What Is IEEPA? The International Emergency Economic Powers Act Explained

What Is IEEPA?

The International Emergency Economic Powers Act — universally known by its acronym IEEPA — is a federal statute enacted by Congress in 1977. It grants the President broad authority to regulate commerce with foreign nations during a declared national emergency. IEEPA was designed as a peacetime complement to the Trading with the Enemy Act (TWEA) of 1917, which had been applied in contexts far beyond actual wartime situations and was in need of reform.

Under IEEPA, once the President declares a national emergency with respect to an unusual and extraordinary threat to national security, foreign policy, or the economy, the executive branch gains sweeping powers to block transactions, freeze assets, impose sanctions, and — as became central to the tariff debates of 2025 — regulate imports. The statute has historically been used for targeted sanctions against specific countries, entities, or individuals (think sanctions on Iran, Russia, and North Korea), not broad tariffs applied to dozens of trading partners simultaneously.

How the Trump Administration Used IEEPA for Tariffs

Beginning in early 2025, the Trump administration took the unprecedented step of invoking IEEPA as the legal basis for sweeping “reciprocal” tariffs on imports from more than 80 countries. The administration declared a national emergency based on persistent and large U.S. trade deficits, arguing that these deficits constituted an unusual and extraordinary threat to the national economy.

The tariff schedule that resulted — sometimes called the “Liberation Day” tariff schedule, announced on April 5, 2025 — imposed rates ranging from 10% (the baseline “universal” rate for most countries) up to 46% on goods from Vietnam, 34% on goods from China, and varying rates for dozens of other trading partners. The administration set rates based on a simplified formula that divided each country’s trade surplus with the United States by its total exports to the U.S., then took half that figure as the “reciprocal” rate.

This was not the first time IEEPA was invoked for trade measures. Earlier in 2025, the administration used IEEPA to impose 25% tariffs on Canadian and Mexican goods, nominally tied to fentanyl and border security concerns. Those measures predated the broader “reciprocal” schedule but were grouped under the same IEEPA authority.

Legal Challenges to IEEPA Tariffs

Almost immediately after the tariffs were announced, legal challenges flooded into federal courts. The central question was whether IEEPA’s language — which authorizes the President to “regulate” commerce — could be interpreted to include imposing new tariffs at any rate on any country.

Critics, including most trade law scholars, argued that tariffs are a form of taxation and that the Constitution grants Congress, not the President, the power to levy taxes and regulate trade. While Congress can delegate tariff authority to the executive, that delegation must be clear and bounded. IEEPA’s broad emergency language, they argued, did not constitute a sufficiently clear congressional delegation to impose open-ended tariffs in peacetime.

The initial challenges worked their way through the U.S. Court of International Trade (CIT), which has specialized jurisdiction over customs and international trade matters. The CIT issued a preliminary injunction in late 2025 blocking collection of some IEEPA duties pending a full hearing on the merits.

The Supreme Court Ruling

The definitive legal resolution came in February 2026, when the Supreme Court of the United States decided V.O.S. Selections Inc. v. United States 6-3. Writing for the majority, Chief Justice Roberts held that IEEPA does not grant the President authority to impose sweeping, open-ended tariffs on imports outside of a genuine national security emergency involving armed conflict or an equivalent acute crisis. The majority applied the “major questions doctrine,” which requires a clear congressional statement before an agency or executive branch actor can regulate a matter of vast economic and political significance.

The Court found no such clear statement in IEEPA. The persistent trade deficit that had existed for decades, the majority reasoned, was not the kind of “unusual and extraordinary threat” that IEEPA was designed to address. The ruling struck down the entire IEEPA reciprocal tariff framework.

The three dissenters argued that IEEPA’s text was broad enough to encompass tariffs and that the majority’s ruling improperly second-guessed a presidential determination of national emergency.

What Became Refundable

As a direct result of the ruling, all IEEPA reciprocal tariffs collected between the effective dates of the tariffs and the date of the Supreme Court decision — roughly February 4, 2025 through February 20, 2026 — became unlawfully collected revenue that CBP is required to refund. The total estimated amount at stake is approximately $166 billion.

CBP established the CAPE (Customs Automated Post-Entry) portal as the mechanism for importers to file refund claims. The portal launched on April 20, 2026, and allows importers of record to submit structured claims tied to their original entry summaries.

What Is Not Affected

Several important categories of tariffs remain fully in effect:

Section 301 China tariffs. These tariffs — ranging from 7.5% to 100% depending on the product list — were imposed under a completely separate legal authority (Section 301 of the Trade Act of 1974) and were not challenged in the IEEPA litigation. They remain in place.

Section 232 steel and aluminum tariffs. These tariffs, based on national security grounds under Section 232 of the Trade Expansion Act of 1962, also have their own legal basis and are unaffected by the IEEPA ruling.

Section 122 replacement tariffs. After the SCOTUS ruling, the administration quickly invoked Section 122 of the Trade Act of 1974 to impose a 10% universal tariff as a balance-of-payments measure. These tariffs are distinct from IEEPA and are not part of any refund.

Why It Matters to U.S. Importers

The IEEPA tariff refunds represent one of the largest one-time windfall opportunities for U.S. importers in decades. Businesses that paid these duties — which were, by definition, unlawfully collected — are legally entitled to recover them. For a company that imported $5 million in goods from Vietnam (which had a 46% IEEPA rate), the potential refund could exceed $2 million.

The refund process is not automatic. Importers must affirmatively file claims through the CAPE portal. There are filing requirements, documentation needs, and a process that requires familiarity with the ACE customs system. But for importers who take the time to file — or who work with a vetted recovery partner — the opportunity is real and significant.

Key Takeaways

• IEEPA is a 1977 law that grants emergency powers over foreign commerce
• The Trump administration used it in 2025 to impose “reciprocal” tariffs of 10%–46%
• The Supreme Court struck down IEEPA tariffs in February 2026 as an impermissible delegation
• All IEEPA reciprocal duties paid between Feb 4, 2025 and Feb 20, 2026 are refundable
• Refunds are filed through CBP’s CAPE portal; the importer of record must file
• Section 301, Section 232, and Section 122 tariffs are not affected