On November 5, 2025, the U.S. Supreme Court is set to hear the Trump Administration’s appeal of lower court decisions holding the imposition of certain tariffs under the International Emergency Economic Powers Act (“IEEPA”) unlawful. If the Supreme Court rules that IEEPA does not authorize tariffs, the government would no longer have authority to collect them and importers should receive refunds for unliquidated entries and liquidated entries that have been properly protested. However, even if the Supreme Court holds unequivocally that IEEPA does not authorize any tariffs, the availability of refunds is not certain. Given the President’s commitment to maintaining tariffs and the economic and logistical implications of refunding billions of dollars in IEEPA tariffs, it is possible the President may take actions to avoid issuing refunds altogether.
In this alert, we consider actions the President might take to continue enforcing the tariffs imposed under IEEPA over the past nine months. While each action faces challenges, refunds—particularly full refunds—are not an inevitability. And at a minimum, the Administration may not submit to issuing refunds without further litigation. Importers should closely watch for steps taken by the Administration allowing it to retain, and continue to collect, as much tariff revenue as possible. Covington’s International Trade Team stands ready to assist importers in navigating the outcome of the Supreme Court’s ruling and the Administration’s responses to it.
The President possesses the authority to impose tariffs under a variety of trade statutes that he can turn to if the Supreme Court rules that IEEPA does not, or constitutionally cannot, provide broad tariff-setting authority to the executive. Some of these authorities, including Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962, require the executive branch to conduct investigations and prepare bespoke reports before imposing new tariffs. However, two authorities empower the President to potentially impose tariffs without any predicate agency action: (1) Section 122 of the Trade Act of 1974, which empowers the President to impose tariffs of up to 15 percent for a period of 150 days to address balance-of-payment problems; and (2) Section 338 of the Tariff Act of 1930, which permits the President to impose new or additional tariffs up to 50 percent without any durational limit to counter discrimination by foreign governments against U.S. commerce.
Neither of these authorities have been previously challenged in court. Section 122 has never been used, and Section 338 has also largely gone unused. In particular, Section 338 was invoked only a few times shortly after its enactment in 1930, but no president has directly applied it to impose tariffs. Because these authorities may allow the President to impose tariffs without preceding action from an agency or Congress, the President could notionally seek to invoke them in swiftly responding to a potential ruling from the Supreme Court holding IEEPA tariffs unlawful. There are at least two possible ways the Trump Administration—acting unilaterally—might try to use other legal bases to authorize tariffs previously collected under IEEPA. Both actions would present challenges, but the Administration has consistently pursued aggressive action in the face of uncertain legal landscapes, in the trade context and others. Alternatively, the President could attempt to work with Congress to retroactively authorize the IEEPA tariffs.
A. The President May Rely on Other Tariff Statutes to Maintain Tariffs Imposed Under Existing IEEPA Executive Orders
First, the Administration may seek to avoid issuing refunds by arguing that at least some of the tariffs imposed under existing IEEPA Executive Orders (“EOs”) nonetheless remain effective, as to both past and future imports, because they are justified by other authorities not explicitly identified in the EOs—particularly those not requiring predicate agency action. This strategy would leverage the fact that the President is not himself subject to the Administrative Procedure Act (which requires agencies to follow certain procedural and notice requirements), and generally need not explain his decision-making except as required by statute. Though there appears to be little precedent for such a strategy, and it would face obstacles, the Administration may at least delay—and perhaps limit—refunds by pursuing it.
The viability of this strategy would depend first on the relief ordered in the IEEPA case now pending before the Supreme Court. For instance, even if the Supreme Court holds the tariffs unlawful, it is unlikely to weigh in on the proper remedy—in particular, on whether any importer can seek refunds from the unlawfully imposed tariffs, or instead only the plaintiffs to the case (or perhaps no importers at all). Instead, the Supreme Court is likely to remand the case to the lower courts to make that remedial determination in the first instance. Any remedy that enjoins agencies from implementing President Trump’s EOs would require him to issue new actions re-authorizing the tariffs under different authorities.
The Administration, though, may contest any such broad remedy by arguing that it is not permissible under recent Supreme Court precedent and should instead be limited to the plaintiffs to the case. In addition, the Administration may claim that the tariffs imposed remain lawful—in whole or in part—based on other tariff authorities not explicitly identified in the IEEPA EOs.
This latter argument, to be sure, would face challenges. While other statutory bases to impose tariffs require no predicate agency investigation or action, their use is limited to specific factual circumstances that are narrower than IEEPA’s declaration of an international emergency.
- Section 338, the most expansive of the remaining authorities, requires the President to find the countries at issue impose an “unreasonable charge, exaction, regulation, or limitation” on U.S. products or otherwise discriminate against U.S. commerce.
- Section 122 authorizes tariffs only to address balance of payment issues, caps tariffs at 15 percent, and sets a time limit of 150 days in the absence of an extension from Congress.
Despite these challenges, the President may nonetheless assert that at least some of the tariffs are and have been justified by other authorities, even if not by IEEPA. Even if these efforts are challenged in court and ultimately unsuccessful, the Administration may not voluntarily begin paying refunds immediately following a Supreme Court ruling finding the IEEPA tariffs unlawful. Rather, the Administration may withhold refunds while subsequent efforts to justify the tariffs are being litigated. Or the Administration may resist refunding tariffs paid by non-parties to the IEEPA challenge until ordered to do so as a result of individual or class action lawsuits. In addition, any new implementing action agencies might take to recast the President’s IEEPA tariffs as tariffs issued under other statutes might be subject to retroactivity challenges like those discussed below, to the extent the Administration invokes those other statutes as grounds for refusing refunds of tariffs paid on past imports.
B. The President May Rely on Tariff Statutes Outside IEEPA to Issue New Executive Orders to Apply Tariffs Retroactively
Second, rather than asserting tariffs previously imposed remain viable under existing EOs, the President may seek to issue new EOs re-imposing tariffs based on statutory authorities other than IEEPA and apply those tariffs retroactively to past transactions dating back to the original implementation of the IEEPA tariffs. Such a strategy would likely face significant legal obstacles.
Retroactivity is not favored in the law, and the Supreme Court has explained that “congressional enactments and administrative rules will not be construed to have retroactive effect unless their language requires this result.” Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988); see also Landgraf v. USI Film Prods., 511 U.S. 244 (1994). A statute, rule, or regulation thus cannot be applied retroactively unless clearly authorized by Congress (and, in the case of a rule or regulation, the agency).
The key principles underlying the Supreme Court’s retroactivity precedents—that retroactivity is disfavored, and that Congress decides the circumstances under which law may have retroactive effect—would seem to apply to presidential action pursuant to statutes no less than to agency action pursuant to statutes. And none of the other authorities the President is likely to rely upon to impose replacement tariffs appear to contain the clear authorization for retroactive tariffs these precedents demand. Moreover, the Administration would be using this strategy as part of an attempt to salvage a basis for tariffs the Supreme Court has held are otherwise unlawful, and any new EOs would require agencies to issue implementing guidance. Those considerations and others may undercut any claims by the Administration that the tariffs are not retroactive or that the requirement that Congress clearly authorize retroactive application does not apply to tariff statutes.
Even if the courts hold any attempt to retroactively impose tariffs unlawful, however, the Administration may delay refunds simply by pursuing this strategy and thereby force new legal challenges to the retroactivity (and legality) of the newly imposed tariffs.
C. The President May Ask Congress to Authorize Retroactive Application of Tariffs Under IEEPA
Aside from unilateral action, the President may ask Congress to amend IEEPA, with retroactive effect, to explicitly authorize him to impose tariffs under the statute. Congress is generally able to legislate retroactively, subject to only limited exceptions. For instance, certain constitutional limitations generally prohibit Congress from retroactively enacting laws that are penal in nature. However, consistent with Supreme Court precedent acknowledging Congress’s constitutional authority to enact retroactive tax laws on the basis that such laws are not penal in nature, such constitutional limitations are unlikely to prevent Congress from enacting retroactive tariff legislation, particularly when such legislation would relate to transactions only a year or two in the past. Nor is such legislation likely to present significant due process issues under the Fifth Amendment of the Constitution, which generally requires Congress only to have a “rational legislative purpose” to justify a retroactive enactment.
Instead, the more significant challenges to legislative attempts to delegate worldwide tariff authority to the President through IEEPA are likely to be political. Such legislation would face immediate procedural hurdles in the Senate, where Democrats—along with four Republican colleagues—passed several resolutions at the end of October to repeal President Trump’s emergency declarations authorizing certain IEEPA tariffs. While Republicans could notionally attempt to avoid a 60-vote Senate threshold by using the budget reconciliation procedure, a tool that is limited to measures with direct budgetary impacts, it is not clear that they could establish even a simple majority. Moreover, the Senate parliamentarian might rule that while reconciliation can be used to impose tariffs directly, it cannot be used to amend the IEEPA statute (a policy change not directly impacting revenue). Support for tariffs is not a traditional GOP position and, if forced to vote, the number of Republicans in the Senate who would oppose a tariff measure is unlikely to be zero. Given narrow control and the probability of unanimous Democratic opposition, such a bill is unlikely to pass the House either. Nevertheless, given changing sentiments in the Republican party, businesses should closely monitor discussions on Capitol Hill if the Supreme Court issues an adverse ruling for the Trump Administration.
If IEEPA tariffs are struck down, companies that have paid duties will likely need to file post summary corrections for unliquidated entries and protests for any liquidated entries. In the meantime, while the case remains pending before the Supreme Court, companies should monitor the liquidation status of entries subject to IEEPA tariffs and file protests within 180 days of liquidation, citing the appeal at the Supreme Court. This is the best way to preserve the right to tariff refunds in the event that IEEPA tariffs are eventually invalidated. In addition, companies should be periodically downloading information from the Automated Commercial Environment system administered by U.S. Customs and Border Protection (“CBP”) and carefully tracking what tariffs they have paid and under what authority. Even if refunds are authorized, CBP may impose documentation requirements and/or administrative barriers to receiving such refunds.
Finally, if the courts ultimately narrow relief from tariffs to only the plaintiffs in the cases now pending before the Supreme Court, the Government may decline to refund IEEPA tariffs as to all other importers (and could even continue collecting IEEPA tariffs from such importers). Companies may thus want to evaluate whether to bring their own individual suits or challenges to any attempts by the Administration to impose retroactive tariffs. Covington’s International Trade Team stands ready to assist businesses impacted by IEEPA tariffs.
If you have any questions concerning the material discussed in this client alert, please contact the members of our Trade Policy practice.
Back
