Supreme Court Ruling Leaves $175 Billion in IEEPA Tariffs Tied Up as White House Switches to 10% Global Charge
The supreme Court decision that invalidated the administration’s use of the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs has left roughly $175 billion in potential refunds locked in litigation, and Treasury Secretary Scott Bessent has warned the money is unlikely to make its way back to consumers as the White House scrambles for new legal footing.
What the Supreme decision changed
The court ruled President Donald Trump could not use the IEEPA to levy duties on trading partners. That judgment voided the legal basis for a series of tariffs and triggered a weekend of internal updates as the Oval Office searched for alternative authorities to keep collecting import duties. The path for handling funds collected under the IEEPA will be pushed into international trade courts, a process the Treasury secretary said could be dragged out for weeks, months or years.
IEEPA collections and the $175 billion question
Analysts have flagged as much as $175 billion in potential refunds tied to IEEPA collections. One modeling exercise projects cumulative IEEPA collections at roughly $164. 7 billion by January 2026, with daily collections running at about $500 million. Precisely how much is in play remains unsettled because IEEPA receipts must be separated from customs duties and levies already in place under previous and new trading agreements.
Treasury secretary Scott Bessent’s assessment and the consumer outlook
Treasury Secretary Scott Bessent, speaking at the Economic Club of Dallas in the aftermath of the ruling, cautioned that court decisions on how to handle IEEPA-generated funds are unresolved and may be lengthy. He added that alternative authorities such as Section 232 and Section 301 offer routes to continue generating tariff revenue and that overall tariff revenue generation need not slow. On the specific question of IEEPA refunds, Bessent summed up his view bluntly: he said he “got a feeling the American people won’t see it. ”
Some optimists have suggested refunds could act as an economic stimulus if U. S. importers receive rebates and pass cash along, possibly lowering prices for consumers. UBS chief economist Paul Donovan has cautioned that hopes for broad pass-through may be misplaced: rebate payments would go to U. S. importers, would increase the fiscal deficit, and with new tariffs still coming, businesses seem unlikely to rush to lower prices.
Administration pivot: Section 122 and the 10% start
After the IEEPA route was struck down, the administration moved to a different trade law. The reworked global tariff is set to begin at a 10% rate, even though the president had earlier announced a 15% level. Under the law now being used, Section 122, tariffs of up to 15% can be applied quickly but only for up to 150 days.
Hours before the tariff was to take effect, U. S. Customs and Border Protection issued a memo to importers instructing that the rate would be 10% at first and would apply to every country for a period of 150 days unless specifically exempt, starting at 12: 01 a. m. ET Tuesday. A White House official confirmed that message was correct and said the administration is working on raising the rate to 15% through a separate order that the president will need to sign; no timeline for that escalation was provided.
Global reaction, trade chaos concerns, and next steps
The abrupt back-and-forth over tariff rates has drawn sharp criticism and warnings of a return to trade uncertainty. A senior European lawmaker from Germany described the situation as pure tariff chaos and said it has created open questions and growing uncertainty. In response to the renewed uncertainty, the E. U. froze implementation of a massive trade deal negotiated last summer. Other trading partners, including India, China, Switzerland and the United Kingdom, are weighing their responses.
Most trade framework deals the administration reached with foreign partners since early last year were built around IEEPA authority, which the court has now said was improperly used when sweeping tariffs were imposed. With legal challenges and separation of IEEPA revenues from existing customs duties still unresolved, the stakes remain high and the timeline for resolution unclear.
Key official lines and what to watch next
- IEEPA tariffs were initially imposed on China in February 2025, followed a month later by tariffs on Canada and Mexico; April’s “Liberation Day” tariffs were also authorized under IEEPA.
- Penn Wharton Budget Model projections place potential refunds as high as $175 billion, reflecting roughly $164. 7 billion collected by January 2026 and about $500 million collected per day.
- U. S. Trade Representative Jamieson Greer said in a Sunday interview that the question of refunds is a matter for the courts and that the administration will follow court directions; Greer added that others created the situation and they will comply with judicial outcomes.
- Watch for legal filings in international trade courts on the handling of IEEPA funds, any presidential order to raise the Section 122 tariff from 10% to 15%, and responses from major trading partners facing the new tariff regime.
Recent updates indicate this remains a fluid situation; details may evolve as courts and the administration move forward.
