The Supreme Court ruled Friday in a landmark 6-3 decision against President Trump's sweeping imposition of tariffs under emergency authority, with Chief Justice John Roberts citing Congress's authority to levy taxes and tariffs.
The case involves Trump's use of the International Emergency Economic Powers Act of 1977 as a way to justify his authority to impose tariffs to curb the flow of illegal drugs from other countries. Roberts pointed out that the Constitution specifies, "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises."
"The Framers recognized the unique importance of this taxing power—a power which 'very clear[ly]' includes the power to impose tariffs," he
The Trump administration conceded that the president enjoys no inherent authority to impose tariffs during peacetime and instead relied exclusively on IEEPA to defend the challenged tariffs, he pointed out, "reading the words 'regulate' and 'importation' to effect a sweeping delegation of Congress's power to set tariff policy—authorizing the President to impose tariffs of unlimited amount and duration, on any product from any country."
"While taxes may accomplish regulatory ends, it does not follow that the power to regulate includes the power to tax as a means of regulation," Roberts wrote. "Indeed, when Congress addresses both the power to regulate and the power to tax, it does so separately and expressly. That it did not do so here is strong evidence that 'regulate' in IEEPA does not include taxation."
Trump has threatened to instead use other statutes to justify his tariffs if they were struck down by the Supreme Court. Two of Trump's own appointees, Justices Neil Gorsuch and Amy Coney Barrett, joined Roberts and the court's three liberals in the decision, as
Refund mess
Kavanaugh pointed out in a dissenting opinion that refunding the money already paid for tariffs could be messy.
"In the meantime, however, the interim effects of the Court's decision could be substantial," Kavanaugh wrote. "The United States may be required to refund billions of dollars to importers who paid the IEEPA tariffs, even though some importers may have already passed on costs to consumers or others. As was acknowledged at oral argument, the refund process is likely to be a 'mess.'"
"IEEPA does not authorize the President to impose tariffs," said Michael Cornett, managing director with the Washington national tax office at Forvis Mazars, a Top 10 Firm. "Tariffs are taxes and unless explicitly delegated to the President, power remains with Congress."
He noted that Roberts' majority opinion is silent on the issue of refunds and the process, but Kavanaugh's dissenting opinion acknowledges it will be a mess and cause substantial economic disruption
"Refunds will depend on current procedures under customs laws, [the] process developed by the government to handle, and most likely further litigation," said Cornett in an email.
The Tax Foundation, in an
Cornett acknowledged that tariffs are not going away, just the ones under IEEPA, and companies will need to work with their accountants on how to deal with them. "Thus, accountants will still need to address tariffs as part of their tax planning strategies," he added. "The issue of refunds was not addressed by the Court. Thus, they may need to work with clients to quantify and document any claims for refunds working with other advisors to a client."
The refund process will be a thorny matter. "Even with today's SCOTUS decision out, the story may not be over — a ruling is not necessarily resolution," said Andrew Siciliano, partner and US and global practice leader, trade and customs, tax, at the Big Four firm KPMG LLP, in an email. "Open questions also remain, such as how the refund process will work now and how refunds will be issued. CFOs should anticipate ongoing change and prioritize near-term investments in data and AI, as well as long-term strategies for resilience like nearshoring, reshoring and supplier diversification. Staying nimble and ready to adapt will be essential as the trade and tariff landscape continues to evolve."
Individual taxpayers and consumers probably won't be able to claim refunds, according to Tony Gulotta, principal and national tax practice leader at the global tax services firm Ryan.
"Technically only the Importer of Record is entitled to a refund, since they paid the tariff and there is a prohibition from assigning those rights," Gulotta said in an email. "As a practical matter, many IORs entered into contracts, including tariff-sharing agreements, that would allow the purchaser to obtain (share in) a refund from the IOR, once the IOR receives it from Customs and Border Protection. There are also a number of vendors that I have talked to that line-itemed the tariff, that are considering refunding the amount line itemed to their consumers. For larger purchases (machinery and equipment), that may be practical, but for smaller purchases, I believe there will be issues. We may also see class actions against larger retailers that priced in tariffs, since they would receive a windfall if they received the refund but never made the consumer whole."
The importer of record has three options for claiming a refund. "When an IOR imports, they are required to do an entry report to the CBP and pay the tariff," said Gulotta. "The CBP, after reviewing the entry for accuracy, 'liquidates' (finalizes) the entry. This usually takes 314 days. After an entry is liquidated, an IOR has 180 days to protest the CBP's decision (if, for example, the CBP adjusts the entry and says they owe more money). If they don't like the response, they can then file an appeal with the United States Court of International Trade. If a Supreme Court decision is made before an entry liquidates, an importer of record could file a post summary correction that removes the IEEPA tariff. Based on a normal liquidation period and the fact that IEEPA tariffs started on Feb. 1, 2025, the liquidations began in December."
More than 1,000 companies are already suing the Trump administration seeking refunds i anticipation of the Supreme Court decision, according to
Gulotta recommends filing a claim with the U.S. Court of International Trade. "There are also some indications that CBP is accelerating some of the liquidations, which would further complicate timelines," he added. "The most conservative course of action is to file a claim with the CIT now. An IOR has two years from the date of import to file a claim with the CIT. Now that a Supreme Court decision has been rendered, it is also possible that the CBP provides another option for recovery.'
Importers of record will need to provide the documentation required by Customs and Border Protection to get a refund, he noted. "At a minimum we would expect the requirement to provide entry records (CBP Form 3461) that establishes how much in IEEPA tariffs were paid," said Gulotta. "IOR should have received copies of these from their brokers when they imported the items, but they can also be obtained from the CBP."
With the IEEPA tariffs now ruled unconstitutional, he anticipates the Trump administration could instead impose a similar tariff of 15% on countries with a trade deficit for 150 days under Section 122 of the Trade Act of 1974. "At this point it appears the IEEPA tariffs collected exceed $100 billion and are growing every day," said Gulotta. "The amount paid by an individual IOR depends on what they purchased and what the country of origin was. A daunting task to review."
