If you are a trade lawyer, you have had a busy weekend. The Supreme Court’s Friday morning decision in Learning Resources v. Trump, and the president’s subsequent reaction, including his imposition of additional tariffs, have left many in the trade world scrambling to understand the implications and actual applicable tariff rates, as well as to figure out what might happen next.
What did the Supreme Court say?
As by now is well known, a majority of the justices found that the president may not rely on the International Emergency Economic Powers Act (IEEPA) to impose tariffs. Writing for the majority, Chief Justice Roberts emphasized that the statutory words “regulate . . . . importation” “cannot bear such weight” as the president would like them to: that is, they cannot authorize “the independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time.”
The collection of opinions in the case comprises 170 pages covering many important points – several of which, especially the major questions doctrine analysis, have relevance far beyond the trade space – but the immediate focus of trade lawyers is on the interpretive undertaking of six justices to read the words of IEEPA as not encompassing the taxing power. The Court emphasized its skepticism that Congress “hid a delegation of its birth-right power to tax within the quotidian power to ‘regulate.’” The tax frame – rather than a foreign affairs frame – drove much of the Court’s decision-making here, just as the plaintiffs had argued.
Importantly, the Supreme Court did not follow the Federal Circuit’s opinion below with respect to the Circuit’s finding that only these particular tariffs were not permitted under the statute. Rather, the Supreme Court appears to have concluded that IEEPA never allows the president to impose tariffs, despite the fact that the scope of the president’s actions here clearly drove the Court to this conclusion. For example, on page 16 of the majority opinion, the Court notes, “Our task today is to decide only whether the power to ‘regulate . . . importation,’ as granted to the President in IEEPA, embraces the power to impose tariffs. It does not.” But elsewhere there are inklings that the Court might entertain or might have entertained more confined tariffs, such as in its discussion of a case regarding President Richard Nixon’s similar tariff action or in its discussion of tariffs in wartime.
It is an interesting hypothetical exercise to consider whether and how the litigation might have ended differently if the president had imposed so-called “secondary tariffs” alone, or first. Put simply, secondary tariffs are tariffs on products from countries that do business with U.S. adversaries – so, for example, countries that permit commerce with Iran or that buy oil from Venezuela. If the administration had only relied upon IEEPA for those tariffs rather than the much larger set of tariffs, maybe there would have been a different outcome, or maybe there would have been no litigation at all.
Finally, the Court also held that cases challenging presidential tariff authority may only be brought in the U.S. Court of International Trade (CIT). This had been an open question because about ten lawsuits had been filed in district courts across the country, and the administration had argued that they could only be brought at the CIT. Such a finding will help streamline such cases going forward.
What did the president do next?
On Friday afternoon, the president held a press conference where he made clear his disappointment in the Supreme Court’s ruling and where he announced that he would be imposing a new set of tariffs. Later in the day, these actions were effectuated by proclamations that the White House posted on its website. Let’s take them one by one.
First, it is important to note that the president on Friday afternoon invalidated several of his 2025 orders that imposed not just the tariffs challenged in the lawsuit but also the others he had threatened or imposed under IEEPA. This step saved the complicated unraveling that might have been required at the CIT regarding whether the Court’s decision applied beyond the named plaintiffs. (In short, the Federal Circuit had vacated the CIT’s injunction on the collection of the tariffs and remanded that finding for further proceedings with respect to the scope of application to just the named plaintiffs as compared to all importers.) As I will discuss further below, however, the White House did not invalidate all orders involving IEEPA-related tariffs.
Second, the president has imposed a new 10 percent tariff on all products from any country in the world, subject to several product-specific carve-outs. This action is noteworthy but not surprising. (Note that on Saturday, the president announced that that rate would be pushed up from 10 percent to 15 percent, but no order has yet been promulgated putting that into effect.)
As I wrote here back in June, the attention to Learning Resources has been overstated with respect to what the tariff landscape will look like going forward. During the first Trump administration, I published a long law review article outlining all the tariff authorities available to the president. These include what I called there “three-digit” statutes: statutes that trade lawyers refer to by their three digits: Section 232 of the Trade Expansion Act of 1962; Section 301 of the Trade Act of 1974; Section 338 of the Tariff Act of 1930; and, Section 122 of the Trade Act of 1974, among others. In the last year, those have gained much greater popularity as it became widely clear that the president was considering these other tools, all of which rely on the president or an agency making a determination about some issue related to U.S. national or economic security. Some of these statutes were used by the first Trump administration (Section 301 and Section 232), and one was deployed on Friday for the first time (Section 122).
Third, the White House announced that it was continuing to suspend duty-free treatment of products under 19 U.S.C. 1321(a)(2)(C) for certain imports. This action clarifies that products worth less than $800 are subject to tariffs – a policy the president instituted in 2025, known as the suspension of those products’ de minimis treatment.
On Sunday evening, Customs and Border Protection announced that it will stop collecting the IEEPA tariffs as of February 24 (Tuesday) at 12am. In addition to uncertainties as to the gap between Friday and Tuesday, there are a lot of elements to work through from the administration’s several actions and announcements.
What is this Section 122 action and is it legal?
The president has imposed the new 10 percent (or perhaps 15 percent) global tariffs under Section 122 of the Trade Act of 1974. Section 122 provides, in part:
Whenever fundamental international payments problems require special import measures to restrict imports—
(1) to deal with large and serious United States balance-of-payments deficits.
(2) to prevent an imminent and significant depreciation of the dollar in foreign exchange markets, or
(3) to cooperate with other countries in correcting an international balance-of-payments disequilibrium,
the President shall proclaim, for a period not exceeding 150 days (unless such period is extended by Act of Congress)—
(A) a temporary import surcharge, not to exceed 15 percent ad valorem, in the form of duties (in addition to those already imposed, if any) on articles imported into the United States.
In Friday’s White House proclamation, the president first discusses his findings based on the advice of his staff regarding “large and serious … deficits” and then imposes this 10 percent tariff in addition to other duties in place, apart from some that he has excepted, until July 24, 2026. This is the first time a president has used this statute to impose tariffs.
So, why did the president use this authority instead of one of the other three-digit statutes? For one, this authority allows him to act without waiting for an agency determination. Sections 232 and 301 require the Commerce Department or the U.S. Trade Representative (USTR), respectively, to act first. For another, we may still see other tariff authorities deployed under still others like Section 338 – and in fact, the president also announced that he was going to use Section 301 shortly as described more below. And in addition, because Section 122 deals with deficits – the source of at least some of the president’s concern – it may seem most appropriate here.
Whether the fundamental international payments problems Section 122 is intended to address are the ones the president is concerned about, or more precisely whether the conditions required by Section 122 are in place, is a question regarding which I expect we will see litigation from importers. Several economists and others have already sought to make the point that the current U.S. economic situation is not the one envisioned by Section 122. If an importer wishes to challenge this new action on that basis, it could bring a case at the CIT. (Separately, there is a conversation afoot among international trade and finance experts as to how these claims by the president about balance-of-payment deficits align with commitments and responsibilities at international organizations such as the International Monetary Fund and World Trade Organization.)
Recall, however, that in the IEEPA case that just finished at the Supreme Court, the CIT in its opinion below already made comments about Section 122. The CIT seemed to suggest that Section 122 was a better vehicle for the administration to use for its concerns about the deficit than IEEPA was. But that was likely dicta and would not bind another CIT judge if the issue were to arise squarely in the future.
There is also a question of how long the president could keep the Section 122 tariffs in place. As noted, the statute limits presidential action to 150 days unless Congress extends that period. But it is not clear whether the president could simply, on day 151, declare the conditions under Section 122 to be in place and to issue a new proclamation imposing tariffs for another 150 days.
There is a further question about whether Section 122 allows the president to impose different tariff rates for different countries. From one reading, the statute suggests the tariff ought to be uniform across all countries, although it allows the president to exempt certain countries entirely. It also contains an exception for certain products, on which the president has already relied to exempt certain products. But does it allow him to impose different rates on the same products from different countries? The administration has not yet suggested it is or plans to do that, but we will see. For variable rates, the administration may instead rely on Section 301 that I turn to next.
What is this Section 301 action and is it legal?
Section 301 provides that if the USTR determines that
(1) an act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts United States commerce, and
(2) action by the United States is appropriate, the Trade Representative shall take all appropriate and feasible action authorized under subsection (c), subject to the specific direction, if any, of the President regarding any such action, and all other appropriate and feasible action within the power of the President that the President may direct the Trade Representative to take under this subsection, to obtain the elimination of that act, policy, or practice. Actions may be taken that are within the power of the President with respect to trade in any goods or services, or with respect to any other area of pertinent relations with the foreign country.
This is a very broad, powerful statute with respect to both the findings and the action it permits, as well as with respect to modifications that can be made over an extended period. It is the statute that is the basis for the many tariffs on products from China from the first Trump administration and other tariffs since then on other countries, or threatened on other countries. There have also been Section 301 investigations in which prior administrations have investigated multiple countries at one time. Consider especially the language in the final sentence of the paragraph above as to the president’s discretion and reach.
The U.S. Trade Representative Jamieson Greer has already indicated the issues that he will study as part of the agency’s Section 301 investigation: they are multiple trade irritants in the U.S. trading relationship with other countries. Most likely, these investigations are teed up and can be completed in short order.
Although many commentators note that Section 301 takes more time to implement than IEEPA does because it requires consultations with the foreign government, notices, and a hearing, the time is not as long as many suggest. Section 301 contains an exception for when expeditious action is required that allows the administration to impose tariffs before such a hearing takes place, for instance, just as it did last year in the context of another Section 301 investigation. We do not have any case law on this point yet to help work through whether and how the administration’s actions may be consistent or not with the statute or the Administrative Procedure Act (APA). But, in short, by one reading, the Section 301 tariffs could be applied in just a few days, especially if the reports are already ready to be issued.
Taken together, it is clear that the president can re-create much of his prior tariff landscape before we even get to March.
Should we expect litigation under these other authorities?
Some commentators have argued that the Court’s decision significantly curtails the president’s “foreign policy” tariff power and that he can no longer threaten tariffs at a whim or, for example, to secure Greenland. Perhaps not so fast. Yes, the decision seems to have removed IEEPA from the immediate peacetime tariff toolkit – or at least the administration has accepted that is the case for the orders imposed last year. But, as noted above, the many other tariff authorities that are available to the president continue to give him the ability to impose tariffs, and quickly. The Court in its decision both commented that the other authorities include constraints on the president and also later acknowledged that the authorities are themselves rather capacious.
So, will we see a lot more litigation? Short answer: yes. There are already several cases underway challenging the administration’s actions under Section 232 and Section 301. The importers have not, however, had much success to date.
This brings me to another point that is critically important to where we go from here. There are two general ways that importers can challenge the three-digit tariff actions that are coming or are already in place. The first is procedurally, and the second is substantively.
Under the procedural path, the importers may not be successful because, where an agency missteps procedurally, the CIT has typically allowed the agency to remedy that problem. See, for example, what happened in the Section 301 China tariffs during the first Trump term. Importers claimed USTR had violated the APA and where the Court agreed, it gave the USTR another opportunity to address comments in the record, and USTR did so. Thus, APA challenges are not impossible to win if the agency does something inconsistent with it, but they are difficult to win. And in the case of Section 122, there is no agency action and the APA does not apply to the president, so there’s no obvious procedural option there.
The substantive path is harder still. As I noted in a webinar on Friday, the effect of the Supreme Court’s ruling in Learning Resources is likely that it will push the forthcoming tariff litigation into the economic security space where litigants will have to challenge the administration’s justifications for its actions: Is there really a balance of payments problem (under Section 122)? Are car imports threatening to impair national security (under Section 232)? Is the Nicaraguan labor situation burdening or restricting U.S. commerce (under Section 301)?
And these are questions on which courts are likely to punt or defer to the executive. They already have. As Tim Meyer and I have written, when it comes to economic security matters, the Federal Circuit has repeatedly deferred to the executive branch and nothing about where we are headed suggests any different.
Where’s my refund?
The big question that everyone seems to be asking is: does this mean someone – anyone? – is getting their money back? Surely if the tariffs have been unlawful all along, the Constitution must require that the government give that money back, they say. Here again, the answer is murkier than perhaps it should be. And one can imagine the administration deploying all sorts of legal arguments to avoid giving any money back given the president’s rhetoric on that issue.
As is widely reported, there are hundreds of cases already filed before the CIT by importers seeking a refund. Those cases will continue to be litigated – and that will take some time. Questions abound: does every importer need to file individually? What about those that have gone out of business? What documentation will be required?
But there are also other ways that refunds could be issued. For example, Customs could create a process to manage refunds that did not require going to court, but again, given the administration’s posture on refunds, that seems unlikely. There are mixed views on just how complicated the refund process could or should be if managed by Customs. The topic came up at oral argument in Learning Resources and Justice Kavanaugh raised it again in his dissent as an aside. But we know that whether you believe the government that it will require considerable documentation and expense to sort, or those who believe it to be rather simple, the fact is that, in some instances, costs associated with refunds have been split, passed on, and traded off, which complicates matters, and it is especially challenging for carriers like UPS and FedEx.
Congress could also intervene and set up a streamlined process for refunds, but again, given Congress’s political balance, that seems unlikely as well.
In sum, there may be a long road ahead for those (importers-of-record) who want their money back.
What happens to the deals?
It has long been my position that the administration would and could claim that the deals are unaffected by the Supreme Court’s decision striking down the president’s IEEPA tariff authority. That appears to also be the USTR’s position. But I’m afraid it is more complicated than that. (And let’s put to one side the questions about the legal status of the deals and their implementation that preceded this moment.)
It is not clear, at the time of writing, what rates are in effect for so-called deal partners: those countries that have negotiated a rate with the United States and for whom that rate has been implemented in U.S. tariff schedule. In other words, if you are importing a widget from Japan, we knew the rate on that widget was likely 15 percent at 9:59am ET on Friday because last year, the president sought to implement an agreement he said he completed with Japan and that order (Executive Order 14345) states that the rate on many products from Japan is 15 percent. We do not know what the rate was after 10:01am ET, and I don’t believe we know with certainty what that rate will be once the new Section 122 tariffs become effective on February 24.
Some commentators are of the view that the effective rates, regardless of the president’s Friday afternoon announcement, for countries with implemented deals are and will continue to be the negotiated rates from the deals. Others think that the negotiated rates are no longer in effect; rather, the new 10 percent (or 15 percent) rate under Section 122 is in effect unless and until the USTR completes its Section 301 investigations and adds additional tariffs. This is really a factual question, although as noted below, if USTR chooses the former approach, there will be questions about how that aligns with the decision in Learning Resources.
In support of the former view is the fact that USTR has consistently said the deals are unaffected by the Court decision, and the fact that the administration’s orders are structured to perpetuate that state of affairs including with exceptions built into them. In his order ending certain tariff actions on Friday, the president did not include in his list the orders that implement the deals. For ease of reference, Mona Paulsen has listed those orders in a blog post over the weekend. The key here is that the (very few) executive orders that we have implementing deals were not invalidated by the White House on Friday.
But how can the administration legally maintain those rates in light of what the Supreme Court has said? As I wrote last June, the administration is likely to argue that it has authority to enter into the deals under IEEPA and that once entered into, the deals give rise to the rates, not IEEPA itself. The USTR also regularly relies on other arguments such as the president’s Article II authority and its organic statute for these sorts of agreements. Despite the weaknesses in those arguments, the administration may advance them in this context as well.
So what does this mean? It depends who you are.
If the U.S. government wants to maintain those rates as they are, then I think it will marshal those arguments to do so.
If an importer is worse off under the negotiated rate than under the new 10 or 15 percent rate, then the importer could bring a lawsuit challenging the administration’s authority to continue to rely on the negotiated deal in the face of the Supreme Court decision. (An embedded question here is whether Section 122 can be superseded by a deal, or vice versa, and there again we might see importers try to bring complaints to the CIT if the Section 122 rate is higher than what was negotiated.)
For foreign governments with implemented deals regardless of rate, the prudent political decision might be to just wait and see rather than re-open negotiations on an arrangement they believe to be durable, even if only lightly so. For those without finalized arrangements, the landscape may have just become more complicated. There are certainly partners who are upset, especially the European Union, about the president’s announcement to move to 15 percent because that exceeds their negotiated rate on certain products. (Several partners had secured a 10 percent rate on many products so that push up to 15 percent threatened by the president on Saturday was concerning. Again, how the Section 122 action aligns with existing deals is a key open question and likely something the administration is still sorting out.) And bear in mind the background fact that other threats in the background regarding U.S. interests related to territory or defense may motivate partners to try to keep this conversation in the trade lane as much as possible.
What other issues remain?
There are many other unanswered questions about the state of the trade world. To name just one: the de minimis regime mentioned above. For instance, under what authority is the president acting to maintain the suspension of that regime? He cites to IEEPA. So, is the president permitted to impose tariffs on these goods? Last summer, he had written into his original order a savings clause of sorts:
If the additional duties imposed under [his IEEPA orders] are held to be invalid, the suspension of, or continued suspension of, duty-free de minimis treatment, as detailed in this order, shall not be affected. Duty-free de minimis treatment would still be suspended, whether pursuant to my authority under 50 U.S.C. 1702(a)(1)(B) to “regulate . . . importation” or my authority under that provision to “nullify” or “void” “exercising any right . . . or privilege with respect to . . . any property,” in the way and to the extent explained in this order, to deal with the emergencies . . .
There is already litigation underway challenging the president’s suspension of the de minimis regime and more layers to the issue than this already long post need deal with at this stage. One would expect that litigation to resume.
– Kathleen Claussen, Published courtesy of Just Security.
