A brewing tariff refund battle

The U.S. Supreme Court's landmark decision in *Learning Resources, Inc. v. Trump*, 607 U.S. ___ (2026), has ignited a complex "tariff refund battle" by ruling that the International Emergency Economic Powers Act (IEEPA) does not grant the President unilateral authority to impose tariffs. This invalidated tariffs generating approximately $166 billion, leading to an intricate refund process overseen by the Court of International Trade (CIT) in cases like *Atmus Filtration, Inc. v. United States*. The administrative challenges of refunding these duties are significant, further complicated by the administration's subsequent imposition of new tariffs under Section 122 of the Trade Act of 1974, which are now also facing legal challenges. Practitioners must navigate this evolving landscape, ensuring clients are prepared for the refund process and aware of ongoing litigation.

The U.S. Supreme Court recently delivered a pivotal ruling in *Learning Resources, Inc. v. Trump*, 607 U.S. ___ (2026), fundamentally reshaping the landscape of presidential authority in trade policy. The Court held that the International Emergency Economic Powers Act (IEEPA) does not empower the President to unilaterally impose tariffs, thereby invalidating a significant portion of duties levied by the Trump administration. This decision, handed down during the heart of the Court's decision season, has not only clarified a critical separation of powers issue but has also triggered an unprecedented "tariff refund battle" over an estimated $166 billion in collected duties.

This article delves into the legal intricacies of the Supreme Court's ruling and its immediate aftermath, focusing on the complex challenges of refunding billions of dollars to importers. It examines the ongoing efforts at the Court of International Trade (CIT) to establish a workable refund mechanism and highlights the new wave of litigation emerging from the administration's subsequent imposition of tariffs under Section 122 of the Trade Act of 1974. For practising attorneys, understanding this dynamic and often contradictory environment is crucial for advising clients on their rights and obligations in a rapidly shifting trade regulatory regime.

Historically, the power to impose tariffs in the United States rests with Congress, as enshrined in Article I of the Constitution. However, various statutes have delegated specific, limited authorities to the President to address particular economic or national security concerns. The International Emergency Economic Powers Act (IEEPA), codified at 50 U.S.C. § 1701 et seq., was enacted to provide the President with broad powers to regulate international economic transactions during a declared national emergency. While IEEPA has been used extensively for sanctions and asset freezes, its application to impose sweeping tariffs on a wide range of goods and countries, as seen under the Trump administration, represented a novel and contentious interpretation of its scope.

This expansive use of IEEPA for tariff imposition faced immediate legal challenges in lower courts, with several rulings finding the tariffs unlawful. These cases eventually coalesced into the consolidated Supreme Court docket, including *Learning Resources, Inc. v. Trump* and *Trump v. V.O.S. Selections, Inc.*, which presented the high court with the fundamental question of whether IEEPA's authorization to "regulate importation" encompassed the power to levy tariffs. The lower courts' decisions, often based on statutory interpretation and constitutional separation of powers, set the stage for the Supreme Court's definitive pronouncement on this critical issue.

The Supreme Court, in *Learning Resources, Inc. v. Trump*, delivered a decisive blow to the executive branch's expansive interpretation of IEEPA. Chief Justice Roberts, writing for the majority, concluded that IEEPA's language permitting the President to "regulate importation" does not implicitly grant the authority to impose tariffs. The Court emphasized that tariff authority is a core congressional taxing power under Article I of the Constitution, and such a vast delegation of economic power would require explicit statutory language, not ambiguous phrasing. Applying separation-of-powers principles and implicitly the major questions doctrine, the Court found that Congress would not have delegated such significant power without clear intent, thus voiding the IEEPA tariffs.

While the ruling was clear on the legal question, it was notably silent on the mechanics of refunding the approximately $166 billion in duties already collected. This silence immediately shifted the "tariff refund battle" to the Court of International Trade (CIT), where thousands of lawsuits had already been filed. In *Atmus Filtration, Inc. v. United States*, No. 26-01259, the CIT, under Judge Richard K. Eaton, initially ordered U.S. Customs and Border Protection (CBP) to begin immediate refunds to all affected importers, regardless of whether they had filed suit. However, this "immediate compliance" portion of the order was swiftly suspended after CBP indicated it lacked the existing systems to process refunds at such a massive scale.

The practical challenges of implementing these refunds are immense. CBP is developing a new system, CAPE (Consolidated Administration and Processing of Entries), to manage the process, with a phased rollout expected. Crucially, refunds will not be automatic; importers must be registered in CBP's ACE portal with ACH banking details on file to receive funds. This administrative hurdle means that many smaller importers, who may not have completed the electronic setup, risk having their refunds rejected. The complexity and scale of this undertaking underscore Justice Kavanaugh's dissenting prediction that the refund process would likely be a "mess".

Further complicating the landscape, the administration, within hours of the Supreme Court's IEEPA ruling, imposed new tariffs under Section 122 of the Trade Act of 1974 (19 U.S.C. § 2132). These replacement tariffs, including a global surcharge, have already faced fresh legal challenges, creating a continuous cycle of tariff litigation and uncertainty for importers. This demonstrates a potential gap in the Supreme Court's decision, as it did not constrain the President's ability to impose tariffs under *other* statutory authorities, leading to a new front in the ongoing trade disputes.

The Supreme Court's decision in *Learning Resources, Inc. v. Trump* represents a significant reassertion of congressional authority over trade policy, yet it has simultaneously ushered in a period of profound administrative and legal complexity. The ensuing "tariff refund battle" for billions of dollars is far from over, with the Court of International Trade and CBP grappling with the practicalities of processing an unprecedented volume of refunds. Practitioners must remain vigilant, advising clients to proactively ensure their ACE portal registrations and ACH details are current to facilitate any potential refunds.

Moreover, the rapid imposition of new tariffs under Section 122 of the Trade Act of 1974 signals that the executive branch will continue to seek alternative statutory bases for its trade agenda, ensuring that tariff-related litigation will persist. Attorneys specializing in international trade and customs law should closely monitor developments in *Atmus Filtration, Inc. v. United States* and any new challenges to the Section 122 tariffs. The long-term implications of this legal saga will undoubtedly shape the balance of power in U.S. trade policy for years to come, demanding continuous engagement and strategic counsel from the legal community.