SCOTUS Strikes Down IEEPA Tariffs (and What That Means for the Construction Industry)

Introduction

On February 20, 2026, the US Supreme Court ruled against the Trump administration in Learning Resources, Inc. v. Trump (the "tariff case"). The Court held that the Trump administration does not have the authority to issue the tariffs pursuant to the International Emergency Economic Powers Act ("IEEPA"). As a note, this is actually two consolidated cases (the other being V.O.S. Selections v. Trump).

IEEPA empowers the president, upon a valid emergency declaration, to "regulate ... importation" during a declared national emergency with regard to an "unusual and extraordinary threat." (50 USC section 1702; see also section 1701). The administration argued that the statute authorizes the president to impose tariffs as a regulation of importation.

The challengers countered that tariffs are a core Article I power (that is, a power of Congress), and even if “regulate” could linguistically include tariffs, the statute lacks clear authorization and would raise major questions and nondelegation problems.

The issue boils down to this: whether Congress quietly transferred one of its most consequential economic powers to the executive branch through a broadly-worded emergency statute. The Supreme Court says it did not.

Background Facts

In 2025, President Donald Trump invoked IEEPA to impose sweeping tariffs on goods imported from China. Declaring that longstanding trade imbalances and China’s alleged unfair trade practices constituted a national emergency, the President relied on IEEPA’s grant of authority to regulate economic transactions during such emergencies. The administration directed federal agencies to raise tariff rates on a broad range of Chinese products, significantly increasing duties across multiple sectors of consumer and industrial goods. The measures were framed as necessary to protect U.S. economic and national security interests and to pressure China to change its trade practices.

The decision is based on two matters, Learning Resources and V.O.S. Services. The former was filed in the US District Court for the District of Columbia, the latter in the Court of International Trade. Learning Resources, Inc. and hand2mind, Inc. (petitioners) are small businesses that develop children’s toys, specifically educational toys and similar products. Petitioners in V.O.S. Services are importers challenging the reciprocal tariffs imposed.

Tariffs' Impact on the Construction Industry, and What Comes Next

The construction industry closely tracked the litigation because of its heavy reliance on globally sourced materials, including steel, aluminum, copper wiring, machinery components, and prefabricated building products. Industry groups have repeatedly warned that broad-based tariffs function as a tax on construction inputs.

For example, the Associated Builders and Contractors (ABC) released analysis showing that, despite a brief decline in December 2025, "key inputs are still experiencing rapid escalation" and that this "is especially true for materials most exposed to tariffs."

The Associated General Contractors (AGC) created its Tariff Resource Center to help contractors stay up-to-date, navigate challenges created by the tariffs, and providing data as to their effects. AGC's 2026 Construction Hiring and Business Outlook Survey suggested that contractors perceive having been materially affected by the tariffs (according to 70% of respondents). "Two in five firms (40 percent) report responding to actual or proposed tariffs by raising bid prices and 20 percent of firms added price-sharing adjustments or other terms to contracts."

And the National Association of Home Builders (NAHB) has been "leading the fight against tariffs" for years. For example, in 2025, representatives from NAHB met with senior staff for the U.S. Trade Representative to discuss how tariffs on building materials will drive up the cost to construct homes and harm housing affordability.

In short, industry economists and other experts are generally resistant and skeptical of tariffs. They tend to drive prices up, decreasing affordability and tightening margins.

The Arguments

The main legal battle centered on whether the President overstepped the authority Congress granted under IEEPA. That is, (1) whether Congress can give the president this power ("nondelegation"), and (2) if Congress can, then whether Congress did give the president that power ("major questions").

Petitioners argued that IEEPA does not have an explicit authorization for the president to impose tariffs unilaterally. But even if it does, such a delegation would be unconstitutional ("Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises"). (U.S. Const., Art. I, section 8, cl. 1).

The Trump Administration argues that IEEPA gives broad authority to act during national emergencies, and that these tariffs fit squarely within the president's ability to regulate importation under IEEPA, because a tariff is kind of regulation.

Amicus Briefs

The case attracted significant attention from amici curiae (“friends of the court”) including members of Congress, constitutional scholars, former executive officials, trade organizations, and state governments. Many briefs supported the petitioners’ position that the tariffs exceeded the authority granted by IEEPA. You can find a list of all the briefs (and the operative briefs) at SCOTUSblog.

Supporters of that view included members of Congress, scholars such as Richard Epstein, former Attorney General Michael Mukasey, policy organizations including the Cato Institute (through Scott Lincicome), California Governor Gavin Newsom, and various small-business associations.

Several amici (e.g., Lincicome, Epstein, Mukasey) emphasized the structural constitutional stakes: they argue that allowing tariff-setting under IEEPA would fundamentally alter the separation of powers by enabling the Executive to reshape national trade policy without fresh congressional approval.

The Decision

Justice Roberts, writing for the majority, begins the decision with this: "Based on two words separated by 16 others... 'regulate' and 'importation'... the President asserts the independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time. Those words cannot bear such weight." (Opinion, p. 5). Article I empowers Congress, not the executive, with the power to tax (and tariffs are, in fact, a tax).

Justice Roberts describes the major questions doctrine as the Supreme Court's reluctance to read into ambiguous statutory text extraordinary delegations of Congress's powers. (Opinion, p. 7). This is especially true where, as here, "the purported delegation involves the core congressional power of the purse." (Opinion, p. 8). "When Congress has delegated its tariff powers, it has done so in explicit terms, and subject to strict limits." (Opinion, p. 8).

"The President asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope. In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorization to exercise it. IEEPA’s grant of authority to “regulate . . . importation” falls short. IEEPA contains no reference to tariffs or duties. The Government points to no statute in which Congress used the word “regulate” to authorize taxation. And until now no President has read IEEPA to confer such power. We claim no special competence in matters of economics or foreign affairs. We claim only, as we must, the limited role assigned to us by Article III of the Constitution. Fulfilling that role, we hold that IEEPA does not authorize the President to impose tariffs." (Opinion, p. 20) (emphasis added).

A procedural note hinted at above: the V.O.S. Services case was affirmed; the Learning Resources case was vacated, and SCOTUS instructed the lower court to dismiss for lack of jurisdiction (that is, it should have been filed in the Court of International Trade).

The Other Opinions

These are very in-the-weeds. However, below are some pertinent quotes that elucidate, depart from, and offer thoughtful criticism of the majority opinion.

Justice Gorsuch's Concurrence

Justice Gorsuch's lengthy concurrence outlines his theory of the major questions doctrine as it departs from his colleagues. And it begins with a fair summary of where the justices came down on this decision. The six in the 6-3 decision aren't in exactly the same place, but they agree that IEEPA does not grant this authority under these circumstances.

"All I can offer them is that most major decisions affecting the rights and responsibilities of the American people (including the duty to pay taxes and tariffs) are funneled through the legislative process for a reason. Yes, legislating can be hard and take time. And, yes, it can be tempting to bypass Congress when some pressing problem arises. But the deliberative nature of the legislative process was the whole point of its design. Through that process, the Nation can tap the combined wisdom of the people’s elected representatives, not just that of one faction or man." (Gorsuch, p. 46).

One podcast compared Justice Gorsuch's opinion to a Festivus "airing of grievances." In any event, the remaining opinions could be read as responses to Justice Gorsuch's concurrence.

Justice Barrett's Concurrence

Justice Barrett writes separately to address Justice Gorsuch's analysis of the major questions doctrine and, in particular, his criticism of her approach. Her approach focuses on the statutory language rather than going into detail about the broader doctrinal discussion.

"To the extent that JUSTICE GORSUCH attacks the view that 'common sense' alone can explain all our major questions decisions...he takes down a straw man. I have never espoused that view. Rather, as I explained in my concurrence in Biden v. Nebraska, 600 U. S. 477, 507 (2023), the major questions doctrine 'situates text in context' and is therefore best understood as an ordinary application of textualism." (Barrett, p. 1).

Justice Kagan's Concurrence

Justice Kagan (joined by Justices Sotomayor and Jackson) issues a concurring opinion also critical of the majority's major questions doctrine analysis. She argues that the text of the statute gets to the correct result without having to rely on any particular doctrine. "The use of a clear-statement rule here is unnecessary because ordinary principles of statutory interpretation lead to the same result." (Kagan, p. 3). "[S]traight-up statutory construction resolves this case for me; I need no major-questions thumb on the interpretive scales." (Kagan, p. 7).

Justice Jackson's Concurrence

Justice Jackson writes separately to point out at that legislative history can be helpful, and the Court need not rely on any interpretative doctrine. "...the legislative history provides helpful evidence of “what Congress was trying to do” in IEEPA ... Given that evidence, we need not speculate or, worse, step into Congress’s shoes and formulate our own views about what powers would be best to delegate..." (Jackson, p. 4-5).

Justice Thomas's Dissent

Justice Thomas argues that the statute at issue "is consistent with the separation of powers as an original matter." (Thomas, p. 2). He would have upheld the President’s authority under the statute as a matter of ordinary statutory interpretation and historical understanding. "[N]either the statutory text nor the Constitution provide a basis for ruling against the President." (Thomas, p. 18).

Justice Kavanaugh's Dissent

Justice Kavanaugh's 63-page dissent, put simply, argues that IEEPA authorizes the president to "regulate...importation," which includes tariffs on foreign imports during declared national emergencies. (Kavanaugh, p. 6). "The tariffs at issue here may or may not be wise policy. But as a matter of text, history, and precedent, they are clearly lawful." (Kavanaugh, p. 63). "In sum, under the major questions doctrine as the Court has applied it, this should be a straightforward case. Congress supplied clear authorization for the President to impose tariffs under IEEPA." (Kavanaugh, p. 45).

What Comes Next?

The big issue left unaddressed is how the harmed businesses will be made whole. This came up at oral arguments, but the decision is silent. Customs said they collected about $200 billion as of December 15, 2025. Justice Kavanaugh did mention this briefly. "Refunds of billions of dollars would have significant consequences for the U.S. Treasury," and "that process is likely to be a 'mess,' as acknowledged at oral arguments." (Kavanaugh, p. 63).

We will have to wait and see, and this may depend on the Trump Administration's response to today's decision.

Conclusion

The Court's decision in Learning Resources v. Trump reaches beyond the immediate dispute over tariffs. In resolving the case, the Court clarified the boundaries of Congress’s ability to delegate emergency economic powers to the executive and underscored the level of clarity required when authorizing actions with sweeping commercial impact. Its practical implications are significant, particularly for industries like construction, where regulatory certainty and predictable trade policy are essential for long-term planning and strategy.