Are The Trump Tariffs Legal?

Short answer: probably not. The U.S. is on the verge of a constitutional and financial crisis. At its heart is the Trump administration’s use of the International Emergency Economic Powers Act (IEEPA), a 1977 law meant for true national emergencies, to impose massive tariffs on global trade. This move stretches executive power into territory the Constitution reserves for Congress: the authority to tax and regulate foreign commerce. The administration’s legal argument has been consistently rejected by lower courts, setting the stage for a landmark Supreme Court case, Trump v. V.O.S. Selections. This case isn’t just about trade policy; it’s a fundamental test of the separation of powers. If the government loses, which seems HIGHLY likely, it could trigger a U.S. Treasury payout of between $750 billion and $1 trillion. But this taxpayer-funded refund won’t go to the consumers who paid higher prices. Instead, it will be a massive windfall for the corporate importers who paid the duties and passed the costs on, a profound irony at the center of this legal battle. The government’s case hinges on a dangerously broad interpretation of the IEEPA.

Can “Regulate” Mean “Tax”?

The administration argues that the President’s power under IEEPA to “regulate… importation” during an emergency includes the power to impose tariffs. Federal courts have disagreed. The U.S. Court of Appeals for the Federal Circuit found that while IEEPA grants broad powers, “none of these actions explicitly include the power to impose tariffs, duties, or the like, or the power to tax”. Taxation and regulation are legally distinct. While a tax can have a regulatory effect, the power to regulate doesn’t automatically include the power to tax. When Congress intends to delegate its tariff authority, it uses clear and specific words like “duty” or “tariff,” which are notably absent from IEEPA. The administration chose IEEPA not because it was the right legal tool, but because it offered a shortcut around the procedural requirements—like investigations and public comment periods—built into other trade laws like Section 232 and Section 301.

Statute	Legal Predicate	Delegated Authority (Verbatim)	Implementing Actor	Procedural Requirements
International Emergency Economic Powers Act (1977)	Declared “unusual and extraordinary threat” to national security, foreign policy, or economy	“regulate… importation”	The President	Declaration of a national emergency
Trade Expansion Act of 1962 (Sec. 232)	Threat to “impair the national security”	“adjust the imports of an article”	The President, based on a Commerce Dept. report	Commerce Dept. investigation (up to 270 days) and presidential action timeline (90+15 days)
Trade Act of 1974 (Sec. 301)	“Unjustifiable” or “discriminatory” act that burdens U.S. commerce	“impose duties or other import restrictions”	The U.S. Trade Representative (USTR)	USTR investigation (up to 12 months), consultations, and public comment

A Strong Judicial Consensus

The legal case against the tariffs is strengthened by a rare, non-partisan consensus in the lower courts. The tariffs were first struck down by the U.S. Court of International Trade and later by the U.S. Court of Appeals for the Federal Circuit. Of the 15 federal judges who have reviewed the case, 11 have ruled that the President overstepped his authority. These judges were appointed by presidents from both parties, signaling that the issue is one of clear legal error, not political disagreement. The legal challenge goes beyond statutory text, touching on two core constitutional principles.

1. Separation of Powers

Article I, Section 8 of the Constitution gives Congress the “Power To lay and collect Taxes, Duties, Imposts and Excises”. This “power of the purse” is a core legislative function. By imposing tariffs expected to raise trillions of dollars, the executive branch has engaged in a massive act of taxation without explicit congressional approval. This action falls into the “lowest ebb” of presidential power, as defined in the famous Youngstown Steel case, because it is incompatible with the expressed will of Congress.

2. The Major Questions Doctrine

This doctrine states that for issues of “vast economic and political significance,” an agency must have “clear congressional authorization” to act. A trillion-dollar tariff program certainly qualifies as a major question. The administration’s attempt to find this authority in the vague phrase “regulate importation” is exactly what the doctrine is meant to prevent. In a separate case involving Section 301 tariffs on China, the Federal Circuit found that the Major Questions Doctrine did not apply because Congress had provided a clear statement of authority. The court carefully distinguished that case from the IEEPA tariffs, noting that here the President was claiming a transformative power “never previously claimed”. This gives the Supreme Court a clear path to strike down the IEEPA tariffs without dismantling all other delegated trade authority. If the Supreme Court invalidates the tariffs, the financial and logistical fallout will be immense.

An Unprecedented Government Payout

The U.S. Treasury faces a potential refund liability estimated at $750 billion to $1 trillion. This includes over $72 billion in IEEPA tariffs already collected through August 2025, plus billions more collected since. This massive, unplanned expense would deliver a severe shock to the U.S. Treasury. The administration’s own warnings of a “disaster for the United States” if refunds are paid is a classic “parade of horribles” legal tactic, often used to distract from a weak legal argument.

Data Point	Amount	Source(s)
Tariff Revenue (Current Fiscal Year)	~$165 Billion	Bloomberg Economics
Tariff Revenue Increase (YoY)	+$95 Billion	Bloomberg Economics
Total IEEPA Tariffs Collected (through Aug 24, 2025)	>$72 Billion	U.S. Customs and Border Protection
Projected 10-Year Revenue (Conventional)	$2.3 Trillion	Tax Foundation
Estimated Total Refund Liability	$750 Billion – $1 Trillion	U.S. Treasury Secretary Bessent

A Logistical Nightmare

There is no simple “undo” button. The government lacks an automated system for a refund of this size. The process would likely involve “millions and millions of paper checks,” creating a bureaucratic quagmire for the thousands of importers entitled to refunds. Businesses will have to file complex claims and provide extensive documentation, and many have “zero faith” they will ever be reimbursed. The most unfair outcome of this legal battle is who stands to benefit from the refunds.

Who Really Pays for Tariffs?

Legally, the U.S. company importing the goods—the “importer of record”—pays the tariff to the government. Economically, however, studies show that importers have passed nearly the entire cost on to wholesalers, retailers, and ultimately, American consumers in the form of higher prices. This “hidden tax” is estimated to cost the average American household up to $2,800 in 2025 alone. Donald Trump’s repeated assertions that the selling country pays the tariff tax are false – they don’t. The importer pays the tariff tax. Then, when the importer resells, American consumers reimburse the importer for the tariff tax in the form of a higher purchase price.

A Refund for a Cost They Didn’t Bear

Under U.S. customs law, only the entity that paid the tax—the importer of record—has the legal right to a refund. Consumers who bought a tariffed product have no legal standing to file a claim. This creates a perverse result: the importers, who largely acted as middlemen for the tariff costs, will receive a full refund from the government. It amounts to a massive, multi-billion-dollar wealth transfer from taxpayers to a select group of corporations—a reimbursement for an expense they did not actually bear. This anticipated payout is so large that hedge funds have already started buying up importers’ refund claims, treating a legal remedy as a tradable financial asset. The evidence strongly suggests the IEEPA tariffs are an unconstitutional overreach of executive power. The Supreme Court is poised to affirm the lower courts, reining in presidential authority and reinforcing Congress’s constitutional role in trade and taxation. While this would be a victory for the separation of powers, it would also trigger a historic financial payout. This refund will create a deeply unfair outcome, rewarding corporate importers with a massive windfall while leaving the American consumers who actually bore the cost with nothing. The final ruling in Trump v. V.O.S. Selections will not only decide the fate of billions of dollars but will also set a lasting precedent for the balance of power in U.S. economic policy.