{"id":6904,"date":"2026-03-27T21:57:22","date_gmt":"2026-03-27T21:57:22","guid":{"rendered":"https:\/\/blogs.luc.edu\/compliance\/?p=6904"},"modified":"2026-03-27T21:57:22","modified_gmt":"2026-03-27T21:57:22","slug":"the-court-struck-down-the-tariffs-but-the-compliance-nightmare-got-worse","status":"publish","type":"post","link":"https:\/\/blogs.luc.edu\/compliance\/?p=6904","title":{"rendered":"The Court Struck Down the Tariffs but the Compliance Nightmare Got Worse"},"content":{"rendered":"

Ryan Mack<\/em><\/p>\n

Associate Editor<\/em><\/p>\n

Loyola University Chicago School of Law, JD 2027<\/em><\/p>\n

For companies that spent the past year paying billions in tariffs imposed under the International Emergency Economic Powers Act (IEEPA), February 20, 2026 looked like a victory. The Supreme Court ruled that the IEEPA does not authorize the President to impose tariffs. But, if compliances officer, general counsel, and importers should not celebrate yet. The ruling did not end the tariff saga; it merely opened a new and more chaotic chapter.<\/p>\n

<\/p>\n

The Supreme Court\u2019s Ruling in Learning Resources, Inc. v. Trump<\/em><\/strong><\/p>\n

In Learning Resources, Inc. v. Trump<\/a>, <\/em>the Supreme Court examined whether the International Emergency Economic Powers Act (IEEPA) permits the President to impose tariffs as part of a national emergency declaration. President Trump declared a national emergency to address foreign threats, including illegal drug influx and trade deficits, and imposed tariffs on imports from Canada, Mexico, and China. The plaintiffs, comprising small businesses and states, challenged the tariffs, arguing that IEEPA does not grant the President such authority. The District Court for the District of Columbia and the Court of International Trade ruled against the President, with the Federal Circuit affirming that IEEPA\u2019s authority to \u201cregulate . . . importation\u201d does not include imposing tariffs. The Supreme Court held that IEEPA does not authorize the President to impose tariffs, emphasizing that the power to tax, including tariffs, is a congressional power under Article I of the Constitution. The Court found no clear congressional authorization for the President\u2019s asserted power, noting the absence of tariffs or duties in IEEPA\u2019s text and the historical lack of precedent for such use of IEEPA. In dissent, Justices Thomas, Alito, and Kavanaugh argued that the IEEPA\u2019s broad language did authorize the President to impose tariffs. They believed the majority\u2019s interpretation improperly constrained executive power over foreign commerce, suggesting that the provisions should be read to permit such presidential actions in response to national emergencies.<\/p>\n

The Learning Resources <\/em>decision rests on a straightforward constitutional premise that the authority to impose tariffs lies within Congress\u2019s exclusive power as outlined in Article I, Section 8<\/a> of the Constitution. But the Court did not resolve what happens to the money already collected. The refund question was left entirely open, and the administration has given every indication that it intends to contest repayment. President Trump suggested, at his post-decision press conference<\/a> that tariff refunds would be the subject of future litigation, a process that could take years to complete.<\/p>\n

The replacement problem: new tariffs and new legal challenges<\/strong><\/p>\n

Within hours of the ruling, the Trump administration moved to replace the invalidated tariff scheme. President Trump issued a proclamation under Section 122<\/a> of the Trade Act of 1974, imposing a 10% global tariff effective February 24, 2026, for a period of 150 days, unless modified, terminated, or extended by Congress. Section 122<\/a> authorizes the President to impose, temporary, across-the-board import surcharges to address balance-of-payments concerns. Tariffs on steel, aluminum, and auto parts, under Section 232 of this act were untouched by the Court\u2019s ruling and thus remain in effect. Treasury Secretary Bessent<\/a> stated that combining Section 122, 232, and 301, tariffs \u201cwill result in virtually unchanged revenue in 2026.\u201d But for most importers, the economic reality did not change. As of March fifth of this year, 24 states<\/a> have sued in the Court of International Trade (CIT) challenging the legality of the Section 122 tariffs. Section 122 carries a 150-day statutory clock and requires congressional approval to extend beyond it, raising the prospect of another legal challenge when the authority expires in late July 2026. The administration has also launched new investigations under Section 301<\/a> of the Trade Act, which authorizes tariffs in response to unfair foreign trade practices following an administrative investigation, an authority that is not time-capped and has historically survived judicial challenge but carries procedural prerequisites that may invite litigation. The result is a layered, unstable tariff scheme in which the legal validity of any given duty may shift faster than a supply chain can adapt.<\/p>\n

What compliance teams must do now<\/strong><\/p>\n

The practical compliance obligations flowing from the Learning Resources <\/em>decision run in two directions: backward toward IEEPA refunds and forward toward the new tariff regime.<\/p>\n

Importers seeking refunds<\/a> face significant risk if they choose not to bring suit in the CIT. Because the CIT can grant relief only to parties before it, those who do not file their own claims will not benefit, even if plaintiffs prevail. A two-year statute of limitations runs from when each cause of action accrues, and delay increases the likelihood that the government will argue the importer waited too long to seek equitable relief. Companies<\/a> should promptly review their import records and consult trade counsel regarding potential claims.<\/p>\n

Companies responding to the new tariffs<\/a> should reassess sourcing strategies, explore duty mitigation mechanisms such as foreign-trade zones and duty drawback, and align procurement, legal, and finance teams. The Supreme Court\u2019s IEEPA decision should not be viewed as the end of tariff risk. Instead, it reflects a broader environment of continuing trade policy volatility as the administration turns to alternative statutory authorities whose scope and duration remain uncertain.<\/p>\n

Downstream commercial exposure<\/a> may arise where companies previously offset IEEPA tariff costs through surcharges or price adjustments, as customers may now pursue reimbursement if refunds are issued. Companies that ultimately absorbed tariff costs but did not serve as the importer of record should evaluate their contractual rights and other potential avenues for recoupment from the importing parties.<\/p>\n

The bigger picture: executive trade power after Learning Resources<\/em><\/strong><\/p>\n

The Learning Resources <\/em>decision is a significant constitutional check on executive power and a consequential one for the future of trade regulation. By characterizing tariffs as a form of taxation reserved to Congress, the Court has potentially opened the door to broader challenges against other tariff authorities, as importers grow more inclined to test the limits of section 232, 301, and 338. This ruling also exposed how dependent American trade policy has become on a patchwork of aging statutes with unclear limits and largely untested procedural prerequisites. Most observers believe<\/a> Section 232 and Section 301 tariffs are less vulnerable to legal challenge given that those statutes expressly authorize tariff adjustments and require an investigative process before imposition. For compliance professionals, the lesson of 2026 is that the legal foundation of U.S. trade policy is being relitigated in real time, and businesses that wait for certainty before acting may find that the window to protect their interests has already closed. The Supreme Court gave importers a legal victory, but the compliance work that their victory created has only just begun.<\/p>\n","protected":false},"excerpt":{"rendered":"

For companies that spent the past year paying billions in tariffs imposed under the International Emergency Economic Powers Act (IEEPA), February 20, 2026 looked like a victory. The Supreme Court ruled that the IEEPA does not authorize the President to impose tariffs. But, if compliances officer, general counsel, and importers should not celebrate yet. The ruling did not end the tariff saga; it merely opened a new and more chaotic chapter.<\/p>\n","protected":false},"author":187,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39,46],"tags":[2227,2437,2435,2438,2280,1928,2436],"class_list":["post-6904","post","type-post","status-publish","format-standard","hentry","category-litigation","category-regulation","tag-administrative-law","tag-constitutional-law","tag-international-trade-law","tag-separation-of-powers","tag-supply-chain-risk","tag-tariff","tag-trade-regulation"],"_links":{"self":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/6904","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/users\/187"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6904"}],"version-history":[{"count":1,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/6904\/revisions"}],"predecessor-version":[{"id":6905,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/6904\/revisions\/6905"}],"wp:attachment":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6904"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6904"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6904"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}