Supreme Court Strikes Down IEEPA Tariffs

On February 20, 2026, the Supreme Court ruled 6-3 that the President does not have the authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA). Parties who paid IEEPA tariffs now face the need to plan and act carefully to recover invalidated tariffs.  Importers and others should be wary of premature celebration and premature decisions about how to proceed.

The Court’s decision fundamentally alters the playing field for importers, financing institutions, consumers, and U.S. international trade negotiators. However, the Supreme Court’s ruling does not address the other existing “Trump tariffs” or guarantee that more tariffs will not be issued under a different authority. In fact, on the very same day as the Supreme Court ruling, President Trump declared he would issue a global 10% tariff (with some exceptions) under Section 122 of the Trade Act of 1974, which authorizes certain tariffs up to 15% for up to 150 days, after which Congress can approve an extension. The following day, the President increased this tariff to 15%, before ultimately settling on 10%.  While various laws authorize the President to issue certain tariffs, the authorities they grant are more limited in scope or involve more process and protections than the broad tariff authority the President had claimed under IEEPA.

Background on IEEPA Tariffs

Throughout 2025 and early 2026, President Trump imposed, adjusted up and down, and threatened tariffs under the purported authority of IEEPA. These tariffs were primarily of two varieties:

1)      Tariffs with the announced objective of combatting the illegal drug trade -- The Administration imposed a 25% tariff on most Canadian and Mexican imports and a 10% tariff on most Chinese imports. These are referred to as the “fentanyl” tariffs (which can be misleading since they were not simply a tariff on fentanyl itself).

 2)      Tariffs with the announced objective of combatting trade deficits -- The Administration imposed tariffs of this sort in varying percentages on products from virtually every other country, typically between 10-25%. These tariffs were labeled “reciprocal” (which can also be misleading because “reciprocal” suggests the level is equivalent to what those countries impose on goods imported from the U.S., but in most cases the IEEPA tariffs were significantly higher).

These tariffs had a significant financial impact on U.S. importers, multi-national organizations, exporters (who faced retaliatory tariffs in some countries and waning interest in U.S. products), and American consumers. They were of course also extremely unpopular with U.S. trading partners. As of mid-December, U.S. Customs and Border Protection (CBP) reported it had collected more than $130 billion in IEEPA tariffs.

As of February 20, 2026, the IEEPA tariffs should no longer be collected, since they have been ruled unconstitutional. (CBP implemented parts of the Supreme Court’s ruling a few days later on February 24, 2026.) This ruling will provide some relief to importers going forward, subject of course to the new Section 122 tariffs.

Refunds

The most pressing concern for many U.S. importers is, “What about refunds? Can I get back the money I paid in tariffs, and if so, how?”

The Supreme Court decision did not directly address refunds but many commentators are incorrect in claiming that it did not address refunds at all. The Court affirmed the underlying decision of the Court of Appeals for the Federal Circuit, requiring remand to the Court of International Trade (CIT) for a determination of next steps in the case. While uncertainties remain, this likely means that questions about refunds may remain open for some time, as the CIT, Congress, and CBP evaluate matters further.  Of course, any decisions by the CIT in this case or others could also potentially be appealed back up through the appellate courts and ultimately back to the Supreme Court.

In the meantime, some requests for refunds are being submitted based on existing procedures. In his dissent, Justice Kavanaugh claimed that the process for issuing refunds is likely to be a “mess” and he may be right. However, the “mess” may be caused as much by timing, volume, and funding issues as by strictly legal/procedural uncertanties.

There are several existing ways in which importers can seek refunds for tariffs paid. First, Customs has a process for filing Post Summary Corrections (PSCs) after a tariff has been paid incorrectly. PSC can be filed up until shortly before a customs entry is “liquidated” (typically 300 days after entry).

Second, after liquidation, importers may generally file a protest. That is a more formal legal challenge and can typically be filed up until an additional 180 days after liquidation. While PSCs may be “simpler” on an entry-by-entry basis, for some importers, filing a protest might actually prove the easier approach for a large volume of entries. Also, some customs brokers are refusing to file PSCs on affected entries in the absence of clearer guidance from CBP.  As of the date of the Supreme Court ruling, many entries would still be within the time window to file PSCs relating to IEEPA tariffs, or at least within the time window to file a protest.

Third, another option for seeking a refund is a lawsuit at the CIT. While the President has indicated that companies will need to litigate to receive refunds, questions remain about whether such lawsuits can and should realistically be handled by the CIT and under what circumstances. Just three days after the ruling, on February 23, 2026, FedEx filed a lawsuit in the CIT to seek refunds under the Supreme Court’s ruling. Importers should watch carefully to see how the Government responds to this and other pending lawsuits.

While litigation at the CIT may appear attractive to some, it may also be “jumping the gun,” because existing or new procedures may soon be created or clarified. Filing a lawsuit now will not necessarily put importers in the “front of the line,” because there are already over a thousand lawsuits pending. Also, the outcome of protests and litigation may be different for entries liquidated before and after the Supreme Court’s decision.  Uncertainties remain about how the CIT will handle certain types of entries under Administrative Procedure Act and other principles, and appropriate procedures might be clarified soon before the time to protest has expired for many entries.

What Comes Next?

The realistic answer is that no one knows for sure. The CIT might create new procedures or clarify existing procedures, or approve new or clarified procedures proposed by the Administration. Or Congress itself might act to clarify the situation. Thus, there remain strong reasons for some importers to take a “wait and see” approach, or to take minimal actions now to protect their potential refund rights relating to specific entries through PSCs or protests on a “rolling” basis until the “fog” clears.

Allocation of Refunds under Supply and Purchase Contracts

It is worth noting that importers are not the only ones who may have rights relating to IEEPA tariff refunds. While importers generally pay applicable tariff and would thus would receive any refunds, some suppliers might also have contractual rights to recover duties that were allocated to them. In some cases supply contract/purchase order terms may allocate tariffs to customers who could have rights to recover a share of tariff refunds. Buyers and sellers allocate tariff costs and related paperwork obligations among themselves using a wide variety of contractual provisions, including a long list of shipping terms commonly referred to as INCOTERMS ™. The Court’s ruling opens up the possibility that such terms may take on new importance in tariff refund allocations, and such terms could need to be adjusted to reflect new realities. The outcome of the negotiations and disputes that flow from the Supreme Court’s ruling could involve questions of contract interpretation, international treaties, venue and jurisdiction in different countries and U.S. states, as well as U.S. administrative law.

New Section 122 and Other Tariffs

As noted above, on the same day as the SCOTUS Ruling, President Trump declared he would issue new tariffs under Section 122 of the Trade Act of 1974. These tariffs will apply to goods entered or withdrawn from consumption after 12:01am on February 24, 2026, with certain exceptions. The President may also seek to use other legal authorities, such as Section 301 of the Trade Act of 1974 or Section 338 of the Tariff Act of 1930 to impose additional tariffs. These authorities are more limited in scope and/or duration than the broad authority the President had claimed under IEEPA. For example, Section 301 imposes process requirements that limit its utility as a general tariff tool. Also, neither section 122 nor section 338 have been used by any president to deploy tariffs to date. Thus, further tariffs under these authorities would likely lead to legal challenges. However, importers and others should not underestimate the Administration’s dedication to using tariffs as a key part of President Trump’s agenda, and by continuing to use different authorities that take time to challenge, it is possible the Administration might be able to use questionable tariff practices to impose certain tariffs at least for a time.

If you have questions about tariff matters, please consider contacting us to discuss whether we can help.