On February 20, the Supreme Court of the United States held that the president lacks authority under the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. §§ 1701–1706, to impose tariffs. The decision invalidates all additional ad valorem duties imposed pursuant to IEEPA-based executive orders issued in 2025, including tariffs imposed on Mexico, Canada, and China designed to combat fentanyl trafficking and immigration concerns, the reciprocal tariffs regime, and related country-specific actions (e.g., Brazil and India). That same day, President Donald Trump issued an executive order titled “Ending Certain Tariff Actions” (the IEEPA Terminating Order), formally terminating those IEEPA-based tariffs. U.S. Customs and Border Protection (CBP) subsequently issued guidance confirming that IEEPA-based tariffs will no longer be collected on imported goods starting February 24, 2026, and that it is updating the Automated Commercial Environment (ACE) portal to deactivate the relevant Chapter 99 Harmonized Tariff Schedule of the United States (HTSUS) provisions.

The ruling does not affect tariffs imposed under other statutory authorities, including Section 232 of the Trade Expansion Act of 1962 (Section 232), Section 301 of the Trade Act of 1974 (Section 301), and Section 201 of the Trade Act of 1974, as well as antidumping and countervailing duty (AD/CVD) orders, which remain in full force and effect (collectively, Sectoral Tariffs). This development, however, does not signal a broader rollback of U.S. tariff policy. Within hours of the Court’s decision, President Trump, through the issuance of a proclamation titled “Imposing a Temporary Import Surcharge to Address Fundamental International Payments Problems” (the Section 122 Proclamation), invoked Section 122 of the Trade Act of 1974, 19 U.S.C. § 2132 (Section 122), imposing a temporary 10% global import surcharge starting February 24, 2026 (with public statements indicating a possible increase to 15%).

For importers, the landscape now presents two parallel considerations: (1) potential refund strategies for IEEPA-based tariffs previously paid; and (2) forward-looking exposure modeling under Section 122 and other existing tariff regimes.

The Court’s Holding

In Learning Resources, Inc. et al. v. Trump[i] and V.O.S. Selections v. Trump [ii], No. 24-1287 (U.S. February 20, 2026), the Court concluded that IEEPA’s authorization to “regulate … importation” does not encompass the power to impose duties or tariffs. The Court emphasized that: (1) the Constitution vests taxing and tariff authority in Congress; (2) IEEPA does not expressly authorize duties; and (3) when Congress intends to delegate tariff authority as part of its core taxing and foreign commerce powers, it does so explicitly (e.e.g., Sections 122, 201, and 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962).

The decision invalidates tariffs imposed under the following executive orders, including amendments (collectively, the IEEPA Tariffs):

• Executive Order 14193 (Northern Border/Fentanyl)  
• Executive Order 14194 (Southern Border/Migration)  
• Executive Order 14195 (China Synthetic Opioid Supply Chain)  
• Executive Order 14245 (Countries Importing Venezuelan Oil)  
• Executive Order 14257 (Reciprocal Tariffs)  
• Executive Order 14323 (Brazil)  
• Executive Order 14329 (Russia)  

The Court did not expressly address refunds for duties already paid. However, the dissent recognizes that the ruling is likely to trigger significant refund claims (potentially billions of dollars) to be administered through the existing customs and Court of International Trade (CIT) framework, indicating that importers may have recourse, for example, through the protest mechanism with CBP.

Even with this ruling, the Sectoral Tariffs and de minimis restrictions adopted separately remain in effect as noted by CBP’s CSMS #67845486 notice through its Cargo Systems Messaging Service, titled “Continuing the Suspension of Duty-Free De Minimis Treatment for All Countries.”

IEEPA allows the president to regulate international commerce after declaring a national emergency in response to an “unusual and extraordinary threat.” The government argued that the statute’s reference to “regulate … importation” implicitly authorized tariffs at any rate and duration once an emergency is declared. The Court disagreed, stressing that IEEPA lists specific powers but does not mention “tariffs” or “duties” and that Congress has granted tariff authority expressly in other trade statutes. The majority also highlighted the magnitude of the power the government claimed — open‑ended, emergency-triggered tariff authority — as a reason to read the statute narrowly.

By confirming the limits of IEEPA, the decision delineates the procedural boundaries within which the U.S. may impose tariffs and provides greater statutory clarity regarding the legal basis for future trade measures. In doing so, the ruling re-anchors U.S. trade policy within established statutory frameworks and treaty-based systems, including the World Trade Organization (WTO) and United States-Mexico-Canada Agreement (USMCA), which presuppose that tariffs are imposed through legislatively grounded or negotiated mechanisms rather than unilateral executive action.

Practical Impact on Duty Liability

The Court’s invalidation of the IEEPA Tariffs removes only the IEEPA component of the duty “stack” on affected imports; it does not alter any other tariff authorities (e.e.g., Sectoral Tariffs). For entries made on or after February 24, 2026, importers will no longer declare the IEEPA‑related Chapter 99 HTSUS provisions, and the additional IEEPA ad valorem duties will not be assessed. All other applicable duties, including most-favored nation (MFN) general duty rates, Sectoral Tariffs, and, where applicable, the new Section 122 global surcharge, remain fully in effect.

At present, there is no indication that CBP will automatically reliquidate all affected entries, so importers will likely need to rely on existing customs procedures to seek refunds and carefully identify entries in which both IEEPA Tariffs and other trade remedies were stacked, as opposed to entries where IEEPA was the sole source of additional duties. By contrast, for products (particularly non-steel, non-aluminum, and non-copper components) that were not subject to Section 232 or other trade remedies and were dutiable solely by virtue of the IEEPA measures, the Court’s ruling eliminates the only additional tariff layer that applied. Prospectively, those entries revert to their baseline MFN or other applicable rates, and IEEPA Tariffs previously paid on such products are likely to represent the clearest and most straightforward category of potential refund exposure.

Relief and Refunds

Under the U.S. customs framework (discussed in detail here): (i) before liquidation, importers may file post-summary corrections (PSCs) to their previously filed entry summaries to correct duty, value, classification, and other declaratory elements, and CBP may extend or suspend the liquidation period, but entries are generally liquidated under 19 U.S.C. § 1504 within 314 days from the date of entry; (ii) once liquidated, duty determinations are final unless protested; (iii) protests must be filed within 180 days of the date of liquidation, if CBP denies the protest (or fails to act within the statutory period), the importer may file suit in the CIT within 180 days of the date of mailing of CBP’s notice of denial of the protest (28 U.S.C. § 2636).

Because the first IEEPA Tariffs were implemented in 2025, the first wave of entries subject to those tariffs began liquidating around December 16, 2025. For those initially liquidated entries, importers would need to file a protest on or about June 13, 2026 (i.e., within 180 days of liquidation) to preserve their administrative refund rights and the ability to pursue judicial review. If the protest period expires without a timely protest, the liquidation becomes final and conclusive under 19 U.S.C. § 1514, and the importer generally does not have the right to file suit in the U.S. Court of International Trade to challenge those duties. Absent an atypical basis for residual jurisdiction under 28 U.S.C. § 1581(i), which cannot be used simply to circumvent missed protest deadlines, the loss of protest rights typically means the loss of judicial recourse for those entries.

The Court clarified that challenges to the legality or application of tariffs “arising out of” federal trade and customs laws fall within the exclusive jurisdiction of the CIT under 28 U.S.C. § 1581. In doing so, the Court confirmed that such disputes must proceed in the CIT — whether under the protest-based jurisdiction of § 1581(a) (following a denied protest) or, where appropriate, under the CIT’s residual jurisdiction in § 1581(i) — rather than in federal district courts. The Court did not, however, directly prescribe the specific remedies available to the many importers that have already paid IEEPA Tariffs, and the administration has indicated that it is awaiting further guidance from the lower courts.

Although the majority opinion does not explicitly discuss remedies, the dissent acknowledged that the government may ultimately be required to refund tens of billions of dollars (estimated at roughly $130 billion) in unlawfully collected duties and characterized the likely refund process as a “mess.” The mechanics and temporal scope of any refunds — specifically, whether relief will extend back to entries dating from April 2025 (when this suit was first filed) or only to entries covered from the date of the Court’s decision — remain unresolved. The majority opinion does not dispute the dissent’s characterization of potential refund exposure, nor does it purport to limit the availability of refunds. Instead, the Court effectively leaves the implementation of refunds to existing customs procedures and the CIT framework. Consistent with this, in December 2025, the CIT issued a decision (the December 2025 matter) in which importers, including several large national retailers, sought to preserve their refund rights under the current customs protest and litigation process in the event that the Court ultimately invalidated the IEEPA Tariffs (discussed in detail elsewhere in this article).

In the immediate aftermath of the decision, CBP began updating its systems for processing imports. On Sunday evening, CBP issued CSMS #67834313 titled “Ending IEEPA Tariff Collection.” That notice explains that IEEPA Tariffs will no longer be assessed or collected on goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12 a.m. ET on February 24, 2026. Correspondingly, importers will no longer be required to input IEEPA-related Chapter 99 HTSUS codes to secure release of their cargo.

As noted above, PSCs, protests, and, where necessary, CIT litigation provide the principal mechanisms for correcting tariff assessments and seeking refunds. These mechanisms are not an automatic refund program for IEEPA Tariffs. It remains unclear whether CBP will adapt existing processes or whether tariff‑specific administrative guidance or legislation will be needed to implement any comprehensive refund regime.

Senate Democrats have introduced a bill titled “Tariff Refund Act of 2026,” which would require the administration to refund, with interest and within 180 days, all revenue collected under the invalidated IEEPA tariffs, with a priority placed on small businesses and smaller importers in the refund process. It remains uncertain whether the bill will garner sufficient bipartisan support to clear both chambers of Congress or if it will overcome a potential veto from President Trump.

Recent decisions from the CIT confirm that the court can order reliquidation and refunds where duties were unlawfully collected, suggesting that early, “protective” lawsuits are not always required to preserve refund rights if a tariff regime is later invalidated. At the same time, the government has indicated that it views refunds as generally available only to importers that affirmatively pursue relief — through protests, litigation, or both — creating uncertainty over how courts will apply exhaustion requirements and whether CBP will adopt any broader administrative refund program.

Against this backdrop, importers that paid IEEPA duties should assess their current posture, including liquidation status, protest deadlines, and any existing challenges, to protect potential refund rights. By way of example, an international shipping and logistics company has filed suit in the CIT to contest the now‑invalidated duties and seek refunds, arguing that IEEPA never authorized the president to impose tariffs and that CBP’s role was purely ministerial. For other importers, similar litigation may be a viable path to recovery, but whether to pursue that approach will depend on each company’s specific duty exposure, entry profile, and timing and should be evaluated on a case‑by‑case basis.

Uncertainties Going Forward

Even with these procedures in place, significant questions remain on both the remedial and constitutional fronts.

It remains unclear whether potential refunds will be limited to importers that previously “preserved their rights” through CBP processes or litigation. In a December 2025 CIT decision, the court held that importers who had already filed timely challenges to the IEEPA Tariffs would not forfeit potential refunds merely because their entries liquidated while the Supreme Court was considering the tariffs’ legality. How any eventual refund process will treat importers that did not take similar steps is unresolved. Notably, the IEEPA Tariffs were held unauthorized and invalid on the merits, rather than merely procedurally defective, which reinforces the argument that some form of relief should be available, even though the scope, mechanics, and eligibility criteria have not yet been defined.

Relatedly, the CIT will be the central forum for shaping any IEEPA‑related relief, with appeals going to the U.S. Court of Appeals for the Federal Circuit. It remains unclear how the court will structure any relief: whether it will apply plaintiff‑specific standards or instead articulate broader principles that CBP must implement, potentially through additional CSMS guidance. What is clear is that companies will need to monitor developments closely and be prepared to affirmatively seek relief.

Beyond refunds, the decision leaves unresolved several constitutional and policy issues that may shape future tariff practice. The Court did not address whether the national emergencies invoked — drug trafficking issues at the northern and southern borders and fentanyl smuggling facilitated by China — to justify tariffs on products from Canada, Mexico, and China satisfied IEEPA’s “unusual and extraordinary threat” threshold. Nor did it meaningfully engage with nondelegation or separation‑of‑powers concerns associated with using IEEPA as a tariff tool. And although the Court held that IEEPA cannot be used to levy peacetime tariffs, it remains unclear whether the same underlying emergency concerns the government relied upon for IEEPA Tariffs could instead be advanced under other statutory frameworks, such as the Sectoral Tariffs, subject to their own procedural and substantive constraints.

Future Tariff Power

The decision leaves intact the government’s existing tariff tools under other statutes. The dissent underscores that the Sectoral Tariffs will remain available instruments for imposing tariffs based on national security, unfair trade practices, or balance‑of‑payments concerns.

The Court’s holding, therefore, removes IEEPA as a stand-alone basis for peacetime tariffs; leaves in place a substantial array of alternative tariff authorities; and may prompt future administrations to rely even more heavily on Sections 232 and 301, subject to their respective procedures and constraints (e.e.g., both require an investigation and report by the U.S. Department of Commerce (DOC)).

From a business planning perspective, the decision is less a “tariff rollback” and more a rebalancing of tools, and it should be considered together with potential Section 122, Section 232, and Section 301 developments. The Court’s decision also has immediate implications for existing trade agreements and ongoing or future trade negotiations. Businesses must consider how the Court’s ruling affects broader trade developments internationally. With those tariffs now invalidated, trading partners have sought assurances that future tariff measures will be grounded in durable statutory authority. For example, the EU, which was set to vote on approval of a trade agreement reached with the administration last year, agreed to further delay any such vote in light of the Court’s ruling. Thus, the risk profile of business deals negotiated based on expected international agreements may be left in flux. The decision may also prompt counterparties to demand stronger dispute-settlement protections and clearer statutory guardrails before finalizing agreements.

Uncertainty remains as other tariff avenues exist, such as the Sectoral Tariffs and Section 122 global surcharges. Thus, importers may still face practical gaps between the IEEPA Tariffs ruling and operational reality at ports. Because tariffs directly affect cargo values, supply chains, costs, and trade flows, they also influence exposures for marine cargo insurers, trade credit insurers, surety, political risk, and other specialty lines. However, the Court’s ruling provides greater clarity at least with respect to IEEPA Tariffs, as it removed much of the “wait-and-see” caveat that had surrounded IEEPA Tariff volatility and legal uncertainty. Any reduction in legal uncertainty around certain tariffs should help insurers and reinsurers to more comfortably price risk and assess exposures, notwithstanding the continued business risk posed by new or evolving tariff measures.

President Trump’s Response to the Court’s Holding

In response to the Court’s decision, President Trump issued: (i) the IEEPA Terminating Order, which terminated all IEEPA Tariffs; (ii) an executive order continuing the suspension of duty-free deminimis treatment (i.i.e., low-value shipments (generally valued at $800 or less) remain ineligible for duty-free entry and must be formally entered, declared, and assessed all applicable duties, taxes, and fees); and (iii) the Section 122 Proclamation, which imposed a 10% global tariff (the Section 122 Tariff), effective at 12:01 a.m. ET on February 24, 2026, and, absent an extension by Congress, remaining in effect through July 23, 2026.

Section 122 of the Trade Act of 1974 is expressly limited to addressing “large and serious” balance-of-payments deficits or preventing significant deterioration in the U.S. balance-of-payments position. Its justification is macroeconomic stabilization, not protection of strategic industries or defense capabilities. Section 122 allows the President to impose up to a 15% ad valorem surcharge on most imports for a period of up to 150 days (unless extended by Congress), and it does not require the type of formal investigation that Sections 201, 232, or 301 mandate.

The Section 122 Tariff is framed as a “temporary import duty to address fundamental international payment problems” compared to the national emergencies that were declared under IEEPA Tariffs. The Section 122 Tariff does not apply to goods that: (i) were loaded onto a vessel at the port of loading and were in transit on the final mode of transit prior to entry into the U.S. before 12:01 a.m. ET on February 24, 2026, and (ii) are entered for consumption, or withdrawn from warehouse for consumption, before 12:01 a.m. ET on February 28, 2026.

The administration has announced its intention to increase the Section 122 Tariff to 15%, but no implementing proclamation has yet been issued. The measure applies broadly to articles imported into the U.S., with exceptions for the following categories of products:

• Certain critical minerals, metals used in currency and bullion, energy, and energy products;  
• Natural resources and fertilizers that cannot be grown, mined, or otherwise produced in the U.S. (or in sufficient quantities to meet domestic demand);  
• Certain agricultural products, including beef, tomatoes, and oranges;  
• Pharmaceuticals and pharmaceutical ingredients;  
• Certain electronics;  
• Passenger vehicles, certain light trucks, certain medium and heavy-duty vehicles, buses, and certain parts of passenger vehicles, light trucks, heavy-duty vehicles, and buses;  
• Certain aerospace products; and  
• Informational materials (e.g., books), donations, and accompanied baggage.  

Goods that qualify for duty-free treatment under the USMCA, as well as textiles and apparel articles that enter duty-free under the Dominican Republic–Central America Free Trade Agreement are also exempt from the Section 122 Tariff. The new surcharge applies in addition to other duties (including MFN duties and Section 301 tariffs), but it does not apply to goods already subject to Section 232 tariffs, which include: (i) aluminum articles and their derivatives; (ii) steel articles and their derivatives; (iii) copper and its derivatives; (iv) passenger automobiles and parts; (v) lumber, timber, and their derivative products; (vi) medium and heavy-duty vehicles and parts; and (vii) semiconductors and critical minerals.

CBP issued guidance via CSMS #67844987 on February 23 titled, “Imposing Temporary Section 122 Duties,” to guide importers on how to navigate these Section 122 Tariffs. It advises that importers utilize certain HTSUS code sequences based on applicability and potential exemptions of the underlying goods and expressly provides drawback availability.

President Trump has signaled that the Section 122 Tariff is only a first step and that his administration will pursue additional tariff measures under other statutory authorities to recoup revenue and maintain pressure on trading partners. Ambassador Greer, the U.S. Trade Representative (USTR), has indicated that new Section 301 investigations will be initiated that encompass most major trading partners and target areas of concern such as industrial excess capacity, forced labor, pharmaceutical pricing practices, discrimination against U.S. technology companies and digital goods and services, digital services taxes, ocean pollution, and practices related to the trade in seafood, rice, and other products. Businesses should therefore expect continued volatility in U.S. tariff policy over the coming months.

Section 122 as a Transitional Tariff Bridge

As the new Section 122 Tariff underscores, Section 122 is now the only currently available statute authorizing immediate, broad-based tariffs following the invalidation of the IEEPA Tariffs. Importantly, Section 122 is not a national security authority. Unlike Section 232, which is triggered by a finding that imports threaten to impair national security, Section 122 is expressly limited to addressing “large and serious” balance-of-payments deficits or preventing significant deterioration in the U.S. balance-of-payments position. Its justification is macroeconomic stabilization, not protection of strategic industries or defense capabilities.

As noted above, Section 122 permits the president to impose temporary tariffs or quotas, capped at 15% and limited to 150 days (unless extended by Congress). The balance of payments encompasses the totality of U.S. economic transactions with the rest of the world, including both trade flows and capital movements, with trade deficits forming one component of that broader framework. Enacted during the currency instability of the 1970s, Section 122 was designed as a short-term stabilization tool and requires consultation with and reporting to Congress. It has rarely been used in modern practice; its closest historical analogue is President Nixon’s 1971 10% import surcharge, imposed under earlier authority during the collapse of the Bretton Woods system. Congress subsequently enacted Section 122 in part to cabin that type of action within defined temporal and procedural limits.

Structurally, Section 122, similar in breadth to the former IEEPA Tariffs, operates on a global or countrywide basis and does not inherently require product‑level findings. By contrast, Section 232 and Section 301 require industry‑, product‑, or practice‑specific determinations supported by administrative records. As a result, a Section 122 Tariff cannot simply be converted into a Section 232 or Section 301 tariff without satisfying those independent statutory predicates. However, a Section 122 program can be structured to facilitate transition — for example, by differentiating among country groupings, excluding sectors already under active investigation, or pairing the surcharge with formal announcements that specific industries are under Section 232 review and particular countries are subject to Section 301 investigation. During the 150‑day window, DOC and USTR could develop evidentiary records sufficient to support targeted findings, allowing narrower and more durable Section 232 or Section 301 measures to replace the broader Section 122 Tariff before expiration.

This sequencing strategy would effectively use Section 122 as a bridge mechanism, maintaining tariff leverage and preventing a policy vacuum while procedurally compliant remedies are constructed. It also creates a congressional forcing mechanism, because Section 122 authority expires absent extension, thereby requiring legislative engagement if broader or longer-term authority is desired. At the same time, the approach carries legal and international risk. Courts may scrutinize whether a genuine balance-of-payments condition exists or whether the rationale is pretextual. Internationally, Section 122 does not fit neatly within the national security exception often invoked under Section 232 and may instead implicate WTO balance-of-payments safeguard disciplines, which involve multilateral consultation and oversight.[iii]

Revenue effects also differ. Although Section 122 generates tariff revenue, its statutory justification is macroeconomic stabilization rather than trade remedy, which could affect both domestic political support and international defensibility. Section 122 cannot replicate the breadth or durability of IEEPA indefinitely. It can, however, function as a temporary macroeconomic scaffold while sector-specific or country-specific tariffs are lawfully developed under Section 232 or Section 301. The durability of that strategy will depend on the factual strength of the balance-of-payments justification, careful statutory sequencing, and judicial tolerance for transitional use of temporary trade authority.

Moving Forward

In light of the Court’s holding and the administration’s swift imposition of Section 122 Tariffs, importers that have paid IEEPA Tariffs may wish to evaluate both (i) their potential refund avenues, and (ii) their exposure under the emerging tariff framework. In particular, companies could:

• Identify all imports subject to IEEPA Tariffs, by time period, HTSUS classification, and country of origin, and quantify duties paid under those measures to assess potential refund magnitude.  
• Review the liquidation status of affected entries and determine where PSCs can still be filed and where protest periods remain open.  
• Confirm which protests have already been filed and assess whether additional procedural avenues (including new protests or litigation) may be available.  
• Collect entry documentation, duty payment records, and internal analyses of the tariffs.  
• Review contracts (supply, sales, and logistics) to ensure tariff-related cost allocations are clear and flexible.  
• Pursue actions to seek refunds. These could include a number of parallel avenues for relief:
  • Legal action before the CIT.  
  • Legal action against companies to which tariff-related charges were paid.  
  • Negotiations with contractors, suppliers, and other partners to recover tariff-related charges.  

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[i] This decision stemmed from a District Court of the District of Columbia judgment that was vacated and remanded by the Court with instructions to dismiss for lack of jurisdiction because these challenges belong in CIT.

[ii] This Court holding affirmed the U.S. Court of Appeals for the Federal Circuit decision.

[iii] WTO balance-of-payments safeguard disciplines refer primarily to the General Agreement on Tariffs and Trade 1994 Articles XII and XVIII:B and related WTO procedures, under which a member invoking balance-of-payments difficulties must notify and consult with other members (typically through the WTO Committee on Balance-of-Payments Restrictions, with input from the International Monetary Fund). Measures adopted under these provisions are expected to be temporary, targeted, and progressively relaxed as the member’s external payments position improves, and they are subject to multilateral review and potential challenge.