Big news in trade policy today. The U.S. Supreme Court ruled 6-3 that the International Emergency Economic Powers Act (IEEPA) does not give the President the authority to impose tariffs. The decision issued in the consolidated case Learning Resources v. Trump, which invalidates a sweeping set of import taxes that have reshaped global supply chains since early 2025, has real, direct implications for anyone sourcing food ingredients internationally.
Whether you’re a bulk importer, a wholesale supplier, a manufacturer, or a private label brand working with a co-packer or coman: this ruling changes how you plan your sourcing, price your products, and think about your supply chain going forward. Here’s everything you need to know.
How We Got Here
Starting in early 2025, the Trump administration used IEEPA, a 1977 emergency powers law, to impose a sweeping set of import tariffs. The policy introduced a 10% baseline “reciprocal” tariff on goods from nearly every U.S. trading partner. It also imposed higher rates on dozens of specific countries. In addition, the administration applied 25% tariffs on Canada, Mexico, and China tied to fentanyl emergency declarations. Together, these measures produced the highest U.S. tariff levels since the Great Depression.
The administration argued that IEEPA’s broad language allowed the president to “regulate” imports during a declared national emergency. It claimed that this authority also included the power to tax them. Courts disagreed almost immediately. Multiple businesses and a coalition of states filed lawsuits. By November 2025, the Supreme Court agreed to hear the case on an expedited basis.
The financial scale was enormous. U.S. Customs and Border Protection collected approximately $133.5 billion in IEEPA tariff revenue across fiscal years 2025 and 2026. That figure represented nearly half of the $287 billion in total tariffs collected in 2025 alone. It also reflected a 192% year-over-year increase, according to the Federal Reserve Bank of Richmond.
For context, U.S. commercial bakers paid $182 million in tariffs during the first half of 2025. Those costs covered raw materials, ingredients, and equipment. This amount was more than double the $70 million paid during the same period the year before, according to the American Bakers Association.
What the Court Decided
Chief Justice John Roberts authored the majority opinion, joined by Justices Sotomayor, Kagan, Gorsuch, Barrett, and Jackson, a rare cross-ideological coalition. The Court concluded that IEEPA allows the President to regulate imports in an emergency, but not to levy taxes on them. Because no administration had ever used the law to impose tariffs in its nearly 50-year history, the Court ruled that Trump exceeded the authority Congress intended to grant.
The decision invalidates two categories of tariffs:
- The 10% baseline “reciprocal” tariffs on all U.S. trading partners, with higher rates on dozens of specific nations
- The 25% tariffs on Canada, Mexico, and China tied to fentanyl-related emergency declarations
The ruling drew swift and pointed reaction from the policy world. Scott Lincicome, Vice President of General Economics at the Cato Institute, called it the end of “the biggest and baddest of Trump’s 2025 tariffs,” and said it almost certainly requires refunds of duties already collected. He added that the decision is “welcome news for American importers, the United States economy, and the rule of law, but there’s much more work to be done.”
What’s Still in Place
Not everything goes away, and this is an important distinction for food and ingredient businesses to understand. Tariffs imposed under other statutes remain fully in effect:
- Section 301 tariffs on Chinese goods cover many food ingredients, agricultural products, and retail-ready packaging materials. These were originally introduced in 2020 and extended in 2024. They remain fully in effect.
- Section 232 tariffs on steel and aluminum affect packaging, equipment, containers, and infrastructure across the food industry. These also remain in place and, notably, companies like Coca-Cola and PepsiCo continue to face higher input costs as a result.
The effective average tariff rate drops from roughly 17% to about 9%, still well above the ~2% baseline before 2025, but a meaningful reduction for importers, suppliers, and manufacturers sourcing affected goods. At the consumer level, the Yale Budget Lab estimated that tariffs cost American households an extra $1,300 to $1,700 per year in 2026. With IEEPA removed, households can expect that burden to fall by roughly half.
What It Means Depending on Your Role
The impact of this ruling isn’t uniform. Here’s a quick breakdown depending on where you sit in the supply chain:
- Importers and suppliers: Your landed costs on IEEPA-affected goods should drop. Review your tariff classification codes with your customs broker to confirm which shipments qualify and whether you’re eligible for refunds.
- Manufacturers and co-manufacturers (comans): If you’ve been absorbing tariff costs on bulk ingredients or raw materials from affected countries, this is the moment to recalculate your input costs and revisit pricing with your retail or brand partners.
- Co-packers and co-packing operations: Packaging materials and wholesale ingredients sourced internationally may see cost relief. Update your bills of materials and check whether your contract pricing still reflects current tariff realities.
- Private label brands: If your retail-ready products rely on internationally sourced ingredients or components, lower tariff costs could improve your margins or give you room to price more competitively. Loop in your R&D and sourcing teams to assess the full picture.
The Refund Question: Billions on the Table, but Nothing Is Automatic
Here’s where things get complicated, and the story is far from over. The Supreme Court’s ruling did not spell out how already-collected tariff duties should be returned. It declared the tariffs unlawful, but left the mechanics of repayment to the lower courts. As Justice Brett Kavanaugh noted in his dissent, this is likely to generate “serious practical consequences” and a “mess” for the government.
The numbers at stake are significant. Penn Wharton Budget Model estimates that reversing IEEPA tariffs could generate up to $175 billion in refunds. PNC Financial Services Group puts the figure at approximately $150 billion. Treasury Secretary Scott Bessent has acknowledged that the Treasury has the cash to make refunds if ordered to do so, but added the process could take over a year. The administration has also suggested it may try to limit which importers are actually eligible, particularly companies that passed tariff costs downstream to consumers.
As of December 2025, more than 301,000 importers had made over 34 million entries subject to IEEPA tariffs. That scale makes a quick, button-push refund essentially impossible. Trade attorneys describe the recovery landscape as deeply complex: importers generally have 180 days after Customs liquidates an entry to file a protest and request a refund from U.S. authorities. Customs and Border Protection, but the clock on those windows has already been running.
Over 1,500 Companies Already Filed Lawsuits to Preserve Refund Rights
Many companies did not wait for the Supreme Court to act. Anticipating a ruling against the administration, more than 1,500 businesses filed protective lawsuits in the U.S. Court of International Trade (CIT) in late 2025. They sought to preserve their right to claim refunds before their entries were liquidated, and the filing window closed permanently.
According to an analysis by Bloomberg, filings increased sharply after Costco Wholesale Corporation made its lawsuit public. The disclosure drew widespread attention to the issue across multiple industries.
Costco’s complaint pursued three outcomes. It asked the court to declare the IEEPA duties unlawful. It also sought an injunction to halt further collections. In addition, it requested a full refund of all IEEPA duties already paid.
Other notable companies filed similar cases, including Ricoh and Revlon Consumer Products. Hundreds of smaller businesses joined them from the manufacturing, retail, and food and beverage sectors. The Court of International Trade consolidated all cases under a single lead docket.
The CIT has confirmed that it has authority to order the reliquidation of entries. That allows Customs to recalculate tariffs and issue refunds. The government has indicated it will not challenge that authority. However, the court also warned that companies that failed to file protective actions in time may face greater difficulty. Businesses that filed CIT cases before Customs liquidated their entries now stand at the front of the line for refunds.
For the food, beverage, and ingredient industry, the exposure is particularly high. Bloomberg Economics identified food and beverage as one of the top sectors by share of IEEPA duties collected, alongside textiles and toys. As a result, the potential refund opportunity for bulk importers, wholesale distributors, and co-manufacturing operations is significant, even as the timeline for recovery remains uncertain.
What Can the President Do Next?
The White House has said it intends to rebuild its tariff framework using other legal authorities. Treasury Secretary Bessent and other officials have identified several statutes they could use, each with different limits and timelines.
- Section 301 (Trade Act of 1974) allows the U.S. Trade Representative to impose tariffs in response to unfair trade practices by a foreign country. This is the most likely path for reimposing China-focused tariffs. However, USTR must first conduct a formal investigation before any duties take effect. That process can take months. The administration also cannot use Section 301 as a blanket measure across all trading partners.
- Section 232 (Trade Expansion Act of 1962) authorizes tariffs based on national security concerns and applies to specific product categories. It requires a Commerce Department investigation that can last up to 270 days. Unlike other tools, Section 232 places no cap on tariff rates or duration. The administration has already signaled it may expand its use. The pharmaceutical sector now faces a potential Section 232 investigation.
- Section 122 (Trade Act of 1974) permits tariffs to address large trade deficits without an agency investigation. It caps duties at 15% and limits their duration to 150 days. This authority has never been used before.
Some lawmakers have also called for congressional action. Several Republicans urged Congress to explicitly authorize tariff powers, which would give future administrations a clearer legal foundation. Former Senate Majority Leader Mitch McConnell said that if the executive branch wants to enact trade policy, “its path forward is crystal clear: convince their representatives under Article I.”
None of these alternatives offers the speed or flexibility that IEEPA provided. Morgan Stanley analysts warned that replacing IEEPA tariffs could take many months, creating a temporary gap in the tariff regime. Even so, administration officials have signaled that new measures are already in development, and the trade environment is unlikely to return to pre-2025 conditions.
What Should You Do Now?
Even with today’s ruling, this situation is still actively developing. Here are the most important steps for food ingredient businesses right now:
- Document your IEEPA tariff payments immediately. Use CBP’s Automated Commercial Environment (ACE) portal to pull entry summaries. Each IEEPA tariff is listed with a unique Harmonized Tariff Schedule code. Having clean, organized records is your starting point for any refund claim.
- Talk to your customs broker or trade attorney as soon as possible. If your entries haven’t liquidated yet, there may still be time to take protective action. If they have, your attorney can advise on your options under the 180-day protest window.
- Recalculate your landed costs. With the effective tariff rate dropping from ~17% to ~9%, your cost structure on IEEPA-affected goods has shifted. This is a good moment to revisit pricing and margins with your sourcing partners.
- Stay alert for what comes next. The administration is already exploring alternative tariff authorities. If you’ve been diversifying your supplier base, keep going. If you haven’t, now is the time to start.
In Summary
Today’s Supreme Court ruling is the most significant trade policy development since Liberation Day 2025. Bulk importers, wholesale suppliers, manufacturers, co-packers, consignees, and private label brands will see meaningful short-term cost relief on many imported goods. Section 301 and 232 tariffs remain in place. Courts will likely decide refund disputes. The administration is already preparing its next move. Businesses that stay ahead of these changes, rather than react to them, will emerge from this period in the strongest position.
Navigating trade policy is complicated. Source86 monitors these changes daily, so our partners don’t have to. Contact us to discuss how this ruling affects your ingredient costs and supply chain, whether you’re in sourcing, R&D, co-manufacturing, or production.g, or production.
