What Is IEEPA? The Emergency Law Behind Tariffs and Iran Sanctions

On February 20, 2026, the Supreme Court struck down one of the most aggressive uses of presidential economic authority in American history. In a 6-3 ruling in Learning Resources, Inc. v. Trump, the justices held that the International Emergency Economic Powers Act does not give the president the power to impose tariffs. The decision invalidated roughly $166 billion in import taxes that had been collected from more than 333,000 American businesses.

But the law at the center of that case, known as IEEPA, remains one of the most consequential statutes in American governance. It is the legal backbone of nearly every U.S. economic sanctions program, from Iran to Russia to North Korea. It has been invoked 77 times by every president since Jimmy Carter. And even after the Supreme Court drew a line at tariffs, its powers remain vast, largely unchecked, and deeply embedded in how the United States projects economic force around the world.

Origins: Why IEEPA Exists

The story begins with a much older law. The Trading with the Enemy Act of 1917 (TWEA) was a wartime statute that gave presidents sweeping authority over economic transactions with foreign adversaries. Starting with Franklin Roosevelt in 1933, successive presidents used TWEA to declare national emergencies without limiting their scope or duration and without meaningful congressional oversight.

By the early 1970s, the arrangement had become absurd. A 1973 Senate investigation discovered the United States had been operating under a continuous state of emergency for more than 40 years. Four separate emergency declarations were still in effect, covering everything from the 1933 banking crisis to a 1971 economic emergency declared by Richard Nixon.

Congress responded with two statutes meant to rein in presidential power. The National Emergencies Act of 1976 required presidents to formally declare emergencies and renew them annually. IEEPA, signed into law on December 28, 1977, replaced TWEA's peacetime authorities with a framework that was supposed to be more constrained. The new law restricted emergency powers to threats originating outside the United States, added reporting requirements, and gave Congress the ability to terminate emergencies by joint resolution.

Whether those restraints have worked as intended is the central question of the debate that followed.

What IEEPA Actually Authorizes

The scope of presidential power under IEEPA is wide. Once the president declares a national emergency involving an "unusual and extraordinary threat" with a foreign source, the statute unlocks authority over financial transactions, property, and trade. Because the U.S. dollar serves as the world's reserve currency and most international transactions flow through American banks, IEEPA effectively allows the president to cut off any person, entity, or nation from the global financial system.

Penalties for violating IEEPA regulations are severe. A 2007 amendment raised criminal fines to $1 million and prison terms to 20 years. Civil penalties can reach $1.3 million per transaction or twice the value of the transaction, whichever is greater. These penalties are enforced by the Treasury Department's Office of Foreign Assets Control, or OFAC, which maintains a Specially Designated Nationals list that has grown to roughly 6,000 entries.

A History of Escalating Use

IEEPA's first deployment set the template for everything that followed. When Iranian students seized the U.S. embassy in Tehran on November 4, 1979, President Carter signed Executive Order 12170 ten days later, freezing approximately $12 billion in Iranian government assets held in American banks. That emergency has been renewed annually by every subsequent president and remains in effect 47 years later.

The post-9/11 era transformed IEEPA from a crisis-response mechanism into a permanent architecture. President George W. Bush signed Executive Order 13224 on September 23, 2001, authorizing the Treasury Department to designate and freeze the assets of foreign persons connected to terrorism. What began as a single page of names has expanded into the sprawling sanctions apparatus that now targets entities across dozens of countries.

Subsequent administrations added layers. Obama used IEEPA for cyber threats and the Russia/Crimea sanctions. Trump, in his first term, targeted Huawei and expanded Venezuela sanctions. Biden dramatically escalated Russia-related designations after the 2022 invasion of Ukraine. By the time Trump returned to office for a second term, IEEPA had been invoked in 77 separate national emergency declarations. Forty-six of them were still active.

The Tariff Experiment and Its Collapse

Trump's second-term use of IEEPA was unlike anything the statute had been deployed for before. Beginning in February 2025, the administration cited IEEPA to impose tariffs on imports from Canada, Mexico, and China, declaring that illegal immigration and fentanyl smuggling constituted a national emergency. On April 2, 2025, the White House went further with what it called "Liberation Day", imposing a 10 percent baseline tariff on nearly all imports and country-specific rates as high as 41 percent. The underlying emergency declaration: the U.S. trade deficit itself.

Courts moved quickly. The U.S. Court of International Trade struck down the tariffs in May 2025, and the Federal Circuit affirmed that August, calling the tariffs "unbounded in scope, amount, and duration." The case reached the Supreme Court as Learning Resources, Inc. v. Trump.

Chief Justice Roberts, writing for a six-justice majority that spanned the ideological spectrum, held that IEEPA's grant of power to "regulate" imports does not include the power to tax them. The reasoning turned on a structural point: IEEPA authorizes the president to regulate both importation and exportation. But the Constitution explicitly bars taxes on exports. If "regulate" meant "impose tariffs," IEEPA would unconstitutionally delegate export-taxing power to the president. The word, Roberts concluded, must mean something narrower.

Justice Kavanaugh dissented in a 63-page opinion joined by Thomas and Alito, arguing that the majority had created an arbitrary distinction that undermined IEEPA's emergency framework. The administration responded the same day by signing an executive order ending the IEEPA tariffs and, within hours, reimposing a 10 percent tariff under a different statute, Section 122 of the Trade Act of 1974, which allows tariffs during balance-of-payments emergencies but expires after 150 days without congressional action.

The $166 billion refund process has proven its own kind of emergency. Customs and Border Protection's systems were not designed to easily separate IEEPA duties from other tariffs, and the agency estimated it would take 4.4 million labor hours to manually recalculate entries. A self-service portal for importers was expected by mid-April 2026.

Iran: The Longest Emergency

If the tariff episode tested IEEPA's outer boundaries, Iran represents its enduring core. The 1979 emergency declaration that began as a response to the hostage crisis has become the longest-running exercise of IEEPA authority in the law's history, and in 2026 it is arguably more consequential than ever.

On February 6, 2026, Trump signed an executive order titled "Addressing Threats to the United States by the Government of Iran," reaffirming the national emergency and establishing secondary sanctions targeting countries that acquire goods or services from Iran. The order used IEEPA for its traditional purpose: economic sanctions, not tariffs. The Supreme Court's ruling two weeks later left this authority completely untouched.

The broader Iran sanctions framework extends well beyond IEEPA, drawing on a web of statutes including the Iran Sanctions Act, the Iran Threat Reduction Act, and multiple National Defense Authorization Acts. But IEEPA remains the statutory backbone. Iran is one of four countries subject to comprehensive sanctions, meaning virtually all transactions involving Iran are prohibited for U.S. persons without a specific license from OFAC. The others are Cuba, North Korea, and Syria.

The current "maximum pressure" campaign has targeted oil brokers in the UAE and Hong Kong, tanker operators in India and China, and the head of Iran's National Iranian Oil Company. Shadow fleet sanctions aim to intercept vessels transporting Iranian oil in defiance of the embargo. For a deeper look at the strategic flashpoints involved, see our explainers on the Strait of Hormuz and the legal authorities for military action against Iran.

Is IEEPA Too Broad?

The law that Congress wrote in 1977 to restrain presidential emergency powers has become, in the assessment of the Brennan Center for Justice, a statute that gives the president "largely unchecked power to impose crippling economic sanctions." The gap between IEEPA's original intent and its current use is difficult to overstate.

The problems are structural. The threshold for declaring a national emergency is effectively meaningless; presidents have declared emergencies for threats ranging from the 1979 hostage crisis to trade deficits to fentanyl smuggling. No congressional approval is required. Congress can terminate an emergency by joint resolution, but this requires a veto-proof majority, which is virtually impossible to assemble. And emergencies last indefinitely: the original 1979 Iran declaration has been renewed without interruption for 47 years.

The Brennan Center has proposed requiring Congress to vote on emergency declarations within 90 days, approving new sanctions programs within a set timeframe, requiring warrants before freezing Americans' assets, and providing targets with meaningful notice and hearings. The REPUBLIC Act attempted some of these reforms. None have advanced meaningfully, in part because reform would force lawmakers to vote on dozens of existing sanctions programs, a politically dangerous proposition when those sanctions target countries like Iran, Russia, and North Korea.

Defenders of IEEPA's breadth argue that sanctions require speed and that going to Congress first would telegraph intentions and allow targets to move assets. The post-9/11 asset freezes, they point out, required immediate executive action that deliberation would have fatally delayed. There is genuine tension between democratic accountability and operational effectiveness, and no reform proposal has satisfactorily resolved it.

What is not in serious dispute is the distance between what Congress envisioned in 1977 and what exists today. As a congressional committee stated at the time of IEEPA's passage, the use of emergency economic powers was meant to be "rare and brief." Instead, it has become one of the most frequently and durably exercised presidential authorities in American governance.

The Supreme Court's tariff ruling closed one door. But the architecture of emergency economic power remains largely intact, available to any president willing to declare a threat and act.