The Supreme Court’s ruling against IEEPA tariffs didn’t happen in a vacuum. It was the latest chapter in a story that goes back to the founding of the republic. The United States has been arguing about tariffs since before there was a United States. And the debate has always been about the same fundamental tension: who benefits from restricting trade, and who pays the cost?
If you’re an importer dealing with the IEEPA tariff refund, understanding this history gives you context for why the ruling happened, what it means, and why it matters beyond your individual refund claim.
The Founding Era: Tariffs as the Original Tax
When the United States was brand new, there was no income tax. No sales tax. No payroll tax. The federal government ran almost entirely on tariff revenue. The Tariff Act of 1789 — one of the first laws Congress passed — imposed duties on imported goods ranging from 5% to 15%.
Alexander Hamilton, the first Treasury Secretary, was a vocal advocate for tariffs. In his 1791 Report on Manufactures, he argued that tariffs would protect America’s infant industries from established European competitors. His logic was straightforward: if British manufacturers could produce goods cheaper due to economies of scale, American manufacturers would never be able to compete unless the government leveled the playing field with tariffs.
Thomas Jefferson and the agrarian South disagreed. They saw tariffs as a tax on farmers and consumers who bought imported goods. Southern cotton exporters also worried that other countries would retaliate against American exports.
This North vs. South, industry vs. agriculture divide would define tariff politics for the next century.
The Tariff of Abominations (1828)
The tension peaked with the Tariff of 1828, which Southern states called the “Tariff of Abominations.” It imposed duties as high as 62% on imported manufactured goods, benefiting Northern factories at the expense of Southern consumers and exporters.
South Carolina went so far as to declare the tariff null and void within its borders — the “Nullification Crisis.” President Andrew Jackson threatened military force. Congress eventually passed a compromise tariff that gradually reduced rates.
The episode foreshadowed a pattern that repeats throughout American history: tariffs create winners and losers, and the losers push back.
The Protectionist Era: 1861–1934
During and after the Civil War, tariffs skyrocketed. The Morrill Tariff of 1861 raised rates to fund the Union war effort, and they stayed high for decades. By the 1890s, the average tariff rate on dutiable imports was over 40%.
This was the golden age of American protectionism. The Republican Party — the party of Northern industry — championed high tariffs as essential to American prosperity. The McKinley Tariff of 1890 pushed rates to nearly 50%. The Dingley Tariff of 1897 went even higher.
Smoot-Hawley: The Cautionary Tale
The Smoot-Hawley Tariff Act of 1930 is the most infamous tariff law in American history — and for good reason. Signed by President Hoover at the onset of the Great Depression, it raised tariffs on over 20,000 imported goods to record levels.
The consequences were catastrophic. Trading partners retaliated with their own tariffs. International trade collapsed. Between 1929 and 1934, global trade fell by roughly 65%. Most economists agree that Smoot-Hawley didn’t cause the Great Depression, but it made it significantly worse.
The lesson that policymakers drew from Smoot-Hawley was clear: unilateral tariff escalation triggers retaliation, and trade wars make everyone poorer. This lesson would dominate American trade policy for the next 80 years.
The Free Trade Era: 1934–2017
The backlash against Smoot-Hawley produced the Reciprocal Trade Agreements Act of 1934, which fundamentally changed how tariff policy worked. Instead of Congress setting tariff rates directly (which had proven politically disastrous), Congress delegated negotiating authority to the President. The idea was that bilateral negotiations would produce lower, more rational tariff rates than the logrolling that happened on Capitol Hill.
This delegation of authority — from Congress to the President — is a theme that echoes all the way to the IEEPA tariff debate in 2025-2026.
GATT and the WTO
After World War II, the United States led the creation of the General Agreement on Tariffs and Trade (GATT) in 1947. GATT established a framework for multilateral trade negotiations aimed at reducing tariffs globally. Eight rounds of GATT negotiations between 1947 and 1994 brought average tariff rates in developed countries from around 22% to under 5%.
In 1995, GATT was absorbed into the World Trade Organization (WTO), which added enforcement mechanisms and expanded the rules to cover services, intellectual property, and other areas beyond traditional tariffs.
During this period, the U.S. average tariff rate dropped to around 2-3% on a trade-weighted basis. Free trade became the consensus position of both major political parties — at least among policy elites. Understanding how U.S. import tariffs work today requires understanding this decades-long trend toward lower barriers.
NAFTA and Beyond
The North American Free Trade Agreement (1994) eliminated most tariffs between the U.S., Canada, and Mexico. Subsequent agreements with countries like South Korea, Australia, Singapore, and others further reduced barriers. By the 2010s, the United States had free trade agreements with 20 countries.
But the free trade consensus was fraying at the edges. Workers in manufacturing-heavy regions saw factories close as production moved overseas. Communities built around steel mills, textile plants, and auto factories hollowed out. The economic data showed that trade was a net positive for the national economy, but the costs were concentrated in specific places and on specific people.
The Protectionist Return: 2018–2025
In 2018, President Trump began imposing tariffs at a scale not seen since Smoot-Hawley. But unlike the 1930s approach of Congressional tariff-setting, these tariffs were imposed through executive action using delegated presidential authorities.
Section 232: National Security Tariffs
In March 2018, the administration imposed 25% tariffs on steel imports and 10% tariffs on aluminum imports, citing national security concerns under Section 232 of the Trade Expansion Act of 1962. These tariffs applied to most countries and remain in effect as of 2026.
Section 301: China Tariffs
Starting in July 2018, the administration imposed escalating tariffs on Chinese imports under Section 301 of the Trade Act of 1974, targeting what it called unfair trade practices. These tariffs were applied in four “lists” covering progressively more products:
| List | Effective Date | Rate | Products Covered |
|---|---|---|---|
| List 1 | July 2018 | 25% | $34 billion in industrial goods |
| List 2 | August 2018 | 25% | $16 billion in industrial goods |
| List 3 | September 2018 | 25% | $200 billion in consumer/industrial goods |
| List 4A | September 2019 | 7.5% | $120 billion in consumer goods |
These Section 301 tariffs are still in effect and are separate from IEEPA. They’re assessed under different HTS 9903 codes and are not part of the current refund program.
IEEPA: The Emergency Powers Escalation
In February 2025, the administration escalated further by imposing additional tariffs using the International Emergency Economic Powers Act — a law that had never before been used for tariffs.
IEEPA was passed in 1977 to give the President the ability to impose economic sanctions in response to “unusual and extraordinary threats” to national security. It had been used to freeze assets, block transactions, and impose sanctions on individuals and countries. But it had never been used to set tariff rates on imported goods.
The IEEPA tariffs ranged from 10% to 145%, layered on top of existing Section 301 and Section 232 tariffs. For some Chinese imports, the combined tariff rate exceeded 200%.
The legal challenge was immediate and came from multiple directions.
The Supreme Court’s IEEPA Ruling
The legal argument against IEEPA tariffs was straightforward: IEEPA authorizes the President to regulate “transactions” during national emergencies, but tariffs are a form of taxation, and the Constitution reserves taxing power to Congress. Even if IEEPA grants broad emergency powers, it doesn’t grant the power to impose taxes.
The Court of International Trade heard the initial challenges, with different judges reaching different conclusions. The case moved quickly through the Court of Appeals for the Federal Circuit and to the Supreme Court, which agreed to hear it on an expedited basis.
On February 20, 2026, the Supreme Court ruled 6-3 in Learning Resources, Inc. v. Trump that the use of IEEPA to impose tariffs was unconstitutional. The majority opinion held that IEEPA’s text, structure, and legislative history all pointed away from tariff authority. The emergency powers granted by IEEPA are broad, but they don’t encompass the power to tax imports.
This ruling invalidated all IEEPA tariffs collected between February 4, 2025 and February 24, 2026 — a period during which importers collectively paid billions in IEEPA surcharges. Those surcharges are now refundable.
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Why History Matters for Your Refund
You might be wondering why a history lesson matters when you just want your money back. Here’s why.
Understanding Which Tariffs Are Refundable
The current tariff landscape is a layer cake built over decades. Section 232 tariffs (steel and aluminum) are still valid. Section 301 tariffs (China) are still valid. Normal MFN tariffs are still valid. Only the IEEPA layer has been struck down.
If you don’t understand the historical context, you might assume all tariffs on Chinese goods are refundable. They’re not. Only the IEEPA component — the newest, topmost layer — was invalidated. Understanding the difference between duties, tariffs, and taxes helps you separate the refundable from the non-refundable.
Understanding the Legal Precedent
The Supreme Court’s ruling didn’t just affect IEEPA tariffs. It set a precedent about the limits of presidential trade authority. Future administrations cannot use IEEPA to impose tariffs. This means the tariff landscape going forward is more predictable — Section 201, 232, and 301 remain available, but the emergency powers route is closed.
Understanding the Political Context
Tariff policy is always political. The IEEPA refund program exists because a specific legal challenge succeeded in a specific political and judicial environment. Understanding the historical pendulum between protectionism and free trade helps you anticipate what might come next — and plan your import strategy accordingly.
Where We Are Now
As of early 2026, the U.S. tariff landscape looks like this:
| Tariff Program | Status | Refundable? |
|---|---|---|
| Normal MFN rates | In effect | No |
| Section 232 (steel/aluminum) | In effect | No |
| Section 301 (China) | In effect | No |
| IEEPA tariffs | Struck down | Yes |
| USMCA preferences | In effect | N/A (preferential treatment) |
For importers, the practical implication is that your duty costs are lower than they were during the IEEPA period but still higher than pre-2018 levels. The Section 301 and 232 tariffs remain significant cost factors.
The IEEPA refund represents a one-time recovery opportunity — money that was collected under an authority the Supreme Court determined was unconstitutional. The four recovery paths are available now, but the windows for some paths are closing as liquidation dates pass and protest deadlines expire.
The Delegation Problem: Congress vs. the President
One of the most important threads running through this entire history is the question of who gets to set tariff rates — Congress or the President. The Constitution is clear: Article I, Section 8 gives Congress the power to “lay and collect Taxes, Duties, Imposts and Excises.” But starting with the Reciprocal Trade Agreements Act of 1934, Congress has steadily delegated tariff authority to the executive branch.
Why Congress Delegated
Congress delegated because the Smoot-Hawley experience proved that legislative tariff-setting is politically dysfunctional. When every member of Congress can lobby for tariffs on products in their district, the result is logrolling and rate escalation. Delegation to the President, who has a national constituency, was supposed to produce more rational tariff policy.
How Delegation Expanded
Over the decades, Congress created multiple statutory authorities for presidential tariff action — each broader than the last:
- Section 201 (1974): Safeguard tariffs to help industries injured by imports — limited in scope and duration
- Section 301 (1974): Retaliatory tariffs against unfair trade practices — broader authority, fewer constraints
- Section 232 (1962): National security tariffs — very broad authority with minimal Congressional oversight
- IEEPA (1977): Emergency economic powers — the broadest authority of all, originally intended for sanctions rather than tariffs
Each statute gave the President more discretion and fewer guardrails. By the time IEEPA was invoked for tariffs in 2025, the delegation had arguably gone further than Congress ever intended.
The Supreme Court Draws a Line
The IEEPA ruling is, at its core, a ruling about the limits of delegation. The Court said: Congress may have delegated broad emergency powers, but it didn’t delegate the power to tax imports. That power remains with Congress.
This is significant beyond the IEEPA context. It signals that courts may be willing to scrutinize other expansive uses of delegated trade authority — potentially affecting how Section 232 and Section 301 are used in the future.
For importers, this means the legal landscape is shifting in your favor. The trend toward broader and broader presidential tariff authority may have peaked with IEEPA. Understanding what IEEPA actually says helps you see why the Court drew the line where it did.
Lessons From History
Every major tariff episode in American history shares certain patterns:
- Tariffs create concentrated costs. The importer pays; the consumer pays through higher prices; specific industries pay through retaliation.
- Retaliation escalates. From the Nullification Crisis to Smoot-Hawley to the 2018-2025 trade war, every tariff escalation triggers a response.
- Legal challenges follow overreach. When tariff authority exceeds its legal bounds — whether it’s a state nullifying federal law or a president using emergency powers for trade policy — the courts eventually intervene.
- The pendulum swings. Periods of protectionism are followed by periods of liberalization, and vice versa.
The IEEPA ruling is consistent with all four patterns. The tariffs created concentrated costs (importers absorbed them). Trading partners retaliated. The legal challenge succeeded because the authority was overreached. And the pendulum may be swinging back — at least on the question of executive tariff power.
For importers, the actionable takeaway is this: when the government overcharges you and the courts say so, there’s a process to get your money back. That process is available now. The IEEPA refund eligibility guide will help you determine what you’re owed, and the IEEPA refund glossary defines every term you’ll need along the way.
Don’t wait for the next chapter of tariff history to be written. The refund is available today, and the windows to file are closing.
Request a free Impact Assessment to determine your total IEEPA tariff exposure and the best recovery path for your entries. The assessment is confidential, covered by mutual NDA, and delivered within 5-10 business days.
