SCOTUS Limits Presidential Tariff Powers: Key Takeaways for Government Contractors

By Jacqueline K. Unger and Ryan Boonstra of PilieroMazza PLLC
Originally published February 23, 2026

On February 20, 2026, the Supreme Court of the United States (SCOTUS or the Court) issued a major decision in Learning Resources, Inc. v. Trump limiting the Trump Administration’s ability to impose tariffs under the International Emergency Economic Powers Act (IEEPA). The decision narrows the executive’s emergency economic powers and reinforces congressional control over tariffs. This ruling carries significant implications for government contractors who have spent the past year navigating rapidly shifting tariff regimes. Below, we break down the Court’s holding and what contractors need to know.

The Case in Brief

The central question before the Court was whether the IEEPA authorized the President to impose tariffs to address an “unusual and extraordinary threat” to national security, foreign policy, or the U.S. economy. The Trump Administration argued that it had authority under IEEPA to impose tariffs on Canada, Mexico, and China to combat the fentanyl crisis and to impose broad reciprocal tariffs to combat large trade deficits.

SCOTUS was not convinced. In a 6-3 decision, the Court ruled that the IEEPA does not grant the President authority to impose tariffs. In reaching this decision, SCOTUS found:

• The President failed to “point to clear congressional authorization” showing that Congress had relinquished its tariff powers as necessary under the “major questions” doctrine, which requires that any delegation of Congressional power to make decisions of vast economic or political significance be clear.
• The IEEPA’s terms “regulate” and “importation” were too ambiguous to imply sweeping tariff powers, especially given Congress’s long-established constitutional authority over taxation and duties.
• Historical and wartime precedents did not support the Administration’s interpretation. In this regard, the Court held that the interpretation of the IEEPA’s predecessor Act has no bearing on the powers Congress intended to confer when developing the IEEPA. And, wartime precedent could not be used to support the President’s power to impose tariffs because the President lacks peacetime authority to impose tariffs. Finally, the Court found that prior SCOTUS decisions discussing duties had little bearing on the meaning of the IEEPA and did not address the power to “regulate.”

Takeaways for Government Contractors

Although it is too early to know what long-term impact the Court’s opinion will have, it is clear that tariff burdens will not entirely disappear, and the process for obtaining refunds for the unlawful tariffs likely will be messy. Below are important implications for contractors to keep in mind.

1. Refunds are not guaranteed

The Court did not address whether contractors or importers are entitled to refunds for tariffs already paid under the IEEPA, let alone the mechanism for such refunds. The government collected an estimated $130+ Billion under these tariffs. Justice Kavanaugh’s dissent acknowledged the massive refund implications, but SCOTUS’s decision left open questions of whether refunds are owed and how they would be effectuated. Litigation is being filed seeking refunds, and some politicians have already taken to the media or written to the President himself to demand refunds.

Whether the government processes refunds voluntarily or importers are forced to litigate, any future refund mechanism will require detailed, well-organized cost documentation, so contractors should accurately track tariff-related costs and preserve import records, correspondence, invoices, and pricing impacts tied to tariffs. If refunds are authorized later, contractors with poor documentation will struggle to recover funds.

2. Tariffs are not going away

It is important to recognize that SCOTUS’s ruling dealt only with tariffs under IEEPA. As a result, President Trump has other viable statutory authorities for imposing tariffs.

The same day as the ruling, President Trump issued an Executive Order (EO) ending the IEEPA tariffs imposed through prior EOs and directed that, “as soon as practicable,” such tariffs no longer be collected. Though the EO ends the IEEPA tariffs, it declares that no other duties are affected, including duties imposed under section 232 of the Trade Expansion Act of 1962 and section 301 of the Trade Act of 1974 (Section 301). Additionally, the same day as the ruling, President Trump announced a new 10% global tariff under Section 122 of the 1974 Trade Act, effective February 24, which allows for a 150-day “temporary import surcharge,” unless extended by Congress. The following day, the surcharge was increased to 15%. The Trump Administration also announced that it will initiate new investigations into unfair trade practices under Section 301 which likely will lead to additional tariffs down the road. Thus, while SCOTUS curtailed the President’s tariff authority under IEEPA, the Trump Administration remains committed to imposing tariffs and is using alternative statutory tools to do so. Contractors should continue monitoring new impositions of tariffs as price impacts will likely continue.

3. Contract pricing and supply chain planning remain affected

Even if certain tariffs are invalid, contractors may still face increased costs from new tariffs under different statutory authorities. Additionally, agencies may be reluctant to adjust pricing absent clear direction from the Administration or Congress. Contractors should assess the potential impact of new tariffs, evaluate whether such impacts can be mitigated through their contract provisions, and engage counsel early when preparing REAs and claims related to tariffs.

Jackie Unger is a Partner and leads PilieroMazza’s Government Contracts Group, serving as Chair of the Firm’s largest practice group. She also co-Chairs the firm’s False Claims Act Group, where she represents clients in investigations related to government contracts, including FCA investigations and suspension and debarment proceedings. She can be reached at junger@pilieromazza.com or 202.655.4170.

Ryan Boonstra is an Associate with PilieroMazza. He assists PilieroMazza clients with a wide range of government contracting issues, including, requests for equitable adjustment, claims, appeals, small business concerns, defense contracting, and bid protests. He can be reached at rboonstra@pilieromazza.com or 202.521.0084.