Tariff Tactics

With indications that the Supreme Court may issue its decision in Trump v. V.O.S. Selections, Inc. imminently, attention has understandably focused on the headline question: does the International Emergency Economic Powers Act (“IEEPA”) authorize the tariffs imposed beginning in early 2025? For importers and tariff refund litigants, however, how the Court reaches its decision—and how it frames relief—may prove just as consequential as the holding itself.

While prediction can be a dangerous business, we provide our advance predictions here on three issues of practical, post-decision consequence: (1) constitutional vs. statutory resolution (prediction – statutory); (2) prospective vs. retroactive relief (prediction retroactive); and (3) partial vs. total invalidation of the tariffs (prediction – unclear or partial).

1. Constitutional vs. Statutory Invalidation

If the Supreme Court invalidates the IEEPA tariffs, it may do so on constitutional or statutory grounds. A constitutional ruling would require the Court to address far-reaching questions about executive power or nondelegation. A statutory ruling, by contrast, would focus narrowly on whether IEEPA’s text authorizes tariffs at all.

Prediction: A majority is likely to favor a statutory approach. That outcome would be consistent with the Court’s preference for judicial minimalism, consistent with recent decisions, e.g., in Trump v. CASA, Inc, in which the question of Federal Court power to issue universal injunctions hinged on construction of the Judiciary Act of 1789.

Practical Takeaway: A statutory ruling would leave open the possibility of Congressional action. It would also raise questions about whether Congress could retroactively authorize some or all of the previously imposed tariffs.

1. Prospective vs. Retroactive Relief

A Supreme Court decision invalidating IEEPA tariffs raises remedial questions.  The Supreme Court could limit relief to prospective application (i.e. going forward), a possibility raised directly at oral argument when importer counsel Neal Katyal suggested that prospective relief could mitigate administrative complexity, citing Office of the U.S. Trustee v. John Q. Hammons Fall 2006, LLC.  However, in that case, any disparity in payment was “short lived and small,” as Justice Ketanji Brown Jackson wrote in her opinion for the six Justice Majority.  Regardless, a vigorous dissent by Justice Neil Gorsuch (joined by Justices Clarence Thomas and Amy Coney Barrett) emphasized “that a refund is the traditional remedy for unlawfully imposed fees.”

On the other hand, Supreme Court trade jurisprudence closer to the facts of Trump v. VOS Selections, Inc., provides precedent for a retroactive approach.  For example, in United States v. U.S. Shoe Corp., a unanimous Supreme Court held a Federal harbor maintenance tax unconstitutional as applied to exporters and remanded.  Following exporter lawsuits in the Court of International Trade (“CIT”), Judge Jane Restani established a procedure for exporters to resolve claims with Customs and Border Protection (“CBP”) and $730 million of refunds were issued over two years.  Similarly, and more recently, after Congress retroactively renewed the Generalized System of Preferences in 2018, CBP created an administrative procedure for importers to have refunds processed.

Prediction: The Court is unlikely to categorically foreclose retroactive relief. Instead, it may invalidate the tariffs and remand, leaving refund mechanics to the lower courts and administrative agencies.

Takeaway: A ruling against the tariffs is likely to trigger follow-on litigation and administrative proceedings, not immediate closure.

1. Upholding Tariffs—on What Basis?

The Supreme Court could also uphold the tariffs, though most observers (and betting markets) highly disfavor this outcome.  If the Court upheld some or all of the IEEPA tariffs, it could reach this result either by construing IEEPA as authorizing tariffs, or by finding an alternative source of Executive power that would authorize the tariffs at issue here.

IEEPA grants the President the power to “regulate importation,” and President Nixon invoked this power under IEEPA’s predecessor statute to issue Proclamation 4074, declaring a national emergency and increasing ad valorem import duties by 10%.  Proclamation 4074 did not create new tariffs, but the Court could uphold the challenged IEEPA tariffs by analogy to Proclamation 4074.

Alternatively, the Court could find that the President’s executive powers support the imposition of IEEPA tariffs, e.g., for reasons of national security, following the broad view of foreign affairs powers affirmed in United States v. Curtiss-Wright Export Corp., 299 U.S. 304 (1936) and its progeny.  This outcome would require parsing issues of non-delegation and balance of powers between Congress and the President.

Prediction: A broad endorsement of IEEPA tariff authority is unlikely.  If the Court upholds any IEEPA tariffs, it likely will draw distinctions between different categories, i.e., it may treat the “Liberation Day” and “reciprocal” tariffs differently than the “fentanyl” tariffs or tariffs imposed in the context of foreign war and military activity. 

Takeaway: Even partial upholding of tariffs would likely generate additional litigation over how the Court’s framework applies to specific tariffs or categories. 

Conclusion

Across all scenarios, a Supreme Court decision will be very unlikely to end the litigation or automatically resolve refund entitlement issues.  The Court’s choice of reasoning and remedy will shape follow-on proceedings in the Federal Circuit and the CIT.  For importers, the decision should be read not as an endpoint, but as the opening move in the next procedural phase.

Tariff Tactics will continue to analyze the decision—once issued—with particular focus on its remedial implications and the downstream consequences for tariff refund strategies.