In October 2025, we explored a pressing question for public works contractors: should post-contract award tariffs be reimbursable? The crux of that analysis was whether tariffs imposed after contract award constitute a tax under the Washington State Department of Transportation (WSDOT) Standard Specifications, triggering reimbursement under Section 1-07.1(5)B (“tax changes”).
Since then, a landmark Supreme Court ruling in Learning Resources, Inc. v. Trump has clarified the legal nature of tariffs in a way that could significantly affect this debate.
In Learning Resources, Inc. v. Trump, 607 U.S. (2026), the U.S. Supreme Court addressed whether the President had the authority under the International Emergency Economic Powers Act (IEEPA) to unilaterally impose broad tariffs on imports.
The Court held that IEEPA does not authorize the President to set tariffs because it does not delegate the power to tax, an authority that the Constitution reserves to Congress. Tariffs, as imposed by the executive under the IEEPA, were therefore unlawful.
Put simply, the Court confirmed that tariffs are taxes — a form of import tax that raises revenue for the Government and lies squarely within Congress’s exclusive taxing power. Learning Resources, at 7 (“A tariff, after all, is a tax levied on imported goods and services. And tariffs raise revenue – the defining feature of a tax”).
This decision echoes long-standing constitutional principles that tariffs are a type of tax, rather than a mere regulatory fee, despite prior executive arguments to the contrary.
Why This Matters for Public Works Contracts
1. Reinforcing the Legal Foundation That Tariffs Are Taxes
Prior to Learning Resources, the debate for WSDOT and other public owners often hinged on labeling. That is, whether WSDOT could technically classify tariffs as something other than a “tax” for purposes of reimbursement.
Now, the highest court in the land has reinforced the legal reality that tariffs are taxes. This aligns with historical precedent (e.g., Gibbons v. Ogden, 22 U.S. 1, 6 L. Ed. 23 (1824)) and constitutional understanding, but now with direct Supreme Court backing in the context of tariff authority.
Contractors arguing that tariffs should be treated as tax changes under WSDOT’s Section 1-07.1(5)B now have a significantly stronger legal premise. Under basic rules of contract interpretation, objective statutory meaning matters, and a court may be far less inclined to accept an assertion that tariffs are “not a tax” given this definitive Supreme Court ruling.
2. WSDOT’s Interpretation May Face Greater Scrutiny
WSDOT has previously taken the position that “tariffs are not considered a tax under Section 1-07.1(5)B and therefore no price adjustment will be made.”
With Learning Resources clarifying that tariffs are indeed taxes for constitutional purposes, courts or arbitrators could view WSDOT’s contrary administrative position as inconsistent with governing law. If a later judicial or administrative decision incorporates Learning Resources reasoning, WSDOT contractors may have a wave of clearer support for reimbursement claims
3. Evidence and Contract Language Still Matter
Even with Learning Resources strengthening the general classification of tariffs as taxes, contract language matters, a point emphasized in our original article. Some public works specifications extend relief beyond taxes to broader “changes in law” or “government-imposed costs.” Others, like King County, provide structured tariff reimbursement mechanisms.
In WSDOT contracts, unless and until Learning Resources or a similar court decision directly interprets Section 1-07.1(5)B in this context, the interpretation will hinge on:
- Whether the tariff imposed is clearly shown to increase costs.
- Documentation and timing of tariff impacts.
- Whether the contractor has complied with the notice and claim procedures.
- Whether a Washington court/arbitrator will agree with the reasoning in Learning Resources – which would appear likely given that the Supreme Court clearly equated tariffs to taxes.
Practical Takeaways for Contractors
1. Treat tariffs as taxes in claims for WSDOT projects:
Given the Supreme Court’s view of tariffs as taxes, contractors should frame tariff price adjustment or claim submissions accordingly — especially under Section 1-07.1(5)B of the WSDOT specifications.
2. Document thoroughly:
As always, documentation (invoices, supplier correspondence, before/after pricing) and compliance with the WSDOT notice and claim procedures will be key in quantifying impacts and avoiding disputes.
3. Review contract specifics:
Different public owners’ specifications address taxes and cost adjustments differently. Knowing how tariffs integrate with those clauses will be critical for contractors seeking reimbursement for tariff related costs.
A Stronger Legal Lens on Reimbursement of Tariff Costs for Contractors
Learning Resources, Inc. v. Trump does not directly decide how WSDOT contracts must treat post-contract award tariffs, but its constitutional framing of tariffs as taxes is a significant legal development. It reinforces the longstanding understanding that tariffs are government-imposed taxes, not sideline regulatory fees, and gives contractors a firmer footing when seeking reimbursement under public works specifications that adjust for tax changes.
For contractors navigating public works claims in Washington and nationwide, this ruling brings much-needed clarity to the fundamental question: are tariffs taxes? The answer, backed by the Supreme Court, appears increasingly affirmative and could reshape how tariff impacts are handled in contract interpretation and claims moving forward.