Can Congress really hand the president the power to tax?

Update: On Feb. 20, the U.S. Supreme Court issued its decision in the tariff cases argued last November. The Court found that IEEPA does not authorize the President to impose tariffs, and its opinion bases that decision in statutory interpretation of the text. We are reviewing the text for direct implications for refund of tariffs paid and will share further details as soon as possible. Justice Kavanaugh flags in his dissent that the Court's decision may require the government to refund billions of dollars to importers who paid the IEEPA tariffs, noting the challenges associated with issuing refunds. We believe CBP would be authorized to issue refunds directly under typical PSC/protest procedures, but it remains to be seen how this issue will be addressed.

On Nov. 5, 2025, the Supreme Court heard oral arguments on the legality of two separate challenges to the president's use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs in the consolidated cases of Trump v. V.O.S. Selections (No. 25-250) and Learning Resources v. Trump (No. 24-1287). The main legal issue in the case is the statutory interpretation of IEEPA; specifically, whether IEEPA allows the president to impose tariffs. However, two underlying legal doctrines--the Nondelegation Doctrine (NDD) and the Major Questions Doctrine (MQD)--seemed top of mind for the swing justices upon whose votes the case will likely be decided.

During the oral arguments, the justices first pressed the Solicitor General on the absence of any specific statutory language in IEEPA that authorizes the president to impose tariffs. IEEPA states that the president can "by means of instructions, licenses, or otherwise" regulate or prohibit importation but IEEPA does not explicitly allow for or use the terms "tariffs," "duties" or "taxes." Thus, several justices questioned whether the word "regulate, as used in IEEPA, is broad enough to give the president the power to impose taxes. Justices Gorsuch and Barrett dangled whether the tariffs imposed by President Trump could be recharacterized as licenses, which are explicitly permitted under IEEPA, but both appeared to look askance at this textualist proposition, leaving open whether Congress is even permitted to delegate its core power to taxation to the president regardless of what the statute says--which goes to the heart of the NDD and MQD.

Several justices from both ideological wings questioned whether Trump's use of IEEPA to implement tariffs was a form of taxation that impeded on the NDD. Specifically, Justices Sotomayor and Barrett and Chief Justice Roberts highlighted the revenue-generating function of tariffs and compared it to imposing taxes, a power that is reserved for Congress under Article I, Section 8 of the U.S. Constitution. Thus, three sub-issues arose from this line of questioning. First, whether Congress improperly delegated an inherent constitutional power to the executive in violation of the NDD. Second, even if tariff delegation is allowed, Congress's delegation in IEEPA was too broad and unconditional in violation of the MQD. Third, relatedly, whether the revenue-generating function of tariffs is considered a minor by-product of using tariffs as a regulatory tool, like a standard cost-recovery fee, or if it is fundamental to the use of tariffs, like a sales tax.

Based on the ideological leanings of the justices and the questions they asked during oral arguments, it seems likely that Justices Thomas and Alito will find the tariffs lawful, and Justices Sotomayor, Kagan and Jackson will find the tariffs unlawful. Therefore, the majority decision will come down to perception of the swing justices--Justice Barrett, Gorsuch, Kavanaugh and Chief Justice Roberts. All four swing justices seemed concerned with the carte blanche delegation of the power to impose tariffs that IEEPA appears to provide the president, albeit for slightly different reasons. Interestingly, the swing justices' healthy skepticism was on full display a few weeks later during oral argument in a different and unrelated case, Trump v. Slaughter (No. 25-332), involving the president's ability to remove members of independent government agencies, when Justice Barrett questioned whether Congress would knowingly hand over unchecked tariff authority and Justice Kavanaugh harkened back to his MQD roots on whether Congress even has the power to do so if it wants to.

These comments suggest a real possibility that the IEEPA tariffs will be struck down, at least in part. The financial implications of the outcome of this case involve billions of dollars for importers--a nonpartisan research initiative found the U.S. government has collected $259 billion in tariff revenue, through Dec. 5, 2025. Consequently, financial institutions have been using predatory practices to provide loans to importers struggling to stay afloat in return for a piece of any refunds such importers receive from US Customers and Border Protection (CBP) if the tariffs are struck down. Some enterprising law firms have convinced desperate importers to file costly lawsuits seeking to prevent the entries in which IEEPA tariffs were paid from being liquidated (finalized).

However, the more prudent course of action is for importers to use traditional administrative processes to recover the tariffs. If the Court invalidates the IEEPA tariffs, the process of seeking refunds depends on the liquidation status of each entry. For unliquidated (open) entries, importers should submit post-summary corrections (PSCs) to remove IEEPA tariffs. If accepted, the PSC process can result in expedited refunds. For liquidated (closed) entries, or entries in which CBP has denied PSCs, importers should file protests challenging IEEPA tariffs no later than 180 days after liquidation. The US Court of International Trade's (CIT) recent decision denying the plaintiffs' preliminary injunction motion to suspend liquidation in AGS Company Automotive Solutions (Consolidated Court No. 25-225) bolsters the proposition that protests remain the main method for recovering deposited duties if the Supreme Court strikes down the IEEPA tariffs. If CBP denies a protest, importers must file a summons in the CIT no later than 180 days after protest denial. Despite the recent rash of trendy, creative lawsuits, as with Occam's Razor, importers should stick to the basics in seeking refunds.