US Supreme Court strikes down IEEPA tariffs, CBP halts $175 billion duty regime

KARACHI: In a landmark ruling that reshapes the trajectory of United States trade policy, the U.S. Supreme Court has struck down the sweeping tariffs imposed under the International Emergency Economic Powers Act, declaring the use of emergency powers for broad-based global trade measures unlawful.
Following the decision delivered on February 20, the U.S. Customs and Border Protection announced that it will halt the collection of additional ad valorem duties imposed pursuant to the IEEPA starting Tuesday. The agency confirmed the move in a bulletin issued on February 22, stating that the additional duties introduced through seven executive orders signed between February 1 2025 and August 6 2025 will no longer remain in effect.
“In light of recent events, the additional ad valorem duties imposed pursuant to IEEPA shall no longer be in effect and, as soon as practicable, shall no longer be collected,” the executive order said, directing all executive departments and agencies to immediately terminate the collection process.
According to estimates by the Penn-Wharton Budget Model,the CBP collected as much as 175 billion dollars in duties under the IEEPA framework since the global tariffs were introduced in April.
The Supreme Court’s ruling marks a significant constitutional moment, reinforcing limits on executive authority in trade matters. The International Emergency Economic Powers Act was originally designed to address extraordinary external threats during genuine national emergencies. The court concluded that its application as a blanket trade tool targeting imports from multiple countries exceeded statutory intent.
Legal analysts say the judgment restores a measure of balance between the executive branch and Congress in trade policymaking, an area where presidential authority has historically been expansive yet not unlimited.
Despite the setback, the Trump administration is preparing to impose a new 15 percent tariff on imported goods from all countries starting Tuesday, according to a White House proclamation and statements made by President Donald Trump on social media over the weekend.
The proposed duties will be introduced under Section 122 of the Trade Act of 1974, which authorizes the president to impose tariffs of up to 15 percent for a maximum of 150 days to address “large and serious” balance of payments issues. Any extension beyond that period would require congressional approval.
The shift from IEEPA to Section 122 signals a strategic recalibration rather than a retreat from protectionist trade policies. Unlike emergency powers under IEEPA, Section 122 carries clear time limits and requires legislative oversight if extended.
Business groups have reacted cautiously to the ruling. While the halt in IEEPA duties offers temporary relief to importers and manufacturers facing higher costs, the looming 15 percent tariff introduces renewed uncertainty.
Economists note that tariffs function as indirect taxes on imports, with costs often passed on to consumers through higher prices. The 175 billion dollars collected under the IEEPA regime underscores the scale of the financial impact on businesses and households.
International trading partners are also closely monitoring developments. The abrupt imposition and reversal of tariffs have raised concerns about policy predictability in the world’s largest economy. Several countries have previously signaled intentions to diversify trade ties to reduce exposure to sudden US trade measures.
With the new tariff mechanism limited to 150 days unless extended by Congress, lawmakers are expected to face mounting pressure to clarify the future direction of US trade policy. The debate could open broader discussions on economic competitiveness, supply chain security and the role of tariffs in addressing trade imbalances.
For now, the Supreme Court’s decision stands as a decisive check on executive overreach in the name of national emergency. Whether the administration’s alternative tariff strategy will withstand political and economic scrutiny remains to be seen.
As global markets absorb the implications, the ruling underscores a fundamental principle of American governance: even in matters of trade and national interest, emergency powers are not without limits.