The administration shifted from IEEPA-based tariffs to older trade statutes after a Supreme Court ruling, imposing new duties, facing large refund exposure, and prompting legal and congressional questions about who gets to set trade policy.
The Supreme Court in Learning Resources, Inc. v. Trump held 6-3 that the International Emergency Economic Powers Act does not authorize presidents to levy import duties. The justices reasoned that the power to set import tariffs belongs to Congress, noting that IEEPA, a 1977 law meant for freezing assets in emergencies, never mentions import duties. Chief Justice Roberts led the majority, which included both liberal and conservative justices.
The administration reacted fast rather than accept a reduced trade posture. It imposed a 10% global surcharge under Section 122 of the Trade Act of 1974 and then pivoted to older trade statutes that predate most living Americans. That legal shift is unmistakable: the White House moved from emergency authority to trade-specific provisions.
One striking move used Section 338 of the Tariff Act of 1930 to hit certain Canadian goods with 50% duties, the ceiling the law allows when a foreign country is said to disadvantage American commerce. The measures singled out items like wine, hockey sticks, and cement while exempting energy products, potash, critical minerals, and goods already covered by national security tariffs. Legal experts note Section 338 is rarely deployed in modern practice, which makes this a bold, old-school choice.
Against Brazil the administration relied on Section 301 of the Trade Act of 1974, which targets unreasonable trade practices after investigations and findings. The Office of the U.S. Trade Representative held public hearings and consulted Brazilian officials before imposing 25% tariffs on many imports. That process shows a clear procedural contrast with the emergency-based approach the Court rejected.
Officials are pursuing Section 301 probes into roughly 60 economies over alleged forced-labor concerns and are weighing similar Section 338 or Section 301 steps against additional countries. Section 232, the national security tariff authority, remains available and untouched by the Supreme Court ruling. The result is a patchwork of legal authorities being used to preserve trade leverage.
The Court’s decision also created a massive financial exposure for the government. Federal authorities collected more than $130 billion in now-unconstitutional tariffs through mid-December, and some estimates put total refund exposure as high as $175 billion. A federal trade court ordered that importers of record are entitled to refunds and instructed U.S. Customs to stop collecting the struck-down duties.
President Trump described the court-ordered refunds as “a travesty” and “an unnecessary and expensive slap in the face,” arguing the payouts reward foreign interests that profited from past policy. The administration has explored legal tactics to slow refund payments, but appellate efforts have so far faced rejections. Litigation and delay strategies are part of a larger contest about who pays the bill and how fast.
Roughly 3,000 refund lawsuits are pending before the Court of International Trade, assigned to the same three judges who considered the IEEPA challenge. The administration may seek venue changes or individual litigation tactics to slow disbursements. Those procedural fights will shape how quickly money moves and who ultimately bears the cost of the policy shift.
More than 330,000 businesses could recoup duties through a new Customs and Border Protection portal, but ordinary consumers who saw higher prices on store shelves are unlikely to get refunds. The payouts go to importers of record—the companies that paid duties—not the households that absorbed higher costs. That disparity highlights how trade policy often benefits firms on paper while leaving shoppers out of the fix.
“Congress is the one who made the mess out of all of this.”
Rep. Chip Roy argues the fault lies with Congress for drafting vague statutes that invite executive overreach and then complaining when presidents use that authority. He told reporters the Court’s ruling complicates the administration’s trade agenda but also noted other authorities remain available, urging lawmakers to rewrite the rules rather than leave the White House improvising with 1930s-era laws.
“Congress needs to clean it up. And the court here, I don’t think, did us any favors. I think they made it worse.”
Observers on the right emphasize the administration’s resourcefulness. “Trump’s attempts to shoehorn his tariffs under different sections of trade law are unprecedented in the modern era,” one analyst said, capturing both the novelty and controversy of the approach. The average effective tariff rate has climbed to 11.8%, the highest since the early 1940s, which shows the strategy is producing measurable effects.
The legal road ahead is uncertain: Section 338, Section 301, and Section 232 each carry procedural requirements and vulnerabilities that invite judicial review. Section 301 in particular demands formal investigations, public hearings, and findings before duties can be applied, and scaling that process across dozens of economies raises questions about procedural shortcuts. Congress has shown little appetite for tariff-specific reform so far, leaving courts and the executive branch to sort out the balance of power.
When lawmakers refuse to write clear, modern trade statutes, the executive will read every available clause and the courts will end up shaping policy by default. That dynamic explains why the administration has dug into decades-old code to keep leverage on trade while the refund battles, lawsuits, and political fights continue.
