Refunds, trade agreements, and new tariffs: What’s next after the Supreme Court struck down President Trump’s IEEPA tariffs

While the Court’s decision strikes down President Trump’s drug trafficking and reciprocal tariffs imposed under IEEPA, questions remain as to how any tariff refunds may be distributed, how the tariff rates established under trade agreements negotiated under President Trump’s IEEPA tariffs will be impacted, and what measures the Trump Administration will take in putting in place a “Plan B” set of tariff authorities to continue enacting its desired trade policies.

The key takeaways, which are discussed in more detail below, are as follows:

• The Supreme Court majority ruled that IEEPA’s statutory language, simply put, did not authorize tariffs. As the ruling states, two words in the statute – “regulate and importation” – separated by 16 others, cannot “bear the weight” of affording the President the “independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time.”
• The Supreme Court did not address the question of refunds, and left it to the US Court of International Trade to provide guidance on this question. With the tariffs invalidated, there is little doubt that refunds, in the end, will in all likelihood be allowed. But the process at this point is uncertain. Importers and other parties should take all necessary steps to preserve their remedies in the interim.
• The Trump Administration has already begun to execute a “Plan B” in light of the Court’s ruling, announcing its intent to, in the short term, establish 15% duties across the board on most products on top of existing non-IEEPA tariffs (which can be in place only for up to 150 days absent congressional authorization) and also, longer term, to initiate proceedings under other trade statutes that can be used to impose longer term duties.
• While the Supreme Court ruling, which applies to the unilateral tariffs, does not directly apply to the tariff rates established pursuant to trade agreements negotiated by the Trump Administration, the logic of the ruling also, in all likelihood, will vitiate the imposition of tariffs by the President to impose tariffs pursuant to the bilateral trade agreements he recently negotiated. In this regard, even such tariffs established under an agreement also require legislative authorization to be implemented under US law and, in the absence of the authority under IEEPA (which was ruled not to authorize tariffs), there is currently no other statutory basis on which to impose most such tariffs. Whether other countries will honor the non-tariff terms of such agreements remain to be seen, as President Trump did not answer questions about the effect the Court’s ruling has on the trade agreements. 

I. The Court’s Ruling

For the purposes of reviewing the legality of tariffs imposed under IEEPA, the Court consolidated and expedited its consideration of two pending cases:

• Learning Resources, Inc. v. Trump, filed in the US District Court for the District of Columbia, challenged President Trump’s April 2025 executive orders imposing tariffs under IEEPA. The plaintiffs argued that IEEPA did not confer authority to the President to institute such tariffs and any tariffs so issued violated the Constitution’s separation of powers. The US District Court. issued a preliminary injunction, finding that the tariffs likely exceeded the President’s authority.
• V.O.S. Selections Inc. v. Trump, filed in the US Court of International Trade (CIT), similarly challenged President Trump’s authority under IEEPA to implement the global tariffs. The CIT, and subsequently, the Federal Circuit Court of Appeals, ruled that IEEPA did not authorize such tariffs, and issued a permanent injunction against enforcement.

The US Supreme Court’s ruling on these cases sustained the lower court rulings. Chief Justice Roberts authored the majority opinion, which was joined in full by Justices Gorsuch and Barrett and in part by Justices Sotomayor, Kagan and Jackson. Justice Kavanaugh, joined by Justices Thomas and Alito, and Justice Thomas, writing alone, dissented.

The Core of the Case: The Statutory Interpretation Issue. The majority’s holding focused on the statutory interpretation of Section 1702(a)(1)(B) of IEEPA. The Trump Administration had argued that the President’s delegated power to “regulate…importation” carried with it the power to tax, and therefore, impose tariffs. The Supreme Court disagreed, holding that these two words do not confer the power to impose tariffs. As the Court observed, the typical definition of “regulate” does not include the power to tax, and when Congress has previously addressed the President’s power to regulate and tax, it addressed those powers separately. Further, in the view of a majority of Justices, the “neighboring words” and historical use of IEEPA by previous Presidents did not support the conclusion that the statute conveys revenue-raising power to the President. The Court additionally determined that while taxes may accomplish regulatory ends, the power to regulate does not automatically include the power to tax. 

The Applicability of the Major Questions Doctrine. In a section of the ruling joined only by Justices Gorsuch and Barrett, Chief Justice Roberts analyzed and applied the major questions doctrine. The plurality emphasized that when Congress had previously delegated tariff authority to the President, it did so clearly and with careful constraints. The Chief Justice noted that, if IEEPA is read to allow “unbounded tariffs,” such a reading would be a “transformative expansion” that would enable tariff modifications at will, set in motion by emergency declarations that the Trump Administration claimed were unreviewable, and would be restrained only by the doubtful ability of Congress to terminate an emergency through a veto-proof majority. The plurality also noted that there are no emergency statute or foreign affairs exceptions for the major questions doctrine.

The Dissents. Justice Kavanaugh, joined by Justices Thomas and Alito, dissented, arguing that IEEPA’s authority to “regulate…importation” plainly includes tariffs as a traditional tool to regulate imports. The dissent warned that the refund process could be a “mess” and observed that the trade deals facilitated by the tariffs now find themselves in an uncertain state as a result of the Court’s decision.

The Bottom Line. Based on the foregoing analysis, the Court affirmed the Federal Circuit Court of Appeals’ decision in V.O.S. Selections and remanded the case to the CIT for further proceedings consistent with its ruling.

The Jurisdictional Issue. In a footnote to the ruling, the Court also determined that the CIT had exclusive jurisdiction over these matters, as the plaintiffs’ challenges arose out of a US law providing for tariffs. As such, the Court vacated and remanded Learning Resources with instructions to dismiss the case for lack of jurisdiction.

II. No Guidance Provided on the Refund Process – to be determined by the CIT and the Administration

In light of the prolonged uncertainty about the availability of and procedure for tariff refunds, hundreds of companies have filed lawsuits in the CIT against US Customs and Border Protection (CBP) to preserve their rights to obtain refunds on import duties set by President Trump. These suits were all stayed on December 31, 2025 to await resolution of this tariffs case. 

As noted by the dissenting Justices, the Court’s decision today provided no guidance on whether or how refunds of tariff payments would be administered. This was not surprising as the matter of refunds was not directly before the Court.

In any event, the CIT will now be responsible for determining the scope of appropriate relief and the procedures for its administration. There is little doubt that the CIT will authorize or recognize the general rights to a refund – given the underlying illegality of the tariff collected. Indeed, in requesting a stay of the original decisions against the imposition of IEEPA tariffs, the Trump Administration conceded that refunds would be paid with interest if the IEEPA tariffs were ruled to be illegal. Specifically, in a filing with the US Court of Appeals for the Federal Circuit on May 29, 2025, the Department of Justice stated that “[i]f tariffs imposed on plaintiffs during these appeals are ultimately held unlawful, then the government will issue refunds to plaintiffs, including any post judgment interest that accrues.”

Until the Administration or CIT provide additional guidance, it is unclear how such tariff refunds will be made and what steps importers will be required to take to request any refunds. The process could involve the use of existing administrative Customs tools (post-summary corrections and protests), filing lawsuits with the CIT, or a new specified avenue. 

Importers therefore should gather documentation to support any such refund requests and should, in the interim, take all appropriate steps to perfect their refund requests under existing rules and procedures. 

III. The “Plan B”: Alternative Authorities for Imposing Tariffs

As a result of the Court’s ruling, the Trump Administration’s reciprocal tariffs and drug trafficking tariffs are no longer enforceable. As set forth in more detail below, President Trump has promised to utilize alternative methods to continue imposing tariffs. However, these provisions will require some additional procedural steps and are subject to a range of temporal, rate and product-based limits that limit their breadth. Elements of "Plan B" are as follows:

Existing 232 and 301 Tariffs Remain in Effect. At a news conference held shortly after the Court issued its decision, President Trump announced that all tariffs currently imposed under Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974 “will remain in full force and effect.” 

15% Across-the-Board Tariffs Announced on Most Products Under Section 122. Notably, President Trump stated at the news conference, and reflected in a Proclamation issues late Friday, that he will “immediately” impose a 10% global tariff on most products under Section 122 of the Trade Act of 1974, “over and above” what tariffs that are already in place. Subsequently, over the weekend, the President announced on social media that the Section 122 tariff rate would be increased across the board to 15%.

Section 122 authorizes tariffs up to 15% for a maximum of 150 days (unless otherwise extended by congressional legislation) to address balance-of-payments deficits, and affords the President the ability to promulgate certain country or product exemptions. Specifically, the statute states that if the President determines that the purposes of the provision “will best be served by action against one or more countries having large or persistent balance-of-payment surpluses, he may exempt all other countries.” Similarly, the President is afforded the right to exempt “certain articles … because of the needs of the United States economy. Such exceptions shall be limited to the unavailability of domestic supply at reasonable prices, the necessary importation of raw materials, avoiding serious dislocations in the supply of imported goods, and other similar factors.” It is important to note that Section 122 does not, by its terms, expressly appear to authorize the exemption of products from certain countries only (i.e., as distinct from across-the-board product exemptions from all countries).

To date, in the Friday proclamation, the President exempted from the Section 122 tariffs a detailed list of products, including: certain agricultural (i.e., food) products, including beef, tomatoes, and oranges; certain critical minerals, metals used in currency and bullion, energy, and energy products; natural resources and fertilizers that cannot be grown, mined, or otherwise produced in the United States or grown, mined, or otherwise produced in sufficient quantities to meet domestic demand; pharmaceuticals and pharmaceutical ingredients; certain electronics; passenger vehicles, certain light trucks, certain medium and heavy-duty vehicles, buses, and certain parts of passenger vehicles, light trucks, heavy-duty vehicles, and buses; certain aerospace products; and informational materials (e.g., books), donations, and accompanied baggage. The proclamation also states that Section 122 tariffs will not be assessed on imports subject to existing or future Section 232 tariffs.

Whether the President will over time broaden the Section 122 product exemptions or establish country exemptions (perhaps as a result of bilateral trade negotiations) remains to be seen.

Additional Section 301 and Other Investigations. President Trump also announced the Administration will be initiating several investigations under Section 301 (authorizing tariffs to address certain unfair trade practices), and other provisions, likely referencing Section 232 (authorizing tariffs on imports found to threaten to impair national security). Both of these laws, which already have been used by the Administration, allow for the imposition of longer-term tariffs in specific circumstances. In contrast to IEEPA, however, both Section 301 and 232 proceedings require the completion of a federal investigation before tariffs can be implemented thereunder. 

Notably, none of the alternative statutes afford the President the breadth of authority or flexibility available under IEEPA.

The chart below summarizes the key alternative laws that authorize the President to impose tariffs, subject to procedural, temporal, and rate requirements: 

IV. Trade agreements: The status of President Trump’s negotiated trade agreements remains unclear

Within the past year, the Administration has announced the negotiation of a dozen or so international trade agreements in various degrees of completeness. These agreements were negotiated in the context of active and threatened IEEPA tariffs, with the US promising lower tariff rates in exchange for foreign investment in the US, improved market access for US companies, deregulation, or other economic benefits. Currently, none of the agreements have been formalized through publication or ratification by Congress, as is required to enforce the agreements under US law.

While the Court’s ruling only applies, by its terms, to President Trump’s actions challenged in the lawsuit (i.e., his imposition of unilateral tariffs under IEEPA), the ruling’s logic arguably vitiates President Trump’s authority to impose tariffs pursuant to the bilateral trade agreements negotiated under the IEEPA tariffs. For a more in depth discussion of this issue, see “Legal Jeopardy Looms Over President Trump's Trade Negotiation Plans.” By way of summary, even such tariffs established by agreement require legislative authorization to be implemented under US law and, in the absence of the authority under IEEPA (as the Court so decided), there is currently no other statutory basis on which to impose most of the tariffs behind these trade agreements. In the past, the tariff rates in most trade agreements have been implemented through “trade promotion authority” authorized by Congressional legislation. As this statute has expired, there is no standing authority in place that can be used by President Trump to implement such agreement-based tariff rates.

US Trade Representative Greer recently suggested that the Court’s ruling would not affect tariffs under the trade agreements. It remains to be seen whether this position will be subject to further legal challenges, and how the Court’s decision will impact non-tariff elements within these agreements, assuming the applicable tariff rates fall away. Notably, some countries have indicated they will abide by the agreements, regardless of the Court’s decision. When asked about the impact the Court’s decision will have on the trade agreements, President Trump did not provide an answer. 

V. Conclusion

Significant questions remain relevant to the procedures for tariff refunds, the status of negotiated trade agreements, and what new, longer term tariffs the Administration may try to impose going forward. In the meantime, companies should closely monitor judicial, executive, and congressional developments, gather supporting documentation for potential duty refunds, and continue to implement proactive tariff mitigation planning by taking all steps needed to perfect their right to refunds under existing law. Eversheds will continue to monitor this area and our attorneys are available to assist clients in assessing their exposure, pursuing potential refund claims, and developing strategies tailored to their specific business profiles.

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.