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, but importers and others should be wary of premature celebration or over-optimistic planning for the future.

The Court’s decision fundamentally alters the playing field for importers, financing institutions, consumers, and U.S. international trade negotiators. However, this 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 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%.  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, the IEEPA tariffs will no longer be in place, since they have been ruled unconstitutional. That will provide some relief to importers going forward.

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 address refunds. That means eligibility for refunds will be determined by CBP and in the courts going forward based on existing procedures unless new procedures are created. 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 more by timing, volume, and funding issues than by strictly legal/procedural issues.

There are several existing ways in which importers can seek refunds for tariffs paid. 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). After that, importers may 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. As of the date of the Supreme Court ruling, many imports would still be within the time window to file PSCs for many entries affected by IEEPA tariffs, or at least within the time window to file a protest. However, the process could be affected by various other factors, such as potential follow-on court rulings or administrative actions.

Importers are not the only ones who may request refunds. Many buyers and sellers allocate tariff costs and related paperwork obligations among themselves using a variety of contractual provisions and shipping terms commonly referred to as INCOTERMS ™. The Court’s ruling opens up the possibility that many such allocations could need to be adjusted to reflect new realities. The outcome of those matters 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.

What’s Next?

Now that the Supreme Court has declared his IEEPA tariffs invalid, the President may seek to use other legal authorities, such as Sections 122 and 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.