On Friday, the Supreme Court issued its 6-3 opinion in the Learning Resources, Inc. v. Trump, and if you’ve spent any time reading or watching the news in the past few days, you’ve probably seen some version of “the Court struck down Trump’s tariffs.”
While true, the analysis also strips out almost everything that matters. Here’s what the decision actually does (and does not) mean:
1) This is not a ruling against tariffs. It’s a ruling against one way of imposing them.
First and foremost, it’s important to understand that the Court very clearly did not say that all Presidentially imposed tariffs are unconstitutional, period. It also did not say anything about the justifications that the President gave for imposing the tariffs: lowering trade deficits or curtailing fentanyl smuggling. What the Court did say is that the International Emergency Economic Powers Act (IEEPA) does not, in and of itself, give the President the authority to impose tariffs. All other tariff powers remain intact. This report from the Congressional Research Service provides a useful overview of each of these powers and their limits.
While these powers could, in theory, replace many of the tariffs that President Trump originally imposed under IEEPA, they cannot replace all of the tariffs, and they each require additional hurdles or have specified limits.
Section 122, which the President has already used, only allows tariffs up to 15 percent to address “balance-of-payment deficits.” Some have time limits, while others require reports, investigations, and consultations with foreign governments.
Importantly, though, none allow the President to impose tariffs because he didn’t like how he was talked to by a fellow head of state.
2) The case turned on seven words
The International Emergency Economic Powers Act of 1977 authorizes the President to “regulate… importation… during a declared national emergency.” The entire case turned on these seven words and whether they included the power to impose tariffs. Six justices of the Court said “no.” Justice Roberts, writing the majority’s opinion, held that tariffs are fundamentally a taxing power, not a foreign affairs power, and that they differed in kind, not just degree, from the trade tools that IEEPA explicitly authorizes.
The Court also pointed out that no President had ever used IEEPA to impose tariffs before. While this is not in and of itself a winning argument (there is, after all, a first time for everything), it is still meaningful. Whenever an administration claims new power from a decades-old statute, the major questions doctrine throws up a red flag.
3) The Major Questions Doctrine is here to stay
This ruling is the latest, and possibly the most consequential, application of the major questions doctrine to date. Briefly, this relatively new doctrine contends that any time “an agency seeks to decide an issue of major national significance, its action must be supported by clear congressional authorization,” (emphasis original).
In their 2001 opinion in Whitman v. American Trucking Associations, Inc., the Court said, “Congress, we have held, does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions — it does not, one might say, hide elephants in mouseholes.”
Justice Gorsuch, in a concurring opinion, put this clearly, writing, “the President claims, Congress passed that power on to him in IEEPA, permitting him to impose tariffs on nearly any goods he wishes, in any amount he wishes, based on emergencies he himself has declared. He insists, as well, that his emergency declarations are unreviewable. A ruling for him here, the President acknowledges, would afford future Presidents the same latitude he asserts for himself. So another President might impose tariffs on gas-powered automobiles to respond to climate change. Or, really, on virtually any imports for any emergency any President might perceive. And all of these emergency declarations would be unreviewable. Just ask yourself: What President would willingly give up that kind of power?”
It is for this reason, the Court’s majority held, that Congress must clearly give the power to the President. The President cannot simply assert that he has Article I powers.
4) The Dissent Deserves a Fair Hearing
Justice Kavanaugh, writing in dissent, accepts the validity of the major questions doctrine, but questions whether it applies in this particular case. He cites Justice Gorsuch’s four “telling clues” from West Virginia v. EPA (which can be found on pages 746–748) and argues on pages 35–44 of the Court’s opinion that at least three of them do not apply.
For example, he argues that in 1976, Congress and the Court understood that the phrase “adjust the imports” found in Section 232 of the Trade Expansion Act allowed the use of fees to do so despite this word not appearing in the Act. Since IEEPA was passed one year later in 1977, Justice Kavanaugh argues that the phrase “regulate… imports” also authorizes the imposition of fees, of which tariffs are but one option. Indeed, as he writes, “Any citizens or Members of Congress in 1977 who somehow thought that the ‘regulate… importation’ language in IEEPA excluded tariffs would have had their heads in the sand.”
The majority had responses to this, primarily pointing out the difference in the scale of what President Trump was doing versus what Presidents Ford or Nixon had done. Likewise, reasonable people can debate whether tariffs are a “tax” or a “fee” (hint: they’re a tax) and the semantic/legal differences therein. But as Kavanaugh points out, this is in direct opposition to the Court’s previous stance that the major questions doctrine is not a “magic words” test, whereby the Court is essentially requiring that Congress use very specific words to allow very specific actions by agencies, including the President.
5) Refunds Are a Possibility
In addition to the above, Justice Kavanaugh is also the only Justice to bring up the issue of refunds in the Court’s ruling, and he does so only four times. He notes that “The United States may be required to refund billions of dollars to importers who paid the IEEPA tariffs, even though some importers may have already passed on costs to consumers or others,” and that “Refunds of billions of dollars would have significant consequences for the US Treasury.” In a sense, he’s saying that American importers write the tariff check but pass on at least some of the tariff burden to American consumers in the form of higher prices. If the refund process happens, the refunds will all go to the American importers, not the end consumers. This process, as he acknowledges, will be “a mess.”
Indeed, we’re already seeing tariff refund cases submitted. FedEx has filed with the US Court of International Trade, and there are reasons to believe that they will not be alone. Will companies seeking refunds all be required to file individual lawsuits, and if so, in which court? Or will they be allowed to file a class-action lawsuit?
6) This Is Exactly What Checks and Balances Look Like
The easy, attention-grabbing headline that this is a win for free traders or a setback for economic nationalists is tempting, but misleading. The more important insight from this, whether you agree with the majority or the dissent, is that this is exactly how the system is supposed to work.
The White House pushed the boundaries of a statute beyond what its text and history would allow. Private parties challenged that action in court. The judicial branch reviewed it and overturned the White House.
Justice Gorsuch, on page 46, summarizes it nicely: “For those who think it important for the Nation to impose more tariffs, I understand that today’s decision will be disappointing. All I can offer them is that most major decisions affecting the rights and responsibilities of the American people (including the duty to pay taxes and tariffs) are funneled through the legislative process for a reason… In all, the legislative process helps ensure each of us has a stake in the laws that govern us and in the Nation’s future. For some today, the weight of those virtues is apparent. For others, it may not seem so obvious. But if history is any guide, the tables will turn and the day will come when those disappointed by today’s result will appreciate the legislative process for the bulwark of liberty it is.”
The question before the Court was never “are tariffs good or bad?” The question was whether one person should be allowed to impose or alter tariffs against any nation at any time and for any reason he alone determines is an “emergency,” with no Congressional approval or judicial review. And the answer to that question, for now at least, is “no.”
That said, let’s not confuse this legal victory for an economic one. The President has already implemented new tariffs under Section 122, has promised that other countries won’t be celebrating for long, and has assured his supporters that he will “Keep Calm and Tariff On.” This Administration was not surprised last May when the International Trade Court ruled against it, and has long promised that they have alternative plans ready to go if needed.
Still, this ruling is a victory for dispersed power, constitutional limits, and legislative accountability. And we should celebrate it as such.
