United States Supreme Court, Trump's Broad Imposition of Tariffs Based on the International Emergency Economic Powers Act Is 'Unlawful'

The core of this case was straightforward.

The issue was whether the fact that the International Emergency Economic Powers Act states that the President "may regulate importation" can be read to mean that the President also holds the authority to impose tariffs.

The Supreme Court held that under the U.S. constitutional framework, the authority to levy taxes (the taxing power) is, in principle, a power granted to Congress alone.

Accordingly, the Court's position is that, for the President or the administration to levy a tax, Congress must clearly delegate that authority by statute.

The statutory provision at issue merely grants the President authority to the effect that he "may regulate importation," yet the Supreme Court held that this language cannot be construed expansively to encompass the imposition of tariffs.

In other words, the Court concluded that, because a tariff is ultimately a tax imposed on imported goods, because the authority to levy taxes is constitutionally vested exclusively in Congress, and because the International Emergency Economic Powers Act contains no express provision delegating to the President the power to impose tariffs, the administration cannot impose tariffs on the basis of that statute.

Accordingly, the Supreme Court held that the tariffs that the U.S. administration imposed on the basis of the International Emergency Economic Powers Act on imports from Canada, Mexico, and China, as well as the reciprocal tariffs directed at the entire world, were all unlawful measures that exceeded its authority and were therefore void.

Meanwhile, because one of the two cases had been brought before a court that lacked jurisdiction, the Supreme Court held that, as to that case, the lower judgment should be reversed and the action itself should be dismissed.

The justices who issued the dissenting opinion stated that the legal doctrine restricting the administration's discretion is difficult to apply as such in the areas of foreign affairs and trade, and that if the President holds "the authority to restrict or adjust importation," there is room to view the imposition of tariffs, which is a less forceful measure, as also being permissible.

They also expressed concern, to the effect that, under the majority opinion, significant confusion could arise in the process of refunding tariffs already collected.

The significance of this judgment is that the U.S. administration will find it difficult to continue using, in the same manner, the tariff card based on the International Emergency Economic Powers Act, which it had used effectively in trade negotiations.

That said, the scope addressed by this judgment is limited to the question of "whether tariffs may be imposed on the basis of the International Emergency Economic Powers Act."

Accordingly, what becomes void as a result of this judgment is tariffs based on the International Emergency Economic Powers Act, and tariffs imposed on the basis of other statutes, or those that may be imposed in the future, are not automatically affected.

The Supreme Court did not separately determine how the tariffs already collected are to be refunded.

Accordingly, an importer who has already paid tariffs may, if the import declaration has not yet been finalized, pursue a subsequent correction procedure, and if the import declaration has been finalized, pursue an objection procedure by filing an objection within 180 days from the date of finalization.

However, unless the U.S. authorities establish a separate expedited refund procedure, processing the many applications appears likely to take a long time.

For import and export companies, to whom a tariff refund accrues may vary depending on the terms of the transaction (for example, the party making the import declaration, special agreements on bearing the tariff and on subsequent settlement, and the like), so they should conduct their review according to the following steps.

1. To receive a refund from the U.S. customs authorities on or after February 6, 2026, registration of an electronic refund account is required.
2. Identify the import entries on which tariffs based on the International Emergency Economic Powers Act were actually imposed and paid, and prepare the customs clearance documents.
3. Confirm whether the import declaration has been finalized, and review the procedure appropriate to the period before or after finalization (correction or objection).
4. Coordinate the timing and strategy by considering together the follow-on risks, such as temporary tariffs, additional product-specific tariffs, and tariffs resulting from unfair trade investigations, along with the practical benefit of a refund.

In addition, where the tariff increase has been passed on to prices in the course of distribution, refund demands may arise from consumers and others, and in that case the question of to whom the refund benefit accrues and the matter of subsequent settlement may vary depending on the contractual relationship.

Because there is considerable uncertainty as to which legal basis future tariffs may be added under and which tariffs may be added, it is advisable to continue monitoring developments while reflecting matters such as the method of allocating the tariff burden in the contract terms.

At our firm, a customs specialist who holds a licensed customs broker qualification works in collaboration with international trade attorneys and the local U.S. law firm SJKP to provide client companies with the advice they need.

If you need assistance, you are welcome to schedule a 🔗legal consultation with a customs attorney.