What happened?

The United States Supreme Court ruled in Learning Resources, Inc. v Trump [1] that President Trump’s tariffs imposed under the International Emergency Economic Powers Act (IEEPA) - including the “Liberation Day” reciprocal tariffs and drug trafficking related duties on imports from Canada, Mexico, and China - are unlawful. The Court held that IEEPA does not authorise the President to impose duties.

The ruling did not automatically cancel the tariffs, but it prompted swift executive action. Within 48 hours, the Administration:

• issued an Executive Order terminating the IEEPA tariffs;

• imposed a temporary global surcharge under Section 122 of the Trade Act of 1974 (currently 15%); and

• continued the suspension of US de minimis treatment.

This alert explains what these changes mean for New Zealand exporters, including refund opportunities, emerging compliance risks, and immediate contractual and supply chain steps to take.

Who needs to read this alert and why 

This alert is essential for New Zealand exporters, logistics providers, and US based distributors affected by the 15% IEEPA “reciprocal tariffs” since early 2025.

The Supreme Court’s ruling creates a significant potential refund opportunity across a wide range of New Zealand export sectors. However, recovery will not be automatic and will depend heavily on cooperation from the US importer of record. Exporters should urgently review contracts, Incoterms, and supply chain structures to manage continuing tariff volatility and the transition from IEEPA based to Trade Act based enforcement. Timely action is critical because protest rights under US customs law are strictly limited.

Supreme Court’s Judgment

In a landmark constitutional decision, the Court held (6–3) that IEEPA does not authorise the President to impose tariffs - an authority reserved for Congress. The majority reached this conclusion through two analytical paths:

• Major Questions Doctrine (Roberts C.J., Gorsuch, Barrett): The President’s claimed “extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope” requires “clear congressional authorisation”, which IEEPA “falls short” of providing.

• Ordinary statutory interpretation (Kagan, Sotomayor, Jackson): No President had ever used IEEPA to impose tariffs, and IEEPA’s text does not mention tariffs, duties, or taxes. Therefore, it simply does not authorise tariff actions.

The decision invalidates all duties imposed under IEEPA - including the 15% reciprocal tariff on New Zealand goods and the drug trafficking related tariffs applied to imports from Canada, Mexico, and China. It does not, however, disturb the Section 232 or Section 301 duties currently in force, nor does it restrict the President’s authority under other statutes that expressly authorise tariff measures.

Although constitutionally significant, the ruling may not substantially limit future presidential action. Several federal trade statutes continue to authorise tariffs, subject to procedural conditions and statutory limits that are more constrained than those claimed under IEEPA.

President’s initial response

Within hours, President Trump denounced the ruling as “ridiculous, poorly written and extraordinarily anti American” [2]. Within 48 hours, he issued three instruments:

• an Executive Order terminating the IEEPA tariffs [3]; 

• a Proclamation imposing a 10% global surcharge on the basis of Section 122 of the Trade Act 1974 [4]. The President later announced on Truth Social this will  rise to 15%, the statutory maximum, though a legal instrument giving effect to this announcement is yet to be published by the White House [5]. Exceptions apply to critical minerals, energy, pharmaceuticals, electronics, passenger vehicles, and USMCA compliant goods. Any extension beyond the initial 150 day period requires an Act of Congress, and the House’s recent 217–214 vote against President Trump’s Canada tariffs indicates that support is uncertain; and

• a further Executive Order continuing the suspension of duty free de minimis treatment [6]. 

The President also directed the US Trade Representative (USTR) to open a Section 301 investigation into allegedly unreasonable or discriminatory trade practices that burden US commerce [7]. Depending on its findings, additional targeted tariff action may follow - independent of the Section 122 global surcharge.

Significance

The ruling opens a pathway to refund claims for duties paid under the invalidated IEEPA tariffs - including the 15% reciprocal tariff on New Zealand goods. However:

• refunds will not be automatic;

• only the US importer of record may file a protest with US Customs and Border Protection (CBP);

• CBP has not yet established a refund mechanism; and 

• protest rights under US customs law are time limited, meaning delays in engaging the importer of record could forfeit recovery opportunities.

Where New Zealand exporters absorbed or contributed to tariff costs without being the importer of record - for example, under DDP or similar Incoterms, or through reimbursement arrangements – contribution recovery will depend on:

• the contractual allocation of liability and risk;

• the Incoterms used; and

• the availability of supporting documentation.

Competitiveness impacts

From a competitiveness standpoint, the ruling removes advantages previously enjoyed by countries that avoided a country-specific IEEPA tariff - including those without a bilateral trade deficit with the US or those that negotiated favourable bilateral arrangements after the IEEPA tariffs were introduced. The reversion to more traditional, statute bound tariff tools materially levels the playing field across trading partners.

Ongoing tariff exposure

Exporters should not assume that tariff exposure has ended. The Administration continues to have access to several tariff instruments expressly preserved by the Executive Order terminating the IEEPA tariffs, including:

• Section 122 surcharges (currently a global surcharge, limited to 150 days without Congressional extension, capped at 15%);

• Section 232 national security tariffs (including on steel, aluminium, and derivative products- unaffected by the Supreme Court ruling);

• Section 301 unfair trade practice tariffs (likely to expand depending on the new USTR investigation); and

• Section 338 retaliatory duties (allowing the US to impose tariffs up to 50% on goods from countries deemed to discriminate against US commerce).

These authorities feature more procedural guardrails than IEEPA, but they can generate substantial - and potentially cumulative - tariff exposure.

How we can help 

We assist New Zealand exporters, importers, and supply chain participants to navigate the customs, contractual, and commercial implications of US tariff measures - working closely with specialist US counsel where US filings or litigation are required.

We can support you with:

• HTSUS classification reviews, origin determinations, and customs valuation advice to identify and mitigate duty exposure under the Section 122 surcharge and relevant Section 232 measures;

• Importer of record identification and contractual risk management, including Incoterms reviews, tariff cost allocation analysis (especially for DDP, DAP, or hybrid structures), and advice on structuring mechanisms to address ongoing tariff volatility; and

• Refund strategy and claims support, including assessing potential entitlement to recover duties paid under the invalidated IEEPA tariffs, advising on CBP protest procedures and timelines, and aligning contractual and evidentiary documentation to maximise recovery prospects.

Footnotes
[1] Learning Resources, Inc. v. Trump | 607 U.S. ___ (2026) | Justia U.S. Supreme Court Center.
[2] Deccan Chronicle on X: "#WashingtonDC | U.S. President Donald Trump on Saturday raised the worldwide tariff rate from 10% to 15%, effective immediately, calling the Supreme Court's ruling on his tariff powers "ridiculous, poorly written, and extraordinarily anti-American." "I, as President of the https://t.co/MkzmSrGilU" / X.
 [3] Ending Certain Tariff Actions – The White House (20 February 2026).
 [4] Section 122 of the Trade Act of 1974 authorises the President to impose temporary import surcharges of up to 15% to address "fundamental international payments problems," specifically large and serious balance-of-payments deficits. The President’s proclamation cites the $1.2 trillion goods trade deficit, and a net international investment position of negative 90% of GDP as the legal basis for the surcharges.
 [5] Imposing a Temporary Import Surcharge to Address Fundamental International Payments Problems – The White House.
 [6] Continuing the Suspension of Duty-Free De Minimis Treatment for All Countries – The White House
 [7] USTR targets major partners with 301 probes, likely including South Korea - CHOSUNBIZ.