Rethinking the Constitutional Framework for Economic Sanction

Samu Jayaprakash

Edited by Keerthi Chalamalasetty, Aida Alyasin, Mac Kang, and Sahith Mocharla

On February 20, 2026 the Supreme Court issued a landmark case rebuking years of executive branch overreach in Learning Resources, Inc. v. Trump. In a 6-3 ruling, the Court held that “the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs” [1]. Writing for the majority, Chief Justice Roberts found that while the IEEPA grants the President power to regulate importation in national emergencies, the statute contains no direct reference to tariffs or duties. Reading the power to impose taxes and duties into the statute would transfer one of Congress’s core powers, under Article I of the U.S. Constitution, to the President. 

While this decision did limit executive branch overreach, tariffs are just one instrument in a wider arsenal of economic sanctions, many of which have remained unregulated for decades. Economic sanctions are defined as the “deliberate, government inspired withdrawal, or threat of withdrawal, of customary trade or financial relations,” often used as punitive measures to prohibit trade, economic assistance, or financial transactions by one country, group of countries, or a multilateral body (such as the United Nations) against another country, entity, or group in response to a violation or disagreement [2]. These measures can sever an entity’s or individual’s access to global markets, capital, and commerce. Under statutorial authority granted by the IEEPA, the president can declare a national emergency and issue an executive order administering sanctions to target specific threats. Congress also retains the power to pass legislation to impose new sanctions or modify existing ones [3]. However, in their modern form in the United States, sanctions vastly arise through the first avenue, with the IEEPA being invoked 77 times since its enactment in 1977 [4]. While tariffs and duties primarily impose costs on importers, economic sanctions as a whole can freeze an entity’s access to their assets in the United States and effectively cut off access to the global financial system. For designated entities, these consequences amount to complete financial annihilation imposed by an unilateral power, without any obligation to disclose evidence, hold a hearing, or guarantee a path to challenge. 

The Supreme Court in Learning Resources, Inc. v. Trump recognized that reading the IEEPA “to give the President to unilaterally impose unbounded tariffs and change them at will… would represent a transformative expansion of the President’s authority over tariff policy,” and would require clear congressional authorization [5]. Yet tariffs are just a part of macro-economic strategy, and the constitutional logic that was applied over trade policy has not yet been applied to the sanctions regime that has remained unchecked under both the Trump Administration and prior Presidents. Driven by the swift and unilateral power of economic sanctions, the executive branch has increasingly turned to this as a tool of foreign policy, thereby bypassing the frictions of the legislative process. With the increasing use and permanence of economic sanctions, the existing constitutional framework designed to oversee its function is no longer sufficient due to the unchecked and unilateral power of the executive branch, the lack of Congress’s ability to meaningfully check such power, and the irreparable harm on individuals caught in between who are denied any procedural protections or due process rights. 

I. Unchecked and unilateral power of the executive branch 

The first pillar of this balance lies with the unchecked and unilateral power of the executive branch in administering these economic sanctions. The origin of the economic sanctions power lies in the Trading with the Enemy of Act of 1917 (TWEA). This act, passed during World War II, authorized the President to restrict or prohibit trade and impose financial transactions at will with certain entities during wartime or in national emergencies. Since Congress retained the power to declare war under Article I, the president’s power to impose sanctions was limited by a clear, distinct, external restraint. However, this limitation was broken with the enactment of the Emergency Banking Act of 1933, which amended TWEA to give the president broad powers of economic sanction any time the president deemed it a national emergency. At the time, it was justified by the domestic instability caused by the Great Depression, but it has permanently expanded presidential power [6]. 

In the decades that followed, President Truman used this expansion of power against China and North Korea during the Korean War. Subsequent administrations such as Nixon, Kennedy, Eisenhower, and Johnson maintained or expanded restrictions to control the trade of gold and limit foreign investment by US companies [7]. However, following the Watergate Scandal in the 1970s, Congress sought to limit executive power and restore balance between the branches. The IEEPA amended TWEA to limit its use to wartime, prohibit its use for regulating domestic transactions, and require a new declaration of a national emergency tied to an “unusual and extraordinary threat” [8]. Congress also passed the National Emergencies Act (NEA) which created a mechanism of legislative oversight over the declaration of national emergencies. Congress could veto through a concurrent resolution, which required only a simple majority in a single chamber and without presidential approval. This act was deliberate and created to limit presidential power, however this balance was dismantled by two court cases less than a decade later.

The first case, Dames & Moore v. Reagan arose in 1981, when in an agreement to release the hostages during the Iranian Hostage crisis, the President Reagan issued an Executive Order under which all entities in the United States were “obligated to terminate all legal proceedings in United States courts involving claims of United States nationals against Iran” [9]. The court ruled that “although neither the IEEPA nor the Hostage Act constitutes specific authorization for the President's suspension of the claims,” the President had authority to deal with international crises in such a way due to the “history of congressional acquiescence in executive claims settlement” [10]. This set a dangerous precedent where congressional silence was treated as sufficient to implicit consent to broadening the executive branch’s powers, specifically under the IEEPA. Just two years later, in INS v. Chadha, (1983) the Supreme Court found that “the congressional veto provision in § 244(c)(2) [Under the IEEPA] is unconstitutional” [11]. The Court ruled that integral to our system of separation of powers is the legislative processes in which “every bill passed by the House and Senate, before becoming law, to be presented to the President, and, if he disapproves, to be repassed by two-thirds of the Senate and House” [12]. Accordingly, the veto power outlined in NEA would invalidate the Constitution’s clear separation of powers [12]. Thus the concurrent resolution mechanism under the NEA was effectively severed from the statue while the underlying emergency declaration power remained. 

The consequences of these cases was the effective dismantling of IEEPA’s constraints on executive powers. What was originally meant to circumscribe the president’s use of emergency powers became an ever-expanding tool that today extends beyond foreign governments to non-state individuals, terrorist organizations, and even foreign officials; all under the same standard of an arbitrary and unlimited definition of “unusual and extraordinary threat”. As of 2025, presidents have invoked the IEEPA for 77 national emergencies, 46 of which are still ongoing rendering the word “emergency” virtually meaningless under the repeated and continually expanding use of this clause [13]. Beyond the unchecked expansion of the executive branch power over economics, the deeper constitutional failure lies in the systematic destruction of the legislative and judicial checks that were designed to contain it. 

II. Absence of democratic accountability 

The design of the IEEPA originally sought to balance power between the legislative and executive branches, such that the two would work in an equal partnership. Today, however, this partnership no longer exists. Congress now reacts rather than acts with the executive branch as it is no longer equipped with the necessary tools to check the president’s power. 

While the IEEPA and NEA outline formal mechanisms of congressional oversight, they have no practical restraint on the President’s actions. Under the NEA, the President is required to consult with Congress prior to invoking the IEEPA, report to Congress every six months during an emergency, and provide an accounting of the expenditures within 90 days after the termination of an emergency [14]. In theory these requirements allow Congress to remain informed and part of the decision making process. However, in practice, these requirements function as administrative formalities. Consultation with Congress imposes no requirement to obtain approval from Congress meaning that Congress holds no true power. Therefore this cannot be considered as a true constraint or check on presidential power. 

Furthermore, Congress is nearly unable to terminate any sanctions taken by the President. Following INS v. Chadha, the NEA’s original check on presidential emergency declaration, Congress’s power of concurrent resolution (which does not require the President's approval) was struck down as unconstitutional. Instead, ending a national emergency requires a joint resolution which would be presented to the President for approval after being passed by both chambers. The President carries the ultimate power to veto. The only way this could be overridden is with a two-thirds supermajority in both the House and the Senate. However, in the modern political landscape where partisan alignment between the President and at least one chamber of Congress is the norm, the supermajority required is functionally impossible. Therefore, the president who declares such a national emergency also inevitably holds the power to veto any efforts to terminate the emergency, and therefore any accounting of actions undertaken during the period. Such a process cannot reasonably be considered as a practical check on the president’s powers over economic sanctions. 

The judicial system has compounded this imbalance instead of correcting it. Economic sanctions are generally administered and carried out by the Office of Foreign Assets Control (OFAC), and courts have generally ruled OFAC’s actions are entitled to “extreme deference” due to its unique role “in an area at the intersection of national security, foreign policy, and administrative law” [15]. In OKKO Business PE v. Lew (2015), courts backed the OFAC after they blocked a 200,000 Euro wire transfer to a Belarusian entity [16]. The Court held that OFAC’s decisions and enforcement of economic sanction policies were unreviewable since “[m]atters of strategy and tactics relating to the conduct of foreign policy are so exclusively entrusted to the political branches of government as to be largely immune from judicial inquiry or interference" [17]. This deference effectively destroyed the legislative and judicial checks designed to contain the executive branch’s power over economic sanctions. Furthermore, the constitutional failure of the modern sanctions system is not limited to imbalances in separation of powers. It also affects the individuals and entities who are subjected to such sanctions and have no meaningful ability to challenge or contest such a designation. 

III. Lack of due process rights and procedural protections for affected individuals and entities

When a person or entity is designated under a sanction, they undergo severe trade restrictions and financial controls like blocked foreign assets and inaccessible assistance, loans, and investments among others. Moreover, people and corporate persons in the U.S. may not conduct business with those under sanctions. This means that if any property or assets of the designated entity comes under U.S. jurisdiction, these assets must be frozen immediately [18]. Furthermore, third parties – like foreign governments or corporations who assist or engage with the target entity may also be penalized through secondary sanctions. Therefore, third parties who risk losing access and relationships with U.S. corporations, are forced to also sanction entities designated under U.S. sanctions. The result is that a designation issued by the U.S. can leave an entity financially powerless without the involvement or approval from foreign legislatures, courts, or regulatory institutions. Since the U.S. dollar underpins a majority of global financial transactions, and since all U.S. persons and corporations are prohibited from dealing with the designated party, the imposition of sanction under the IEEPA can be considered as a “financial death sentence” for targeted entities [19]. This is not merely hypothetical. The scale of U.S. influence is immense, with the “government’s compendium identifying sanctioned persons and entities, a majority of which are sanctioned under IEEPA, runs to more than 1,400 three-column pages” [20].

Under such circumstances it would be expected that designated groups would have the right to challenge or contest such a designation. However, once designated, an entity receives no guarantee of a hearing, no disclosure of evidence underlying the decision, and no deadline for resolution. While parties may file for removal from an OFAC sanctions list, OFAC provides no timeline for such a process, relying on reasoning that “each petition case is unique” [21]. The practical consequence is that entities may remain in financial purgatory for years, while there is no clear procedure nor requirement for review. This structural inadequacy has been confirmed by case law. In KindHearts for Charitable Humanitarian Development, Inc. v. Geithner (2009), OFAC froze the assets of KindHearts, a U.S. based charity, which was under pending investigation. However, OFAC provided no notice, warrant, or specific reason for freezing their assets and did not officially designate KindHearts as a Specially Designated Global Terrorist until more than a year later. The Court found that OFAC’s actions were “an unlawful seizure of property under the Fourth Amendment, and that the lack of notice and explanation for Treasury’s action constituted a denial of KindHearts’ Fifth Amendment right to due process” [21]. Additionally, the Court required for the classified documents to be reviewed and either summarized or declassified so that KindHeart would be able to respond to the allegations against it. This case was eventually settled in 2012 in which KindHearts would be removed from its terrorist list, have their attorney's fees paid for, and have the ability to redistribute its assets [22]. While this settlement may have resolved the litigation in this specific case, it did not change the underlying lack of fundamental procedural rights for those designated under economic sanction nor the structural (in)capability of redress and appeal. These remedies should be mandatory and pursuable, rather than being forced by courts years after assets and financial capabilities are frozen. 

IV. Conclusion

The existing constitutional framework designed to oversee economic sanctions is clearly no longer sufficient and has resulted in violations of the rule of law on three distinct grounds: the unchecked and unilateral power of the executive branch; Congress’s inability to meaningfully check that power; and the irreparable harm to individuals who are denied any procedural protections and due process. The constitutional design of the IEEPA and NEA, while originally intended to create a balance between the legislative and executive branches, has since been eroded by the dismantling of the legislative veto and the judicial branch’s deference to the OFAC’s economic sanctions authority. Moreover, the existing system of congressional oversight on the expansive power of the executive branch is merely a formality and holds no real weight in today’s political system, more administrative and observing than actionable. Lastly, individuals and entities who are subjected to such sanctions and have no meaningful ability to challenge or contest such a designation to pursue redress. 

The transformation and concentration of power has not been sudden or hidden; rather the use of the IEEPA provisions have increased over time, much like the earlier trajectory of the TWEA. What was crafted for the use as a narrow tool for true national emergencies has transformed into an expansive instrument of the executive branch’s power in foreign policy with increasing prevalence. In fact, IEEPA emergencies have been declared on average 1.5 times each year and with 11 emergencies declared in the Trump administration first term alone [23]. It was against this context of abuse of power that the Supreme Court took action to curtail the executive branch’s power in Learning Resources, Inc. v. Trump. While this was the first meaningful judicial check on the President’s use of the IEEPA, this reasoning should be applied to broader economic sanctions. What the constitution sought to create and what can rectify such an imbalance in power is the careful distribution of oversight to the legislative branch. Congress must not merely be informed of the President’s decisions regarding economic sanction but must play an active role, capable of approving or disapproving of such declarations. A similar system like that in the European Union where autonomous sanction provisions are reviewed at least every 12 months could be established in the U.S. where sanctions are reviewed with guidance from Congress [24]. This helps ensure that sanctions aren’t left unreviewed indefinitely or allowed to persist without any reassessment. Lastly, the strides that the Court has made towards better protections for sanctioned individuals, evidenced by KindHearts should be codified as the bare minimum safeguards for designated parties. At a minimum, this would include a right to the presentation of underlying evidence and reasoning, a mandatory response period to petitions, and a deadline for delisting or at least reviewing designations. 

The modern U.S. economic sanctions regime is not inherently unconstitutional, nor is it an illegitimate instrument of foreign policy. Rather, it is the system that has grown to be so far-reaching, permanent, and insulated from oversight, that it no longer resembles the emergency powers that were once imagined. Learning Resources, Inc. v. Trump (2026) represents an important first step to resolving this concentration of power, but the wider arsenal of economic sanctions still remains at play. Therefore, for there to be a meaningful change in this imbalance of power, similar steps must be taken to limit executive overreach across the broader framework of sanctions. 

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[1] Learning Resources, Inc. v. Trump, President of the United States, 607 U.S __(2026).

[2] Sarah Krulikowski, Economic Sanctions: An Overview (U.S. Int’l Trade Comm’n, Office of Econ., Mar. 1, 2024), https://www.usitc.gov/publications/332/executive_briefings/ebot_economic_sanctions_overview.pdf.

[3] Jonathan Masters, What are Economic Sanctions?, COUNCIL ON FOREIGN RELATIONS (Jun. 24, 2024), https://www.cfr.org/backgrounders/what-are-economic-sanctions.

[4] Christopher A. Casey et al., The International Emergency Economic Powers Act: Origins, Evolution and Use, CONGRESSIONAL RESEARCH SERVICE (Sept. 1, 2025), https://www.congress.gov/crs-product/R45618. 

[5] See [1].

[6] International Emergency Economic Powers Act, Pub. L. No. 95-223, 91 Stat. 1625 (1977) (codified as amended at 50 U.S. §§ 1701-1706).n

[7] See [4].

[8] Andrew Boyle & Tim Lau, The President’s Extraordinary Sanctions Powers, BRENNAN CENTER FOR JUSTICE (Jul. 20, 2021), https://www.brennancenter.org/our-work/research-reports/presidents-extraordinary-sanctions-powers. 

[9] Dames & Moore v. Regan, 453 U.S. 654 (1981).

[10] See [9]

[11] Immigration and Naturalization Service v. Chadha et al., 462 U.S. 919 (1983).

[12] See [11].

[13] See [4].

[14] 50 U.S.C § 1641

[15] Jeremy P. Paner, D.C. District Court Explains “Extreme Deference” Granted to OFAC, THE NATIONAL LAW REVIEW (Oct. 14, 2015), https://www.brennancenter.org/our-work/research-reports/presidents-extraordinary-sanctions-powers. 

[16] OKKO Bus. PE v. Lew, 133 F. Supp. 3d 17 (D.D.C. 2015).

[17] See [16].

[18] See [8].

[19] See [8].

[20] See [8].

[21] Office of Foreign Assets Control, Filing a Petition for Removal from an OFAC List, U.S. Dep’t of the Treasury (last visited Apr. 1, 2026), https://ofac.treasury.gov/specially-designated-nationals-list-sdn-list/filing-a-petition-for-removal-from-an-ofac-list. 

[21] KindHearts for Charitable Humanitarian Dev., Inc. v. Geithner, 647 F.2d 857 (N.D. Ohio 2009) 

[22] See [18].

[23] See [8].

[24] European Union External Action Service, European Union Sanctions, EUROPEAN UNION EXTERNAL ACTION SERVICE (Aug. 19, 2025), https://www.eeas.europa.eu/eeas/european-union-sanctions_en.