The United States Supreme Court on November 5 heard oral arguments in the case of  V.O.S. Selections Inc. v. United States, concerning the question of whether the President may lawfully use the International Emergency Economic Powers Act (IEEPA) to impose tariffs on imported goods. It was one of the most-watched arguments before the high Court in several years.

A coalition of small businesses, joined by the Attorneys General of twelve (12) states, brought suit to challenge the President’s authority to impose tariffs under claimed authority of IEEPA. These include the President’s so-called “fentanyl/immigration” tariffs imposed on products of Canada, Mexico and China, as well as the “reciprocal” tariffs imposed against most other countries. The  administration has to date collected about $100 billion in such tariffs, which importers likely stand to recover if the charges are ruled unconstitutional or unlawful.

The case moved to the Supreme Court with incredible speed. The V.O.S. Selections plaintiff brought suit in the United States Court of International Trade on April 14, 2025 and a toy company, Learning Resources Inc., brought a parallel challenge in the United States District Court for the District of Columbia about the same time. The CIT quickly assigned the case to a three-judge panel, which ruled unanimously on May 28, 2025, that the President lacked power to impose the tariffs under IEEPA. That decision was appealed to the Court of Appeals for the Federal Circuit (CAFC), which assigned the case immediately to its en banc panel (all 11 active judges hearing the case) and heard on an accelerated basis. The Learning Resources case moved through the D.C. District Courts with similar alacrity.

On September 2, 2025, the Federal Circuit ruled, by a 7-4 margin, that the President lacked the power to impose tariffs using IEEPA. Four judges wrote a powerful dissent, arguing that the President’s authority to declare a national emergency was not readily reviewable by courts and that IEEPA’s grant to the President of authority to “regulate” imports included the power to tax them.

The Supreme Court quickly granted certiorari in both cases, V.O.S. and Learning Resources, and set an expedited briefing schedule, which led to the November 5 arguments.

So anxious was the Supreme Court to address the question of the President’s powers under IEEPA that a number of procedural niceties were brushed out of the way. For example, it is likely that the CIT or the District Court – but not both – has jurisdiction over a challenge to these tariffs. It seems admitted that President Trump is not a proper defendant in counts arising under the Administrative Procedure Act; and that not all of the State plaintiffs have standing to sue. But those issues have been brushed aside for later, in the interest of deciding the President’s authority to impose the IEEPA tariffs.

A Rough Morning for the Solicitor General

After the Federal Circuit’s 7-4 decision, most observers felt that there was a 50/50 chance the Supreme Court would uphold the President’s power to set the IEEPA tariffs. But Solicitor General John Sauer, representing the government in the argument, ran into extensive skepticism among the Justices regarding the President’s extensive claim to tariff-setting powers under IEEPA.

Several Justices noted that the power to lay taxes and tariffs was assigned to the Legislative Branch under Article I of the Constitution, and were hostile to the argument that the President had “inherent” tariff-setting powers under Article II of that document.

Even more Justices expressed skepticism that the President’s power under IEEPA to “regulate imports” included the power to impose tariffs. They noted that IEEPA nowhere mentioned tariffs nor the power to impose them. Many also noted that the tariffs raised did not “regulate”, but seemed purely intended to raise revenue, unlike a quota or licensing scheme.  They appeared tailored not to respond to a “national emergency” but instead were meant to set a tariff “policy” for the long term.

Justice Gorsuch, in particular, questioned the President’s claim to have been delegated sweeping Congressional authority, without such a delegation expressly appearing in the text of IEEPA. He questioned whether Congress might delegate its power to declare war, or power to legislate entirely. If such a delegation occurred, it would be the rare President who would return those powers to Congress, absent a veto-proof Congressional supermajority.

A Prophecy from 1975

Much of the discussion focused on a 1975 appellate court decision, United States v. Yoshida International, which, the United States contends, provides the basis for the assessment of tariffs under IEEPA. In 1971, facing a balance of payments crisis – dollars were convertible for gold, and foreign governments held currency worth far more than the United States’ gold reserves – President Nixon made two startling announcements in a Sunday evening address to the country. First, he was suspending the free convertibility of dollars for gold, and (2) he was imposing a 10% “tariff surcharge” on certain goods to pressure the US’s trading partners – mainly Japan and Germany – to revalue their currency.

The currency question was resolved in 4 months with adoption of the Smithsonian Agreement, and Nixon withdrew the tariff surcharge. But importers, questioning the President’s authority to impose the tariff surcharge, sued for refunds of the assessments. The President had never said what law authorized him to impose the surcharge. As a litigation position, the government offered three sources of authority; the Tariff Act of 1930, the Trade Expansion Act of 1962, and the Trading With the Enemy Act (TWEA). The United States Customs Court rejected them all. On appeal, the US Court of Customs and Patent Appeals rejected the Tariff Act and Trade Expansion Act as authorities, but paused on the TWEA. The court narrowly held that the TWEA could be read to support Nixon’s actions, but only because they were limited in time, limited in scope (only dutiable articles were affected, duty-free goods were not) and the surcharges honored the statutory tariff rates which Congress had prescribed. Had Nixon gone further, the Court indicated, it would not have supported his actions.

Indeed, the CCPA noted that the limited tariff-setting authority which it was upholding could be a danger in the hands of “a rampant, unscrupulous President who would declare an emergency where none exists”.

How did Congress react to Nixon’s surcharges? Not well. In 1977, it replaced TWEA with the International Emergency Economic Powers Act (IEEPA), which sought to reduce the President’s emergency powers. It also created a new remedy, Section 122 of the Trade Act of 1974, which allowed the President to address “balance of payments issues” by imposing a tariff of no more than 15%, and for no more than 150 days.

Section 122 has never been used. Justice Samuel Alito, normally an Administration ally, noted at argument that Section 122 appeared to be the only power granted to the President by Congress to treat deficit “emergencies”.

Ultimately, the Justices seemed disturbed by the sheer breadth of the President’s attempted usurpation of Congress’ power to impose taxes. The IEEPA measures have blown far past what the appeals courts sustained in the Yoshida case, and effectively constitute a total usurpation of Congress’ tariffing and taxing powers.

Will Importers Receive Refunds of IEEPA Tariffs?

The Supreme Court has now taken the case under advisement, and speculation on when their decision will issue is rampant. The Court could wait until the end of its term in June 2026,but given the speed with which the case advanced, it seems more likely that a decision will come down at the end of this year or in early 2026.

If the IEEPA tariffs are struck down, one issue raised at argument was whether and how importers would receive refunds of taxes unlawfully assessed. Justice Amy Comey Barrett speculated that the refund process would be “a mess”, but Neil Katyal, attorney for the private parties, noted that Section 514 of the Tariff Act provided a mechanism for protest refunds. And he also noted that decades ago, when the Supreme Court struck down the Harbor Maintenance Tax imposed on exports, the many affected exporters ultimately received refunds.

No court is likely to direct the government to voluntarily refund IEEPA tariffs already collected. It is certain that any importer wishing to receive a refund will need to use Section 514 to file protests against assessments of these taxes. In this regard, it is important to note that importers have only 180 days after “liquidation” of an entry to file a protest. Most entries liquidate about 11 months before goods enter, so there should be a tsunami of IEEPA liquidations early in 2026. But some entries liquidated earlier than 11 months, so importers should check the status of their liquidations and be prepared to file protests. It is not necessary to await the Supreme Court’s decision to do this.

For more information on protecting your firm’s right to refunds of IEEPA tariffs – over $100 billion could be at stake – contact a Neville Peterson professional.