoting your own precedent to undermine your argument, you’ve lost.

If the Court strikes down the tariffs, the government owes refunds. Between $89 billion and $108 billion.

The Treasury doesn’t keep that kind of cash around. They’ll have to issue short-term bonds, an unplanned injection into the bond market when rates are already volatile.

Large corporations with in-house counsel will get their money. Small businesses will face a calculation: Is it worth hiring a lawyer to recover $50,000 when the paperwork costs $20,000?

Probably not.

Even if the Court strikes down the IEEPA tariffs, the tariffs aren’t going anywhere.

Administration officials have confirmed they have a Plan B. Section 232.

Section 232 allows the President to impose tariffs if imports threaten national security. It’s explicit, it’s durable, and courts almost never second-guess it.

Trump has already used it for steel, aluminum, autos, copper, semiconductors, pharmaceuticals, and aircraft.

If IEEPA goes down, the administration can’t use economic emergency as justification. They have to use national security.

That means every tariff becomes a defense issue. Importing copper? National security threat. Pharmaceuticals? National security threat.

The result is the same. High tariffs. Just under a different legal framework. And because courts defer on national security, Section 232 is functionally unchallengeable.

The Supreme Court isn’t ending the tariff war. It’s just forcing the administration to use a different statute.

The tariffs are here to stay. They’re just changing their legal clothes.