On November 5, 2025, the Supreme Court heard oral arguments in Learning Resources v. Trump, the consolidated legal challenge to President Trump's use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs. A decision expected in 2026 could fundamentally reshape presidential trade authority and potentially invalidate tariffs affecting hundreds of billions of dollars in imports.

The Legal Challenge

The case consolidates multiple challenges to tariffs imposed under IEEPA authority beginning in February 2025. Learning Resources, an educational toy company, leads a coalition of importers arguing that IEEPA was never intended to grant presidents the power to impose tariffs as a trade policy tool.

The challengers argue that IEEPA, enacted in 1977, was designed to allow presidents to respond to genuine national emergencies through measures like asset freezes and transaction prohibitions—not to bypass Congress's constitutional authority over trade policy.

Lower Court Rulings

The case reaches the Supreme Court after a dramatic lower court ruling. On May 28, 2025, the Court of International Trade declared the executive orders implementing both the fentanyl tariffs on Canada, China, and Mexico and the reciprocal tariffs invalid as contrary to law. The court permanently enjoined each of the relevant executive orders.

The Court of Appeals for the Federal Circuit heard the government's appeal on August 29, 2025. The appeals court stayed portions of the injunction pending Supreme Court review, allowing many tariffs to remain in effect while the case proceeded.

The Administration's Defense

The Trump administration argues that IEEPA grants broad authority to "regulate" commerce with foreign nations during declared emergencies. The administration points to the text of the statute, which authorizes the president to "regulate, direct and compel, nullify, void, prevent or prohibit" various transactions.

The government contends that tariffs are a form of "regulating" imports and that courts have historically deferred to executive determinations about the existence of national emergencies. The administration also argues that the fentanyl crisis and persistent trade deficits constitute genuine emergencies.

Potential Outcomes

The Court's decision could take several forms, each with different implications for trade policy:

Uphold IEEPA tariff authority: If the Court rules for the administration, it would confirm that presidents have broad power to impose tariffs during declared emergencies. This would validate the current tariff structure and potentially encourage future administrations to use IEEPA for trade policy.

Strike down IEEPA tariffs: If the Court rules that IEEPA does not authorize tariffs, all tariffs imposed under this authority since February 2025 could be invalidated. Importers who paid these duties might be entitled to refunds totaling potentially hundreds of billions of dollars.

Narrow ruling: The Court might rule that IEEPA allows some emergency tariffs but not the broad, permanent tariffs Trump has imposed. This could require the administration to re-justify tariffs under other authorities or seek congressional approval.

Business Implications

The uncertainty surrounding the case has significant implications for businesses. Companies have already adjusted supply chains and pricing based on current tariff levels. A sudden invalidation could create its own disruptions, even if ultimately beneficial for importers.

Many businesses have filed protective claims to preserve their rights to refunds should the tariffs be struck down. Trade lawyers recommend that importers continue to document tariff payments and maintain detailed records of entries affected by IEEPA tariffs.

Historical Context

The case represents the most significant challenge to presidential trade authority since the early 20th century. While presidents have long exercised delegated tariff authority under statutes like Section 232 (national security) and Section 301 (unfair trade practices), IEEPA has never been used for systematic tariff policy before 2025.

The outcome could affect not only Trump's tariffs but also set precedent for how future presidents can respond to economic emergencies. Legal scholars are watching closely for signals about the Court's approach to executive power and congressional delegation.