By Steve Levine · Updated August 13, 2026 · 7 min read
Quick Answer
IEEPA is a 1977 emergency powers statute that lets the President regulate international commerce after declaring a national emergency. In 2025 it was used, for the first time, as the legal basis for sweeping import tariffs. On February 20, 2026 the Supreme Court held in Learning Resources, Inc. v. Trump that IEEPA does not authorize tariffs at all, which turned roughly $166 billion in already-collected duties into refunds owed to the businesses that paid them at the border. Consumers who absorbed those costs in higher prices are not entitled to any part of that refund, which is the reason a wave of class actions now exists.
On this page
- What IEEPA actually says
- How a sanctions law became a tariff law
- What the Supreme Court held
- Who gets the refunds
- Why it matters for class actions
- Frequently asked questions
The International Emergency Economic Powers Act, codified at 50 U.S.C. sections 1701 through 1708, was enacted in 1977 to replace and narrow an older wartime statute. It works in two steps. First, the President declares a national emergency to deal with an unusual and extraordinary threat that originates largely outside the United States. Second, that declaration unlocks authority to investigate, regulate, block or prohibit a defined set of international commercial and financial transactions connected to the threat.
For nearly five decades the powers unlocked in step two were used in a recognizable way: freezing the assets of foreign governments and designated individuals, embargoing trade with particular countries, and administering sanctions programs. The word "tariff" does not appear in the statute, and neither does "duty."
Beginning in February 2025, a series of executive orders invoked IEEPA to impose tariffs rather than sanctions. The structure that emerged over the following months included 25% duties on goods from Canada and Mexico, escalating rates on Chinese goods that reached as high as 145%, a baseline 10% duty described as reciprocal on nearly all other imports, and higher country-specific rates on dozens of nations. The de minimis exemption, which had let low-value shipments enter duty-free, was eliminated for China and Hong Kong in May 2025 and for all countries at the end of August 2025.
This was the first time the statute had been used as the basis for broad import duties, and that was the heart of the legal challenge. Importers argued that a law about regulating transactions during an emergency could not be stretched into a general power to tax imports, particularly given that the Constitution assigns the taxing power to Congress.
On February 20, 2026, the Supreme Court decided Learning Resources, Inc. v. Trump and held that IEEPA does not authorize the President to impose tariffs. The Court grounded the ruling in the constitutional allocation of the taxing power, observing that the framers did not vest any part of that power in the executive branch. Justices in the majority noted that other statutes do delegate tariff authority to the President, but that those delegations come with express limits on the duration, amount and scope of what may be imposed — limits absent from IEEPA because IEEPA was never a tariff statute to begin with.
The practical consequence was immediate. Duties collected under an authority that never existed are duties collected without legal basis, and they have to go back.
Refunds run to the importer of record: the party that entered the goods and paid the duty to U.S. Customs and Border Protection. Court filings put the refundable pool at roughly $166 billion, accruing interest. CBP opened a dedicated refund portal, CAPE, on April 20, 2026, and reported to the Court of International Trade that it had paid about $100 billion as of July 31, 2026, across more than 25 million import entries.
The money does not follow the cost down the supply chain. A retailer that paid the duty, raised its prices to cover it, and then received a refund keeps the refund. Customers who paid the higher prices are not parties to that transaction and have no route into the Court of International Trade, which is the specialized federal court with jurisdiction over customs matters.
That structural gap is the entire premise of the consumer tariff litigation OCA tracks on its tariff class action pillar. Plaintiffs argue that a company which recovered a tariff twice — once from customers at checkout and again from the government afterward — should not keep both, and they plead unjust enrichment, money had and received, and state consumer protection statutes to try to reach the second recovery.
Justice Kavanaugh flagged the same dynamic in dissent, writing that the government may be required to refund billions to importers even though some of them had already passed those costs on to consumers. Nearly every complaint in this space quotes that line, which is telling: the closest thing the theory has to judicial endorsement comes from a dissenting opinion, not a holding.
One boundary is worth keeping straight. Only IEEPA duties are refundable. Tariffs imposed under Section 232, Section 301 or the temporary Section 122 surcharge were not touched by this ruling, so a company's total tariff bill is not the same as its refundable amount — often not even close.
Can a consumer get an IEEPA tariff refund?
No. IEEPA refunds run to the importer of record — the business that paid the duty to U.S. Customs and Border Protection at the border. A shopper who paid a higher shelf price is not the importer and has no filing route in the Court of International Trade. Private class actions have been filed asking courts to order companies to pass those refunds through to customers, but none has been certified or settled, and there is no claim form in any of them.
Did the Supreme Court end all tariffs in February 2026?
No. The ruling addressed tariffs imposed under IEEPA and only those. Tariffs resting on other statutes — Section 232 on steel and aluminum, Section 301 on Chinese goods and later on forced-labor findings, and the temporary Section 122 surcharge — were not invalidated by that decision, and none of them generates an IEEPA refund.
How much was collected under the IEEPA tariffs?
Court filings put the pool of collected IEEPA duties at roughly $166 billion, refundable with interest. U.S. Customs and Border Protection reported to the Court of International Trade that it had paid about $100 billion of that as of July 31, 2026, through the CAPE refund portal it opened in April 2026.
Had IEEPA ever been used for tariffs before?
Not for broad tariffs. Since its enactment in 1977 the statute had been used mainly for sanctions, asset freezes and trade embargoes against specific countries, entities and individuals. The 2025 tariff proclamations were the first attempt to use it as the basis for across-the-board import duties, and that novelty was central to the challenge.
