April 2026: SCOTUS Killed IEEPA Tariffs, But the Trade War Isn’t Over

On February 20, 2026, the Supreme Court ruled in Learning Resources, Inc. v. Trump that IEEPA does not authorize the President to impose tariffs. It was the most significant trade law decision in decades. The administration's response? Pivot to Section 122 of the Trade Act of 1974 and keep the tariffs coming. As of April 2026, the effective U.S. tariff rate stands at 8.9% — down from a peak of 16.5%, but still the highest since the early 1970s.

The SCOTUS Ruling: What Actually Happened

In Learning Resources, Inc. v. Trump, the Court held 6-3 that IEEPA — the International Emergency Economic Powers Act — does not grant the President authority to impose tariffs. The statute authorizes the President to "regulate" international transactions during emergencies, but the Court found that "regulate" does not encompass "tax." Tariffs are revenue measures that the Constitution assigns to Congress under Article I, Section 8.

The ruling voided all tariffs imposed under IEEPA authority since February 2025. The Court of International Trade subsequently ruled that all importers of record are entitled to refunds of IEEPA duties paid — an estimated $175 billion.

The Section 122 Pivot

Within days of the ruling, the administration invoked Section 122 of the Trade Act of 1974, which allows the President to impose temporary tariffs of up to 15% for 150 days to address balance-of-payments emergencies. On February 24, 2026, a 10% Section 122 tariff took effect on approximately $1.2 trillion of annual imports.

Treasury Secretary Bessent announced in April 2026 that the rate would rise to 15% — the statutory maximum. He also noted that USTR and Commerce Department are conducting trade studies that could enable additional tariffs under other legal authorities.

Critically, Section 122 tariffs expire after 150 days unless Congress approves an extension. That clock is ticking — the tariffs are set to expire in late July 2026 unless Congress acts.

The Numbers: Penn Wharton Budget Model (April 15, 2026)

The Penn Wharton Budget Model released its latest data on April 15, 2026, providing the clearest picture of where tariffs stand after the SCOTUS ruling and Section 122 pivot:

China: Still Bearing the Heaviest Burden

Despite the IEEPA tariffs being struck down, China still faces an effective tariff rate of 31.6% — by far the highest of any major trading partner. This is because:

• Section 301 tariffs remain: The tariffs imposed in 2018-2019 targeting Chinese intellectual property theft were authorized under a different statute and were unaffected by the SCOTUS ruling. These cover approximately $370 billion in Chinese goods at rates of 7.5-25%.
• Section 122 adds 10%: The new global tariff applies on top of Section 301 rates.
• Section 232 on steel/aluminum: Chinese steel and aluminum face the 25% Section 232 tariff (rising to 50% in June 2026) plus Section 301 and Section 122.
• Electronics tariffs: The 10% Section 122 tariff on Chinese electronics replaces the old 20% IEEPA rate, but Section 301 rates of 25% on most electronics categories remain.

For Chinese electronics specifically, the combined tariff is now approximately 35-40% (10% Section 122 + 25% Section 301), compared to the previous 54% under IEEPA. A meaningful reduction, but still an enormous tax on consumer goods.

USMCA Is Working — Sort Of

One striking finding in the Penn Wharton data: the share of imports from Canada and Mexico claiming USMCA exemptions surged to 86.3% by February 2026. With IEEPA tariffs struck down and Section 122 applying a lower rate, importers are aggressively using USMCA rules of origin to secure duty-free treatment.

The result: effective tariff rates on Canada and Mexico are less than 5% — a dramatic difference from the 25% IEEPA rates that applied through early 2026. This is exactly what USMCA was designed to do, and it suggests the North American trade zone is more resilient than the tariff headlines suggested.

Steel & Aluminum: The 50% Escalation

Section 232 tariffs on steel and aluminum were never part of the IEEPA regime — they were authorized under a separate "national security" statute and were unaffected by the SCOTUS ruling. The current effective rate on steel and aluminum products is already 40.1%.

On June 4, 2026, these rates are scheduled to increase from 25% to 50%. This will make U.S. steel among the most expensive in the world and further squeeze downstream manufacturers in construction, auto, machinery, and appliances — industries that employ 46 times more workers than the steel industry itself.

The $224.8 Billion Question

Between January 2025 and February 2026, new tariffs raised $224.8 billion in customs revenue. Penn Wharton estimates that if importers hadn't changed their behavior (front-loading purchases, switching suppliers), revenue would have been $53.1 billion higher.

But this revenue comes at a cost. The Yale Budget Lab estimates that tariffs will raise approximately $1.3 trillion over 2026-2035, but slower economic growth reduces the net dynamic revenue to about $1.2 trillion. Meanwhile, estimated household costs of $3,800-$4,900 per year mean Americans are paying far more in higher prices than the government collects in tariff revenue.

And then there's the $175 billion in IEEPA tariff refunds. Importers are filing claims. The refund process could take years, but it represents a massive fiscal liability — tariff revenue that was collected, spent, and must now be returned.

What Happens Next

The next six months are critical:

• Late July 2026: Section 122 tariffs expire after 150 days unless Congress approves an extension. If they expire, the effective tariff rate drops further.
• June 4, 2026: Steel and aluminum tariffs double to 50%.
• July 2026: USMCA mandatory 6-year review. Canada and Mexico are demanding changes in light of the tariff chaos.
• Ongoing: USTR and Commerce Department trade studies could provide legal basis for new tariffs under Section 301 or other authorities.
• Congressional action: Multiple bills have been introduced to reclaim trade authority, but none have progressed past committee.

The Supreme Court took away the executive's most powerful tariff tool. But the trade war machine has many gears. Section 232, Section 301, Section 122, and potentially new Congressional authorization all remain in play. The tariff era isn't ending — it's evolving.