The U.S. Supreme Court is currently considering a major challenge to President Trump’s broad tariffs imposed in 2025 under the International Emergency Economic Powers Act (IEEPA), a 1977 law intended for national emergencies.

These tariffs include “reciprocal” duties on goods from nearly all countries starting at 10-50% from April 2025 and “fentanyl-related” penalties on imports from China, Canada, Mexico, and others starting February/March 2025.

Lower courts ruled these tariffs unlawful, finding that IEEPA does not authorize tariffs the word “tariff” is absent from the statute and that no prior president used it this way for broad revenue-raising measures.

The Supreme Court heard oral arguments on November 5, 2025, where justices from both sides expressed skepticism about the administration’s authority, noting tariffs are traditionally a congressional power.

Potential Refund Amount

As of mid-December 2025, U.S. Customs and Border Protection data shows approximately $133.5 billion in duties collected under these IEEPA-based tariffs are at risk of court-ordered refunds if the Supreme Court rules them invalid. This breaks down roughly as:$81.7 billion from reciprocal duties.

$37.9 billion from China/Hong Kong fentanyl tariffs. Smaller amounts from Mexico, Canada, and punitive duties on countries like Brazil, India, and Japan. Some analyses estimate higher potential refunds up to $168 billion or more depending on the scope and timing.

The Court is expected to issue rulings soon possibly as early as January 10, 2026, based on recent schedules, though no decision has been announced as of January 7. Prediction markets give the administration only a 23-30% chance of prevailing, down from higher odds before arguments.

If the Court sides against the tariffs: They would likely be halted going forward. Refunds could be required for importers who paid them. The Court might limit refunds like prospective only, or to litigants, but historical precedents suggest refunds are the normal remedy for unlawful duties, potentially through administrative processes or protests.

These IEEPA tariffs are separate from other Trump tariffs under Section 232 e.g., 50% on steel/aluminum derivativesor Section 301, which are not part of this case. Tariff revenue in 2025 has been much higher record levels, but only the IEEPA portion is directly challenged here.

This case represents a significant test of executive power versus congressional authority over trade and taxation. The International Emergency Economic Powers Act (IEEPA) was enacted on December 28, 1977, as Title II of Public Law 95-223, signed by President Jimmy Carter.

It emerged from congressional efforts to reform and limit expansive presidential emergency powers under the Trading with the Enemy Act (TWEA) of 1917. TWEA, originally a wartime measure, was amended in the 1930s to allow its use in peacetime emergencies. Presidents invoked it broadly, including President Nixon’s 1971 imposition of a 10% import surcharge during a balance-of-payments crisis.

By the 1970s, a Senate investigation revealed four national emergencies dating back decades still in effect, prompting reforms.In 1976, Congress passed the National Emergencies Act (NEA) to terminate old emergencies, require formal declarations, and enable congressional termination.

In 1977, it enacted IEEPA to restrict TWEA to wartime while providing limited peacetime economic powers for foreign-originated threats. IEEPA authorizes the President, after declaring a national emergency under the NEA, to regulate international economic transactions—including imports—to address “unusual and extraordinary” threats to U.S. national security, foreign policy, or economy with substantial foreign sources.

It deliberately narrowed TWEA by excluding powers like seizing domestic records or vesting assets. The President can investigate, regulate, or prohibit transactions involving foreign property, payments, exports/imports, and more (50 U.S.C. § 1702).

It excludes regulating personal communications, informational materials, humanitarian donations, or purely domestic transactions. Emergencies require annual renewal and congressional reporting. Legislative history emphasized emergencies as “rare and brief,” not for ongoing issues.

Presidents have invoked IEEPA in over 77 national emergencies since 1977, making it central to U.S. sanctions. President Carter in 1979 froze Iranian assets during the hostage crisis—the longest-running emergency.

Blocking assets of foreign governments, terrorists, post-9/11 under Bush, cybercriminals (Obama), and entities in Venezuela or Russia. Initially targeted states; later included non-state actors like terrorists and hackers. Emergencies average over nine years, contrary to “brief” intent.

IEEPA traditionally supported sanctions, not revenue-raising duties. Nixon’s 1971 surcharge used TWEA, not IEEPA. In 2025, President Trump invoked IEEPA unprecedentedly for broad tariffs, February: 25% on Canada/Mexico and 10%+ on China, citing drug trafficking and migration emergencies.

April: “Reciprocal” 10%+ tariffs on nearly all countries, citing trade deficits and non-reciprocity. These collected ~$133 billion by late 2025 but faced challenges. Lower courts ruled IEEPA does not authorize tariffs lacking “tariff” mention; Congress holds trade power.

The Supreme Court heard arguments November 5, 2025; a ruling is pending, potentially invalidating tariffs and triggering refunds. This use tests executive limits, raising separation-of-powers questions amid IEEPA’s evolution into a flexible sanctions tool.