The International Emergency Economic Powers Act (IEEPA) is a U.S. federal law enacted in 1977 that gives the president broad authority to regulate international economic transactions after declaring a national emergency involving unusual and extraordinary threats originating outside the United States. Under IEEPA, a president can block financial transactions, freeze assets, and regulate imports or exports during a declared emergency.

IEEPA was originally designed to replace and limit earlier emergency powers such as those under the Trading with the Enemy Act of 1917 (TWEA), which had been used during war and peacetime. By tying emergency powers to the National Emergencies Act, IEEPA aimed to balance presidential flexibility with legislative oversight.

Historically, Presidents have invoked IEEPA primarily to impose economic sanctions, freeze assets, and block financial transactions related to national security threats such as terrorism or rogue states. For example, after the terror attacks of September 11, 2001, the law was used to impose financial sanctions on foreign terrorist organizations.

Supreme Court Rules IEEPA Does Not Authorise Tariffs

In February 2026, the U.S. Supreme Court ruled in Learning Resources, Inc. v. Trump that IEEPA does not give the president the authority to impose tariffs on imported goods. Simply put, while IEEPA allows the president to “regulate importation” during a declared emergency, the Court found that it does not authorize the president to levy duties, taxes or tariffs, which under the U.S. Constitution belong exclusively to Congress.

In a 6-3 decision, the majority wrote that Congress, not the executive branch, has the constitutional authority to “lay and collect taxes, duties, imposts and excises.” Since tariffs function as taxes collected on imports, the Court held that IEEPA’s language does not clearly grant the president the power to impose them.

The ruling struck down broad global tariffs that Trump had imposed under declarations of national emergencies related to trade deficits and drug trafficking, finding that such actions exceeded the statutory authority granted by Congress.

How Trump Used IEEPA and Why It Was Controversial

President Trump used IEEPA in an unprecedented way, in 2025 and 2026, he declared emergencies and imposed sweeping tariffs, initially targeting Canada, Mexico and China, and later expanding globally. These tariffs were justified under IEEPA as measures to address trade imbalances and national crises.

No previous president had applied IEEPA to impose broad tariffs, and critics argued that the law was being stretched far beyond its original purpose. IEEPA was intended to address financial and economic sanctions, not to replace Congress’s power over tariffs under Article I of the Constitution.

Businesses, states and industry groups challenged these tariffs in court, and lower federal courts agreed that IEEPA was not sufficient authority for tariff imposition. The Supreme Court’s decision consolidated these rulings and confirmed that IEEPA cannot be used for such broad economic measures.

What Law Trump Is Using Instead to Impose Tariffs

After the Supreme Court invalidated the tariff authority under IEEPA, the Trump administration quickly pivoted to alternative statutory authority.

Most notably, President Trump used Section 122 of the Trade Act of 1974 to implement temporary global tariffs of up to 15 percent. This provision allows the president to impose tariffs temporarily in the event of “large and serious balance-of-payments deficits,” but only for a limited period (up to 150 days) unless extended by Congress.

Legal experts and observers have questioned the use of Section 122 for broad trade policy, noting that it was designed for specific trade imbalances rather than sweeping permanent tariffs. Moreover, this approach is likely to face legal and political challenges, although a court decision within its 150-day validity period may be unlikely without congressional intervention.

In addition, other statutes such as Sections 232 and 301 of the Trade Expansion Act and the Tariff Act of 1930 provide alternative bases for imposing tariffs. These provisions require different procedures, including investigations and findings that national security or unfair trade practices justify specific tariffs, and they have been invoked in past U.S. trade disputes.

What This Means for the Future

The Supreme Court ruling marks a clear statement about constitutional limits on executive power and a reaffirmation of Congress’s authority over trade policy. It has several important implications:

• Restoring Constitutional Balance: By limiting the executive branch’s use of emergency laws to impose tariffs, the Court highlights the importance of separation of powers. Congressional approval is required for broad economic measures that affect trade and national revenue.
• Trade Policy Uncertainty: The ruling has introduced uncertainty into U.S. trade policy. Many tariffs imposed under IEEPA may be invalidated, and importers could seek refunds of billions of dollars collected in duties. Legislation has already been introduced in the U.S. Senate to require refunds to businesses and manufacturers affected by the invalidated tariffs.
• Alternative Statutory Tools: Presidents may increasingly rely on other laws such as Section 122, Section 301 and Section 232 to impose tariffs, albeit with more procedural requirements and limited timeframes. These laws may also face legal scrutiny or debates over their appropriate use.
• Economic and Diplomatic Impact: Tariff policy affects global trade relationships. U.S. partners such as the European Union, Canada and India have responded with concern or caution following the ruling, and some trade deal ratifications have been postponed as a result. Continued use of alternative tariff mechanisms could reshape future negotiations and economic relations.

Conclusion

The Supreme Court’s rejection of tariff authority under the International Emergency Economic Powers Act represents a significant moment in U.S. constitutional and economic governance. It reasserts Congress’s central role in trade policy and limits the executive’s ability to use emergency powers for sweeping economic measures. While former President Trump and the current administration can pursue alternative legal pathways, these avenues are more constrained and may face legal and political challenges. The future of U.S. trade policy will likely involve debates in Congress and the courts over the proper balance between executive flexibility and constitutional limits.