US Supreme Court strikes down IEEPA tariffs — but the tariff battle is not over

In a 6-3 majority decision, the Supreme Court of the United States (SCOTUS) ruled that the International Emergency Economic Powers Act (IEEPA) did not authorise the President to impose tariffs during peacetime ‘national emergencies’, and that IEEPA does not overrule the core concept that, unless otherwise specifically authorised, the power to impose tariffs under IEEPA remains with Congress. There had not been any specific delegation of the IEEPA tariff power by Congress to the President.

The immediate response from President Trump was that the SCOTUS decision was “wrong”, but that he had plenty of other options to impose tariffs (some of which would now be imposed), and that his administration was going to litigate against immediate refunds.

Preliminary issues arising from the decision

The decision does give rise to some preliminary issues.

• Whether the tariff collection provisions of US Customs and Border Protection (USCBP) will immediately stop collection of the IEEPA tariffs, or whether there will be delays implementing technology changes.
• The decision did not address the remedies against the collection of the IEEPA tariffs, in particular how refunds were to be paid. It would appear that ‘importers of record’ would need to bring action against the USCBP, and we assume that those importers will be bringing those actions quickly. Even so, President Trump indicated that this administration would litigate against refunds. Those parties who did not directly pay the IEEPA tariffs (not being ‘importers of record’) but somehow contributed to them (perhaps by a payment to the US importer) will need to find other means to recover their contribution.
• The decision does not affect other provisions allowing the imposition of other tariffs by the President. Existing legislation such as the Trade Expansion Act of 1962 and the Trade Act of 1974 continue to authorise the President to impose tariffs in specified circumstances.
• In theory, tariffs on most Australian goods imported into the US would return to zero (or another lower rate) provided for by the Australia-US Free Trade Agreement. However, immediately after the announcement of the decision, President Trump announced that from 23 February 2026, a new flat tariff would be imposed under Section 122 of Balance of Payments (Trade Act of 1974) on all imported goods. That provision allows the President to impose temporary tariffs up to 15% (and for up to 150 days) to address trade imbalances. At last report, the proposal was for a 15% tariff on imports from anywhere, representing a 5% increase for Australian exports. Of course, there could be challenges to the validity of the imposition of these tariffs.
• The decision does not invalidate existing tariffs under Section 232 of the National Security (Trade Expansion Act, 1962) and under Section 301 of the Unfair Trade Practices (Trade Act of 1974). The Section 232 tariffs already include ‘sectoral tariffs’ imposed on such exports as aluminium and steel, which adversely affect Australian exporters already. There is also a proposal for higher tariffs on imports of machinery, which could also affect Australian exports. President Trump has affirmed existing measures and the proposal to initiate other investigations which could lead to more tariffs.
• The decision casts doubts on the various ‘trade agreements’ entered by the US with other countries based on reductions in the IEEPA tariffs for imports of goods from those other countries. Will those agreements now be voided, or will other arrangements come into effect?
• The SCOTUS ruled that the United States Court of International Trade was the proper court to determine disputes on tariffs in this instance and it will probably become the court in which disputes over refunds of IEEPA tariffs will be resolved.

The decision should best be treated as being confined to a ruling on the constitutional validity of the IEEPA tariffs. The immediate responses by President Trump indicate that tariffs will continue to be fundamental to his policy agenda.

Consequences still unfolding

It is far too early to draw any clear consequences from the SCOTUS decision. For example, we do not know how other countries that had imposed retaliatory tariffs on US goods based on the IEEPA tariffs will respond with those tariffs they had imposed. However, it is important for Australian exporters whose goods were subject to the imposition of IEEPA tariffs on entry to the US to seek expert advice from our US colleagues on what steps can be taken for those tariffs to be recovered. Otherwise, the only certainty is that uncertainty in the trade world continues, and no prospect of resolution of that uncertainty exists in the foreseeable future.

Contact us

If you would like more information about the SCOTUS decision, or require our assistance in obtaining advice from our US colleagues on what steps can be taken to recover the IEEPA tariffs, please contact a member of our Customs & Trade team.