International trade in a polarized world - lessons from history (5): the Supreme Court’s take on tariffs and taxes

On 20 February 2026 the Supreme Court of the United States issued a judgment that annulled the recent executive orders imposing tariffs on goods that are imported from most countries. This decision (Learning Resources, Inc. v. Trump) considers the reasoning behind these measures legally unfounded and unconstitutional.

In reference to the International Emergency Economic Powers Act (IEEPA, 1977) the Trump administration argued that the President has the power to impose tariffs on goods with the aim of tackling economic disruption. As is well known, Donald Trump adheres to the belief that a negative trade balance, resulting from a surplus of imports over exports, causes economic distress.

In arguments brought before lower courts, the government’s lawyers argued that the IEEPA is an amendment to the Trading with the Enemy Act of 1917 and that the latter was the legal basis for decrees taken by the Nixon administration in the wake of the ending of the Bretton-Woods system. The Trading with the Enemy Act contains the same wording as the IEEPA (it allows the President to “regulate … imports” in the case of emergency). Moreover, before the lower courts it was pleaded that the new tariffs serve to quell “the unusual and extraordinary threat” of illegal drug trade into the US.

However, the Supreme Court reasoned that the tariffs are unconstitutional because the orders imposing them lack a sufficient legal basis in the IEEPA. The latter – according to the Court – narrowly delegates the authority to take measures relating to foreign trade (and, specifically, imports) to the President. This means that the statute must be interpreted in a cautious fashion, since it cannot be presumed that Congress delegated more authority to the President than expressly defined in the law. Imposing tariffs is not the same as, or covered under, “regulating … imports”.

One line of argument that was brought before both the lower courts and the Supreme Court was concerned with the links between foreign policy, taxation and tariffs. The Court held that in matters that require the assessment of Congress’s powers of delegation customs duties must be considered as taxes rather than foreign policy measures.

When it comes to foreign policy, the Supreme Court in the past considered that the so-called ‘major questions’ doctrine does not apply. This latter doctrine states that the Executive cannot derive powers from Congress in matters of vast economic and political significance unless there is express delegation. In that case, the wording of the legislative act must be clear and its interpretation strict. The ‘major questions’ doctrine is not applied in matters of foreign affairs because of the Executive’s expertise and priority in handling sudden changes in international circumstances. As a result, it is held that, as a rule, Congress cannot impose meaningful limits on the President when it comes to foreign policy.

In Learning Resources, Inc. v. Trump, the Court states that the categorization of tariffs as pertaining to foreign policy does not render the ‘major questions’ doctrine inapplicable. Reference was made to the Constitution, which stipulates the broad authority of Congress to impose “taxes, duties, imposts and excises” (Art. I, section 8). According to the Court, this broad authority requires that the ‘major questions’ doctrine is applicable re taxes, even when they are linked to foreign policy, as is the case for duties and imposts.

The building of the argument on Art. I, section 8 of the Constitution is interesting. In fact, the Constitution in this article draws a distinction between taxes on the one hand and duties, imposts and excises on the other. For example, Art. I, section 8, clause 1 in fine requires that “duties, imposts and excises” are uniform throughout the United States and therefore that individual states have restricted powers in the matter. For customs duties on goods imported into the Federation uniformity of policy was important, which explains why it was deemed a federal matter. Art. 1, section 8, clause 1 provides that Congress is exclusively competent for taxes, which must be apportioned among the states of the federation, rateably according to their number of residents (Art. I, section 2). However, the Sixteenth Amendment (1913) revoked the requirement of apportionment of taxes and gave Congress broader powers in taxation as compared to the 1787 Constitution. This change meant that the constitutional distinctions between direct and indirect taxation, and between taxes and duties, disappeared.

One of the novelties of Learning Resources, Inc. v. Trump lies precisely in the reviving of some of the old meaning of Art. I, section 8, clause 1 because it connects tariffs with foreign policy. This link is made through an appreciation of the applicability of the ‘major questions’ doctrine, which itself is part of a broader doctrine of delegation. However, the interpretation mentioned concerns a new type of delegation as compared to the one intended in the Constitution. Delegation in Learning Resources, Inc. v. Trump refers to the separation of powers between the Legislative and the Executive, whereas the 1787 Constitution – much in line with the views expressed in the Federalist Papers – focused on the fiscal competence as a federal matter in contrast to the powers of the individual states. Delegation in this latter context involved Congress granting individual states the right to impose “duties or imposts”. In fact, Congress was deemed fully competent “to regulate commerce with foreign nations” (art. I, section 8, clause 3).

In Learning Resources, Inc. v. Trump, the Court interprets Art. I, section 8, clause 1 in such a way that it also contains a separation of powers logic. This approach, of itself, is not new. In several cases, the Supreme Court weighed the constitutionality of legislation that granted the President the right to impose tariffs and dismissed arguments referring to unconstitutional delegation. In other cases, dealing with the delegation of the authority to impose taxes, it was held that delegate power is constitutional when it abides to an “intelligible principle”. This entails that the statute must contain standards or rules for the government or agency that levies the taxes on the basis of this statute (for example, Skinner v. Mid-American Pipeline Company (1989)). However, in the previous cases that were concerned with tariffs the wording of the laws granting powers was clear and even though the President could derive discretionary powers from these laws, it was always limited, for example, in time or in terms of proportionality. And even though the issue of delegation in matters of tariffs has been coupled with the argument that they pertain to foreign policy, in the previous cases there was no reasoning on whether the ‘major questions’ doctrine applied (see J.W. Hampton, Jr. & Co. v. United States (1928) and Federal Energy Administration v. Algonquin SNG, Inc. (1976)). Now, for the first time it was argued before the Supreme Court that the President boasts broad powers in foreign trade policy in case of emergencies, which includes the right to impose tariffs. As a result of this argument, the Court connected the ‘major questions’ doctrine to tariffs. In doing so, it resuscitated the old constitutional distinction between taxes and tariffs.  

The above raises the interesting question to what extent tariffs have historically been considered as pertaining to the Executive rather than the Legislative. For a long time, ‘duties’ were imposed by governments and did not require the approval of legislative councils. This principle dates to the Middle Ages. In medieval Flanders, for example, the coastal area was labelled ‘the count’s stream’ (sgraven stroom), which meant that tolls and duties on incoming merchandise were a sovereign right. It was a prerogative of kings and princes to tax foreign trade. Preliminary approval of the Estates was only required for direct taxation on citizens and residents. The same idea existed in late medieval England. In 1606 King James I tried to bypass the English Parliament when imposing tariffs and argued that they pertained to trade rather than taxation. In Bate’s Case, the Crown’s view prevailed: it was decided that tariffs were to be considered as trade measures and that Parliament did not have the exclusive authority to impose them. According to the prevailing economic theory of the time, customs duties were taxes on importers, not on consumers. Bullionist and mercantilist theories held that imports of finished products resulted in a loss of bullion, which must be compensated by import duties.

Over the course of the eighteenth century the views mentioned shifted. During the French Revolution delegation from the Legislative to the Executive was possible for indirect taxes, not for direct ones. The US Constitution breaths the same idea, albeit only in the relationship between Congress and the state legislatives. Following the excesses in trade measures taken by Napoleon, the French Charte constitutionelle (1814) and the Belgian Constitution (1831) imposed that the Legislative had full authority re all taxes, both direct and indirect ones. However, this picture of a broadening legislative competence could be different in federal and confederal states. The Constitution of the German Reich (1870) stipulated that duties on foreign imports and excises were the federation’s responsibility, but other taxes remained of the states. Similarly, the Constitution of the Commonwealth of Australia (1901) provides that direct taxes remain the competence of the six member states, whereas the federal parliament has the right to impose duties and excises. Both in the case of the German and Australian federation, the duties on goods imported from outside the federation were envisaged. An aim to limit competition among the states constituting the federation was also in the case of the United States the reason why the states’ powers to impose tariffs were limited. Since the federal legislative body typically has representatives of all states, it was normal to attribute power on external import taxes to this level of government.

The broadening of the powers of the US President in foreign affairs, in reference to the Legislative’s constitutional authority, happened in case law of the Supreme Court only from the 1930s onwards (for example, United States v. Curtiss-Wright Export Corp. (1936) and Youngstown Sheet & Tube Company v. Sawyer (1952)). This resulted in a relatively late confrontation of legal arguments on tariffs and foreign policy doctrine. When it eventually happened, the latter was already fully developed. Therefore, Learning Resources, Inc. v. Trump is also important because it puts limits to the broad presidential prerogatives in foreign affairs.

In Learning Resources, the Supreme Court has not taken an ‘originalist’ approach, which would have separated tariffs from foreign policy. Instead, it perpetuated its own doctrine of ‘major questions’, which it extended to tariffs for the first time. In the background of the decision, mercantilism is looming. The administration’s view that a negative trade balance is an emergency has been rejected by several courts. The Supreme Court confirms Congress’s broad constitutional tax competences and, arguably, interprets tariffs as taxes rather than policy measures of foreign trade. However, when considering Learning Resources, Inc. v. Trump from the angle of the history of trade policies, there remains a paradoxical outcome. In Learning Resources, Inc. v. Trump, the prerogatives of the President in foreign policy were not extended to tariffs but at the same time categorizing tariffs in such terms amends the 1787 text considerably. This reasoning also connects to the pre-constitutional thinking on trade policy and mercantilism. In this regard, the Supreme Court has turned back in time. Even though tariffs “implicate foreign affairs”, the ‘major questions’ doctrine is applicable. This categorization inevitably locates tariffs in the realm of the Executive, even though at the same time they are explicitly evacuated therefrom as well.

Bibliography

R.E. Barnett and J. Blackman, Constitutional Law: Cases in Context, Supplement 2026, Learning Resources, Inc. v. Trump.

G. Bizioli and Cl. Sacchetto (eds.), Tax Aspects of Fiscal Federalism: A Comparative Analysis, IBFD, 2011.

Congressional and Presidential Authority to Impose Import Tariffs, CRS Report, 19 March 2026.

D. Del Terzo, “Article I and the Major Questions Doctrine After Learning Resources”, Lawfare19 March 2026.