On February 20, 2026, the U.S. Supreme Court issued a decision holding that the International Emergency Economic Powers Act (IEEPA) does not grant the U.S. president authority to impose tariffs. In practical terms, the court concluded that the tariffs imposed under IEEPA were not authorized by Congress and therefore cannot stand. This decision has immediate relevance for importers that paid IEEPA tariffs and for businesses planning for future trade compliance.

In plain language, the court said that tariffs are taxes, and under the Constitution, only Congress has the power to impose taxes unless it clearly hands that power to the president. While IEEPA allows the president to take many actions during a declared national emergency — such as blocking or restricting certain transactions — it does not specifically mention tariffs or duties. The court was unwilling to read that power into the statute, especially given the size and economic impact of the tariffs at issue. Many consider the ruling to be a major setback for President Donald Trump’s use of emergency powers to reshape trade policy and as a reaffirmation that Congress, not the president, controls tariff policy.

The Supreme Court’s ruling resolves the core legal question that the tariffs were improperly imposed, but it leaves important practical questions unanswered. Most notably, the court did not order the government to automatically refund tariffs that have already been paid. Instead, the decision focuses narrowly on authority: because IEEPA never authorized tariffs in the first place, those tariffs were unlawful. What happens next, particularly with respect to reimbursement, will depend on how existing customs processes and follow-on litigation play out.

Importantly, earlier decisions and government statements strongly suggest that refunds are legally available. In a prior case, AGS Co. Automotive Solutions v. U.S. Customs and Border Protection, the Court of International Trade confirmed that it has authority to order reliquidation and refunds of unlawfully collected duties, including the payment of interest, and rejected the argument that liquidation alone permanently bars recovery. If tariffs are ultimately held unlawful, existing trade law provides a path for refunds through the courts and customs processes.

The Department of Justice has, however, previously made statements that run against Trump’s post-decision statements regarding the right to IEEPA tariffs that have already been paid. In a written response filed by government counsel in the AGS Co. Automotive Solutions case, the government stated on the record that if the Supreme Court determined the IEEPA tariffs were unlawful, the government would not seek further appeal and would make reimbursement available for levies imposed under the statute. At the same time, the government has made clear that it reserves the right to contest individual claims, meaning that refunds are not expected to be automatic or uniform across all importers.

The Connection Between Refunds and Liquidation

The ability to recover unlawfully imposed IEEPA tariffs may turn in large part on whether affected entries have been liquidated. Liquidation of imported goods sets the final duties and taxes owed, which may result in either a refund for overpayment or additional charges based on the original tariff estimate previously paid. U.S. Customs and Border Protection (CBP) typically liquidates goods within 314 days of the goods’ entry into the country. A substantial portion of IEEPA‑affected imports remain unliquidated, in which case refunds may be more easily challenged before final determination during liquidation, and potential recovery is not yet limited to the protest process. For entries that have already been liquidated, recovery is more complex. Customs law permits reliquidation in limited circumstances, including voluntary reliquidation by CBP within a defined window (90 days) and court‑ordered reliquidation in appropriate cases.

Importers with liquidated entries generally may file a protest with CBP within the required 180‑day period or pursue judicial relief in the U.S. Court of International Trade. The CIT has already seen hundreds of cases filed by importing companies in recent months that will prevent liquidation of entries, which could complicate or eliminate the availability of tariff refunds. Even when importers challenge the tariffs, the claims may still face legal and procedural hurdles and be challenged by the government on a case‑by‑case basis. As a result, liquidation status — and the timing of any action taken by the importer — will be a critical factor in determining whether and how refunds can ultimately be obtained.

Complexity of Refund Process

Even for importers whose entries have not yet been liquidated, reimbursement may not be simple in practice. Legal commentators and industry groups disagree about how complex the refund process will be. Some expect significant administrative burdens, given the sheer volume of affected entries, the need to verify amounts paid, and uncertainty over whether CBP will create new procedures, guidance, or review mechanisms to handle claims. Others point out that IEEPA tariffs were assessed and recorded on an entry-by-entry basis, suggesting that refunds could be technically straightforward and CBP only need to establish the process of claims handling. At this stage, there is no clarity on the exact mechanism that will be used. CBP could rely on existing tools, such as post‑summary corrections, protests, or court‑ordered reliquidation, or it could introduce new rules or a formal refund program. Most observers expect delays, system congestion, and phased implementation if and when refunds begin.

Evolving Tariff Landscape

The Supreme Court’s opinion leaves questions regarding the future tariffs available outside of the IEEPA. The court did not say that all tariffs are unlawful or that the President has no tariff power whatsoever. It held only that IEEPA is not the right statute for that purpose. Before the decision, members of President Trump’s team suggested that replacement tariffs could be imposed under other trade laws, and the Congressional Research Service similarly identified several statutes (including Sections 122 and 301 of the Trade Act of 1974, and Section 338 of the Tariff Act of 1930) as provisions that authorize the president to impose tariffs. Given the president’s significant use of tariffs as leverage in negotiations with other countries, the court’s ruling is unlikely to prevent ongoing threats of additional tariffs to apply pressure in international bargaining, even if the legal basis for imposing new duties is more constrained.

The president’s post‑ruling actions reinforced this point. On the evening of February 20, President Trump issued several executive orders in response to the court’s holding. One executive order formally eliminated all tariffs that had been imposed under IEEPA. A separate proclamation imposed a new 10% global tariff under Section 122, which the president has indicated on social media will be increased to 15%, the maximum allowed, subject to official confirmation, beginning on February 24. This tariff would be temporary, lasting 150 days and expiring on July 23 unless extended through legislative action. It would not apply to certain categories of goods, including specified critical minerals, energy and energy products, certain agricultural goods, U.S.–Mexico–Canada Agreement (USMCA)–compliant Canadian and Mexican goods, goods covered by CAFTA‑DR, and any goods subject to tariffs under Section 232 of the Trade Expansion Act of 1962. At the same time, the president announced that he will order the U.S. trade representative to launch several Section 301 investigations into the trading practices of unspecified countries, which could authorize the imposition of higher tariffs on major trading partners such as Japan, the European Union, and Canada. Those investigations will take time, and until then, the 15% tariff will remain in place until any increase is permitted on the outcome of the investigation.

At the same time, the temporary 15% global tariff will lower the tariff burdens for some importers compared to prior IEEPA‑based duties. This dynamic may appear to create a short‑term, several‑month window for importers to move forward with sizeable imports that include expensive machinery or components from IEEPA-affected countries to support projects previously stalled by IEEPA tariffs. However, that window is difficult to delineate clearly, as the timing and scope of any additional tariffs remain uncertain.

Practical Next Steps

In light of the uncertainty surrounding the refund process, companies that paid IEEPA tariffs should begin preparing now so they are positioned to act as the administration and the courts clarify how refunds will be assessed, validated, and issued. Affected companies should consider taking the following preparatory steps:

• Identify affected imports by gathering records for goods imported into the United States that were subject to IEEPA tariffs, including records of the date, cost, and country of origin of entries, proof of initial duty payments, and any correspondence received from CBP.
   
• Assess liquidation status of entries to confirm which entries remain open and which have been liquidated but are still within the applicable 180‑day period for filing a refund or reliquidation challenge.
   
• Consider whether pursuing a filing in the CIT in order to preserve any rights to tariff refunds is appropriate in light of business, reputational, and financial needs and risks.
   
• Safeguard access to CBP electronic systems to maintain the ability to engage in any refund or reliquidation process, which is likely to be administered electronically.
• Plan for delays and uncertainty, including potential processing backlogs, new guidance on import processes and tariff payments, and phased implementation of any refund mechanism.
   
• Evaluate the need to obtain legal counsel knowledgeable in tariff regulation and enforcement in order to understand the administrative and judicial developments over what will likely be a years-long process.

In short, the Supreme Court’s ruling is a major development that clearly limits the use of IEEPA as a tariff tool, materially improves the prospects for reimbursement of previously paid IEEPA tariffs, and temporarily reduces the tariff impact for certain IEEPA-affected countries. But it is not the final chapter. We recommend that importers prepare now, stay informed, and approach reimbursements, new projects, and ongoing compliance with careful planning.

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