Supreme Court Strikes Down IEEPA Tariffs: Key Takeaways and Next Steps for Businesses

On February 20, 2026, the U.S. Supreme Court (SCOTUS) issued its decision in Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections, Inc. invalidating the current IEEPA tariffs and holding in a 6-3 ruling that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose tariffs. Chief Justice John Roberts delivered the majority opinion, joined in full by Justices Neil Gorsuch and Amy Coney Barrett, and joined in part by Justices Sonia Sotomayor, Elena Kagan, and Ketanji Brown Jackson. Justices Clarence Thomas, Samuel Alito, and Brett Kavanaugh dissented.

SCOTUS held that the power to impose tariffs rests with "Congress alone," and that IEEPA's grant of authority to "regulate . . . importation" cannot be read to encompass tariffs because the power to regulate does not include the power to tax. The decision invalidates both the "reciprocal" tariffs imposed on the vast majority of U.S. trading partners and the country-specific tariffs on China, Canada, and Mexico tied to immigration and opioid-related emergency declarations.

The Government’s Response

Despite immediate hope that the Court’s ruling would result in imminent refunds of duties previously paid, things do not appear to be so simple. Within hours of the SCOTUS decision, President Trump signed an executive order revoking the IEEPA tariff orders, stating that the IEEPA tariffs "shall no longer be in effect and, as soon as practicable, shall no longer be collected" and initiated or reiterated alternative assessments, including:

Temporary Tariffs Under Section 122 of the Trade Act of 1974: Contemporaneously, the Trump administration imposed new tariffs under Section 122 of the Trade Act of 1974 (initially, a 10% "temporary import surcharge" on products from all countries and with indications of a subsequent increase to 15% — the maximum rate permitted under Section 122 — for up to 150 days). These Section 122 tariffs include exemptions for USMCA-qualifying goods from Canada and Mexico, goods covered under Section 232, and certain other goods, and are set to expire on July 24, 2026, unless extended by Congress. Some experts question whether the basis for Section 122 tariffs is viable under current circumstances.

New Section 301 Investigations: The Office of the United States Trade Representative (USTR) announced that it will initiate new Section 301 investigations into other countries' unfair trading practices on "an accelerated time frame." Section 301 investigations typically require significant procedural steps before tariffs can be imposed but are considered more legally durable than Section 122 tariffs.

Section 232 Tariffs Remain in Effect: The Court's decision does not affect existing or new tariffs imposed under Section 232 of the Trade Expansion Act of 1962, which may include tariffs on steel, aluminum, automobiles, copper, and lumber.

Treasury Secretary Scott Bessent stated that combining Section 122, Section 232, and Section 301 tariffs "will result in virtually unchanged tariff revenue in 2026."

The Refund Question

SCOTUS' decision did not address whether or how the federal government should provide refunds to importers who have paid IEEPA tariffs, estimated at more than $160 billion to $175 billion collected under IEEPA authority. In his dissent, Justice Kavanaugh warned that the refund process is likely to be a "mess."

The executive order revoking the IEEPA tariffs also did not address refunds, and the administration has signaled that it does not plan to issue refunds voluntarily. At the time of this alert, Customs and Border Protection (CBP) has not established a refund mechanism. President Trump indicated in a press conference that the administration expects the issue of refunds to be litigated over the coming years.

Nevertheless, businesses may have the following options for seeking refunds:

1. Administrative Remedies - For liquidated entries, importers should file protests requesting refunds plus interest no later than 180 days from liquidation. For unliquidated entries, importers can file Post Summary Corrections (PSCs) requesting duty refunds plus interest, although importers with sufficient time prior to liquidation may consider waiting for potential CBP future guidance.

2. Court of International Trade Litigation - The Supreme Court affirmed that the U.S. Court of International Trade (CIT) has exclusive jurisdiction over challenges to IEEPA tariffs under 28 U.S.C. § 1581(i). Importers may file suit at the CIT under this residual jurisdiction provision to challenge the lawfulness of IEEPA tariffs collected by CBP, which several had done prior to the SCOTUS ruling. Such claims are subject to a two-year statute of limitations from when the cause of action first accrues.

Importers should consider with trade counsel taking a belt-and-suspenders approach and file suit at the CIT pre-liquidation, while also following through with administrative remedies, including protests post-liquidation and, if necessary, file suit with CIT following any protest denial. 

Notably, in January 2026, the administration stipulated that it would refund IEEPA tariffs for all current and future similarly situated plaintiffs following a "final and unappealable decision" ordering the government to issue refunds. This suggests the administration may refuse to issue refunds until further litigation results in such an order from the CIT, which could take significant time.

See recommendations from our earlier article: What Importers Need to Know as the Supreme Court Decides the Fate of IEEPA Tariffs. These recommendations stand, pending further guidance from the CIT or CBP.

Status of Bilateral Trade Deals

The status of the approximately 20 "trade deals" negotiated by the administration under the IEEPA tariff regime remains uncertain but are in place and effective according to the Trump administration. Elements of these deals that relied on IEEPA authorities — such as country-specific tariff rates, floor mechanisms, and product-specific exemptions — may no longer have legal force. The administration has stated that it intends to honor its trade agreements, but the legal mechanism for doing so under Section 122 is unclear, particularly for countries that negotiated tariff rates exceeding the 15% Section 122 maximum. There will be much more to determine with respect to existing trade deals.

Next Steps for Businesses

Given the evolving tariff landscape, businesses may take the following steps:

1. Gather and Retain Documentation - Businesses should continue to gather and retain records of all IEEPA tariffs paid since April 5, 2025, including entry packets, proof of payment, and documentation of any post-entry activity. Importers should ask their customs brokers to download entry records from CBP's Automated Customs Environment (ACE) to identify entries for which they paid IEEPA tariffs.
2. Document Liquidation Dates - Businesses should document the liquidation date for each entry containing IEEPA-related duties, as this will be critical for determining the appropriate deadline for filing protests or suit.
3. Assess Refund Options - Businesses should consult with trade counsel to determine the most appropriate avenue for seeking refunds — whether through CBP's administrative processes or litigation at the CIT or both — based on the status of their entries.
4. Prepare for New Tariffs - The Section 122 tariffs take effect on February 24, 2026, and will apply for 150 days unless extended. Additionally, the administration is expected to pursue new tariffs through Section 301 investigations and potentially additional Section 232 actions. Businesses should monitor developments closely and assess the impact on their supply chains.
5. Review Trade Deal Implications - If your business benefits from a bilateral trade deal negotiated under the IEEPA tariff regime, consult with counsel to understand how the rescission of IEEPA tariffs may affect those arrangements.

We will continue to monitor developments related to the SCOTUS decision, the status of refund opportunities with respect to IEEPA tariffs previously paid, and the effect of new or replacement tariffs.