WASHINGTON — The Supreme Court is preparing to issue what legal scholars are calling the most significant separation-of-powers ruling since the steel seizure case of 1952. At issue: whether the International Emergency Economic Powers Act, a statute signed in 1977 and never before used for tariffs, gives the president authority to impose sweeping duties on imported goods from countries around the world.
The case, Learning Resources, Inc. v. Trump (consolidated with Trump v. V.O.S. Selections, Inc.), was argued over three hours on November 5, 2025. As of mid-February 2026, 103 days have passed without a decision, significantly exceeding the historical average for expedited cases. The next scheduled bench session is February 20, and the ruling is expected no later than the end of the Court’s term in June.
The financial stakes are staggering. IEEPA-based tariffs have generated $133.5 billion in revenue through mid-December 2025, accounting for 60% of all duties collected that year. Tariff revenue has soared more than 300% since the tariffs took effect. If the Court strikes them down, that entire sum could be subject to refund, affecting more than 34 million entries of goods and over 300,000 importers.
President Jimmy Carter signed IEEPA into law on December 28, 1977. Congress enacted it to rein in executive emergency authority after committee investigations revealed the United States had been in a continuous state of emergency for over 40 years under the predecessor statute, the Trading with the Enemy Act of 1917. Congress passed the National Emergencies Act in 1976 and IEEPA in 1977 to impose new constraints.
IEEPA permits the president to declare a national emergency in response to threats originating outside the United States and then to “investigate, block, regulate, direct and compel, nullify, void, prevent, or prohibit” various economic transactions. The statute does not mention tariffs, duties, taxes, or revenue-raising. Since 1977, presidents have invoked IEEPA 77 times, exclusively for asset freezes, sanctions, and trade embargoes against hostile foreign actors such as Iran, North Korea, and designated terrorist organizations.
No president used IEEPA to impose tariffs until February 2025, when President Trump announced duties on Canada, Mexico, and China, citing national emergencies related to fentanyl trafficking and illegal immigration. On April 2, 2025, he announced additional “Liberation Day” reciprocal tariffs under the same authority: a 10% global baseline plus country-specific rates reaching up to 50%.
The lead plaintiff, Learning Resources, Inc., is an Illinois-based educational toy manufacturer founded in 1984 by the Woldenberg family. CEO Rick Woldenberg, a third-generation family member, filed suit alongside sister company hand2mind, Inc., which supplies materials for Montessori and K-12 schools. The companies employ approximately 500 people in the United States. Additional parties include V.O.S. Selections, Inc., a wine importer, and multiple U.S. states including Oregon.
The case moved rapidly through the courts. The U.S. Court of International Trade ruled the tariffs unconstitutional in May 2025, holding that IEEPA does not authorize tariffs. The U.S. Court of Appeals for the Federal Circuit affirmed on August 29, 2025, ruling per curiam that President Trump exceeded his authority and that establishing tariffs is a power controlled only by Congress.
Article I, Section 8 of the Constitution states that “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises.” The Framers regarded this authority as “the most important of the authorities” held by the federal government. The case asks two questions: does IEEPA’s language authorizing the president to “regulate” importation include the power to impose tariffs, and if so, is that delegation of taxing power constitutional?
Challengers argue the answer to both is no. The Federal Circuit emphasized that Congress deliberately excluded tariff-specific language from IEEPA. Every genuine tariff delegation in federal law uses explicit terms such as “tariff,” “duty,” or “tax.” IEEPA contains none of them. After President Nixon imposed a 10% import surcharge in 1971, Congress responded by enacting Section 122 of the Trade Act of 1974, which granted narrow, time-limited tariff authority capped at 15% for 150 days, rather than expanding emergency powers.
The government counters that “regulate” is broad enough to include tariffs, citing United States v. Yoshida International, Inc. (1975), which held that the predecessor statute’s similar language included tariff authority. The government also invoked the “donut hole” argument: if IEEPA permits complete trade embargoes against Iran and North Korea, it would be illogical to exclude the lesser power to impose tariffs.
Oregon Solicitor General Benjamin Gutman offered a pointed rebuttal: embargoes block transactions entirely, while tariffs generate revenue and function as taxes. “It’s a different kind of pastry,” Gutman told the Court.
A majority of justices expressed skepticism toward the government’s position during the November 5 argument, according to SCOTUSblog. The skeptics crossed ideological lines.
Chief Justice Roberts suggested that authorizing one person to “impose tariffs on any product from any country in any amount” constitutes a “major question” requiring explicit congressional authorization under West Virginia v. EPA (2022). Justice Gorsuch, a Trump appointee, warned against “a one-way ratchet toward gradual but continual accretion of power in the executive branch,” adding: “The power to reach into the pockets of the American people is just different,” according to Lawfare. Justice Barrett, also a Trump appointee, pressed for a single example where “regulate importation” has been used to impose tariffs and raised nondelegation concerns.
Justice Kagan highlighted that Congress deliberately removed powers from the Trading with the Enemy Act when drafting IEEPA. Justice Sotomayor emphasized the constitutional requirement that taxation pass both chambers. Justice Jackson questioned why “regulate” should be read broadly when Congress supplied specific terms like “investigate, block, direct and compel.”
Justice Alito appeared sympathetic to the administration’s position, according to SCOTUSblog. Justice Kavanaugh appeared sympathetic to the government’s argument but also questioned the scope of the claimed power. Justice Thomas explored the boundaries of the challengers’ position through hypotheticals.
A ruling against the government would drop the average statutory tariff rate from 16.1% to 10.4%, according to J.P. Morgan Asset Management. More than 1,000 companies have already filed refund claims, and the Court of International Trade issued an administrative order in December staying all complaints pending the Supreme Court’s decision. The Tax Policy Center estimates a ruling would save the average household approximately $1,200 in 2026 and reduce taxes by $1.4 trillion over 10 years.
The practical impact, however, may be smaller than those figures suggest. The administration is expected to reimpose tariffs quickly under alternative authorities, most likely Section 122 of the Trade Act of 1974 (up to 15% for 150 days). Other options include Section 301 (targeting specific countries) and Section 232 (national security tariffs requiring a 270-day Commerce Department investigation). J.P. Morgan expects “probably very little impact on overall tariffs” due to swift replacement measures, though it notes “a relief rally is possible.”
U.S. Trade Representative Jamieson Greer told CNBC the Court is taking its time given the “enormous” stakes.
The administration argues that IEEPA has been used by presidents of both parties for nearly five decades, and that foreign policy emergencies are properly delegated to executive authority. Solicitor General Sauer contended that IEEPA provides sufficient boundaries through its emergency declaration requirement and congressional reporting provisions, and that Congress can reclaim delegated power through joint resolution, as it did with the 2023 coronavirus emergency termination. Supporters note the tariffs have generated an estimated $1.8 trillion in projected 10-year revenue and serve as a key tool for pressuring China on trade practices, fentanyl trafficking, and other national security concerns.
The ruling will set a precedent for the scope of presidential emergency powers across all policy domains. Neal Katyal, arguing for the challengers, warned the Court: “We will never get this power back if the government wins this case.” Justice Barrett noted that Congress would need a veto-proof supermajority to override presidential tariffs, effectively making the delegation irrevocable.
The Brennan Center for Justice, an organization that describes itself as “an independent, nonpartisan law and policy organization,” argued in an amicus brief that both IEEPA and the National Emergencies Act were enacted specifically to rein in presidential emergency powers, not expand them.
The Senate weighed in on October 30, 2025, passing a 51-47 resolution opposing the global reciprocal tariffs. Republican Sens. McConnell, Paul, Collins, and Murkowski joined Democrats, signaling bipartisan concern. The National Constitution Center has compared the case to the biggest separation-of-powers controversy since Youngstown Sheet & Tube Co. v. Sawyer (1952), when the Court struck down President Truman’s seizure of steel mills during the Korean War.
Small and medium-sized businesses have borne a disproportionate share of the burden. The tariffs have been described as “sucking the life out of” small businesses because of the instability they create in supply chain planning, according to CNBC. Global ocean container volumes to the United States have fallen 14% year-over-year, and U.S. imports from China dropped 28% in 2025, according to shipping industry data.
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