Piper Sandler Warns Trump’s IEEPA-Based Tariffs Lack Legal Basis Supreme Court Could Rule by June 2026

Piper Sandler has issued a stark warning that Donald Trump’s trade policies, particularly those under the International Emergency Economic Powers Act (IEEPA), lack legal foundation and could face a decisive rebuke by the Supreme Court by June 2026. The investment bank argues that Trump’s use of IEEPA to impose sweeping tariffs and broker bilateral deals exceeds the authority granted by Congress, a stance it reiterated in a July 25 research note. The firm’s analysis builds on prior legal scrutiny of Trump’s claims of executive power, emphasizing that courts have consistently rejected the administration’s arguments.

The legal battle began in earnest after Trump announced expansive tariffs in April 2025, a move critics labeled “Liberation Day.” Piper Sandler’s analysts—Andy Laperriere, Don Schneider, and Melissa Turner—highlight that recent rulings in lower courts, including the U.S. Court of International Trade (CIT) and a D.C. district judge, have curtailed Trump’s authority under IEEPA. On May 28, the CIT ruled unanimously against the administration’s use of the statute for tariffs, calling its arguments unconvincing [1]. Separately, Judge Rudolph Contreras nullified the legal basis for IEEPA-based tariffs on May 29, though a stay on his order remains pending appeal [1].

At the core of Piper Sandler’s argument is the assertion that IEEPA, enacted in 1977, was never intended to grant presidents unlimited power to set tariffs or negotiate trade deals. Courts have consistently rejected the notion that the statute permits such broad authority, underscoring congressional oversight as a constitutional requirement. The firm stresses that even Trump’s bilateral agreements, such as the deal with Japan, cannot validate the legality of tariffs absent congressional approval. “Making a deal with another country has no bearing on the legality of Trump’s tariffs,” the note states, noting that executive-led deals lack legal standing [1].

The potential consequences of a Supreme Court ruling against Trump are profound. All trade deals and tariff adjustments made under IEEPA—including proposed 10% minimum import rates and reciprocal tariffs—could be invalidated retroactively. This would trigger claims for refunds to entities affected by unlawful tariffs, administered through the CIT. The firm also critiques the lack of specificity in major economic promises, such as the $550 billion Japanese investment pledge, which it describes as “economically promising but legally tenuous” [1].

Despite these legal challenges, Piper Sandler predicts tariffs will remain high in the near term. Administrative stays and the slow judicial process will delay immediate reversals, and Trump could pivot to other statutes like Section 232 (steel, aluminum, and cars) to justify tariffs. While the bank acknowledges that Section 232 offers stronger legal footing, it warns that Trump may stretch its boundaries, inviting further litigation. At least eight lawsuits from states, tribes, and businesses are already challenging IEEPA-based tariffs, with court dockets spanning multiple federal circuits [1].

The analysts project years of legal uncertainty, with multinationals and trading partners hesitant to invest in the U.S. until the legal framework stabilizes. They also anticipate that the Supreme Court will follow its recent pattern of rejecting expansive executive claims. The firm cites the court’s uniform rejection of similar assertions in past cases, where justices unanimously opposed the “Executive Branch pulling out an old statute and asserting far-reaching, never-before-used authority” [1].

Piper Sandler’s forecast, however, includes a caveat: Trump’s combative approach to litigation will prolong instability. The bank estimates a 9-0 Supreme Court ruling against Trump is more likely than a victory, but even a narrow loss could delay resolution for months or years. The legal calendar through September 2025 includes oral arguments in key cases, with the Federal Circuit hearing a pivotal appeal on July 31.

The analysis underscores the broader implications for U.S. trade policy. If the Supreme Court rules against Trump, it would reaffirm Congress’s constitutional role in tariff-setting and trade agreements. Conversely, a Trump victory could embolden future administrations to test legal boundaries under IEEPA. Either outcome, Piper Sandler argues, will reshape the legal landscape of executive power and international commerce.

Source: [1] [‘Trump’s trade deals are illegal,’ Piper Sandler warns, predicting a Supreme Court smackdown by June 2026] [https://fortune.com/2025/07/25/trump-trade-deals-illegal-piper-sandler-tariffs-supreme-court/]