Last Friday, February 20, 2026, a majority of the United States Supreme Court held that tariff regimes imposed by the Trump Administration in reliance on the International Emergency Economic Powers Act (IEEPA) are unlawful because IEEPA does not authorize the President to impose tariffs. CBP has since announced it will cease collecting IEEPA-based tariffs on February 24, 2026. As discussed further below, there are potentially several paths to achieve refunds of IEEPA-based tariffs previously collected.
In response to the Court’s ruling rejecting the IEEPA tariffs, the Trump Administration immediately issued a Proclamation to impose a new broad-based global tariff, with certain product exclusions similar to those associated with the IEEPA reciprocal tariffs. This initial replacement tariff regime is imposed for a statutory 150-day period beginning February 24, 2026. While Friday’s Proclamation set the tariff rate at 10%, President Trump this weekend posted on social media that the rate will instead be 15%; no official change to the higher rate has been issued as of this writing. The Administration has also signaled further tariff measures are likely to be imposed in the future.
Practical Highlights
- In finding tariffs imposed under IEEPA unlawful, the Supreme Court’s opinion does not immediately cause their removal. Nevertheless, the President ordered CBP to cease collecting IEEPA tariffs and CBP has stated that it will do so for entries beginning on February 24, 2026.
- The President also maintained the suspension of de minimis treatment while modifying the tariff rate applicable to certain products.
- The availability, scope, and procedures relevant to any court-ordered refunds will need to be determined by the U.S. Court of International Trade (CIT). In cases before the CIT, the Government has stipulated to the CIT’s authority to order refunds of IEEPA tariffs if the tariffs were declared unlawful. It is unclear whether the Government may voluntarily undertake refunds in the interim. CBP has acknowledged the Supreme Court opinion and further guidance may be forthcoming.
- In the meantime, importers should consider taking administrative steps to preserve their rights, including filing protests with respect to entries that may soon liquidate. While companies could also file “me too” appeals challenging the assessment of IEEPA tariffs, there appears to be no clear benefit to doing so in the short term.
- The President has promulgated new 10% tariffs to take effect for a 150-day period beginning February 24, 2026. The Proclamation also provides for product exclusions that resemble those provided under the IEEPA reciprocal tariff regime. More recent social media posts by the President indicate that the new 10% tariff rate may increase to 15%.
- The Administration announced that it will also be pursuing other investigations that may result in the imposition of new tariffs. These include investigations pursuant to Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974.
- Although Reciprocal Trade Agreements and similar “deals” reached by the Trump Administration with other countries have framed concessions in terms of the IEEPA tariffs, the erection of a new tariff regime(s) to replace the IEEPA tariffs opens the possibility of introducing similar concessions into revised deals.
IEEPA Tariffs; Not the Only Tariffs
The Supreme Court decision addressed only those tariffs President Trump imposed pursuant to IEEPA. Such tariffs primarily included those targeting imports from the People’s Republic of China, Mexico, and Canada to stem the flow of fentanyl into the United States (the “Trafficking Tariffs”) and the “Reciprocal Tariffs” imposed to address trade deficits and various unfair trade acts. (The “reciprocal tariffs” were imposed at varying levels on products entered from most countries.) Further action was then taken with respect to eligibility for duty-free de minimis treatment, which included the establishment of a tariff rate for such shipments. Finally, several additional IEEPA tariff regimes were put into place with respect to products of Brazil and India, and third countries that engage in certain commerce with Cuba or Iran. Several trade agreements were negotiated with the decrease (or increase) of these tariffs in mind.
The IEEPA tariff regimes summarized above are distinct from the various tariffs imposed pursuant to other statutory authorities, such as Section 232 of the Trade Expansion Act of 1962 (Section 232) or Section 301 of the Trade Act of 1972 (Section 301).
The History
In May 2025, the U.S. Court of International Trade held that the Trump Administration’s Reciprocal and Trafficking tariff regimes were unlawful, and issued a permanent injunction against the operation of those tariffs. The Government appealed the decision to the U.S. Court of Appeals for the Federal Circuit (CAFC) almost immediately, and secured a stay of the CIT’s injunction pending appeal. The CAFC affirmed the CIT’s holding in substance, concluding that IEEPA did not authorize the imposition of tariffs and ordered remand for the CIT to reconsider potential remedies.
The Government appealed the CAFC’s determination to the Supreme Court. The Supreme Court agreed to hear that appeal, as well as an appeal of a separate challenge to the IEEPA tariffs that had been argued before the U.S. District Court for the District of Columbia.
The Supreme Court’s Opinion & Reasoning
In an opinion authored by Chief Justice Roberts, a six-Justice majority of the Court addressed “whether the power to “regulate…importation,” as granted to the President in IEEPA, embraces the power to impose tariffs,” holding that “{i}t does not.”
The Majority began by noting that the Constitution invests the whole power of taxation with Congress, and that the power to impose tariffs is a branch of the taxing power. The Majority analyzed the text of IEEPA and specifically considered whether the authority to “investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit…importation or exportation” encompasses the power to make tariffs.
The Majority reasoned that it does not for several reasons.
- First, the statute does not use the term “tariff” or “duty,” in contrast to other statutes wherein Congress has granted tariff-making authority.
- Second, if “regulate” were read broadly enough to encompass tariff-making, then it would render all the other named powers “simply wasted ink.”
- Third, the Government had not identified any other statute in which the power to “regulate” included the power to tax.
- Fourth, there are other statutes in which Congress addresses the power to “regulate” and also separately addresses the power to “tax.”
- Fifth, reading IEEPA as conferring the power to impose tariffs would render it partly unconstitutional insofar as IEEPA applies to “exportation” as well as importation and the Constitution expressly forbids taxing exports.
- Sixth, no other president has ever claimed that IEEPA conferred tariff-making authority.
- Seventh, when Congress has done so expressly and conferred tariff-making authority in other statutes, it has imposed “various combinations of procedural prerequisites, required agency determinations, and limits on the duration, amount, and scope of the tariffs they authorize,” aspects that are absent from IEEPA.
The Majority rejected the Government’s alternative arguments. For example, while acknowledging that tariffs were “in some sense, less extreme” than the outright “prevent{ion}” of importation, which IEEPA authorizes, the Majority reasoned that the power to tax “falls outside the spectrum entirely.” The Majority also rejected the Government’s reliance on the Trading with the Enemy Act (TWEA) and the Court’s upholding of license fees under Section 232 of the Trade Expansion Act of 1962 in Federal Energy Admin. v. Algonquin SNG, Inc. In essence, the Majority found TWEA’s limited tariff application and associated judicial and legislative interpretation to fall short of being “well-settled” and thus incapable of extending such authority to the same language in IEEPA. The Court also distinguished the language of Section 232 and IEEPA.
The Majority was split on an ancillary point, which led to separate concurring opinions that together rejected the IEEPA tariffs. Three of the six Justices applied a “major questions doctrine” framework that would require the President to identify “clear congressional authorization” of the asserted tariff-making authority under IEEPA, concluding that no such “clear congressional authorization” could be found. The remaining three Justices did not rely on the “major questions doctrine” framework, and instead held that IEEPA does not authorize the imposition of tariffs based on the application of ordinary rules of statutory interpretation alone. Both groups of Justices reached the same conclusion, therefore forming a Majority and rejecting the IEEPA tariffs.
Finally, the only conclusion all nine justices agreed on was that only the CIT — and not other federal district courts — had jurisdiction over Plaintiffs’ challenge to the IEEPA tariffs. To the extent future tariff actions are subject to challenge, this holding and rationale may streamline litigation and avoid dueling challenges in different courts.
The Status of IEEPA Tariffs Going Forward
The fact that the Supreme Court’s opinion was issued did not immediately eliminate the tariff regimes imposed pursuant to IEEPA. Instead, after the Supreme Court’s opinion was released, the Trump Administration began to unwind the IEEPA tariffs. The President issued a first Executive Order on February 20 providing that IEEPA tariffs “shall no longer be in effect and, as soon as practicable, shall no longer be collected.” Thereafter, U.S. Customs and Border Protection (CBP) issued a CSMS message stating that it will cease collecting IEEPA duties for entries beginning on or after 12:00AM Eastern Time on February 24, 2026.
The second Executive Order revises actions imposing tariffs on entries valued at or under $800 and that would otherwise qualify for the de minimis exemption authorized at 19 U.S.C. § 1321(a)(2)(C). Whereas prior Executive Orders had imposed IEEPA-based tariffs on such entries sent through the international postal network, the second Executive Order removes those IEEPA-based tariffs and replaces them with the new Section 122 tariffs until their expiration (see below for details on the new Section 122 tariffs) or the effective date for CBP’s new postal entry process for postal shipments. CBP may undertake to establish this new process before expiration of the Section 122 tariffs. As for shipments falling under the de minimis threshold that are not sent through the international postal network, those “shall be subject to all applicable duties, taxes, fees, exactions, and charges.”
Will There Be Refunds?
Neither the Supreme Court’s opinion nor Friday’s Executive Orders prescribe a course of action with respect to refunding previously collected IEEPA tariffs. Pending further action by the President and/or CBP, proceedings before the Court will continue to address the timing, scope, and procedure for IEEPA tariff refunds.
What Comes Next for Refunds
The Supreme Court affirmed the CAFC’s judgment. Because the CAFC Judgment vacated the CIT’s decision with respect to remedy, that question will need to return to the CIT. Initially, the CIT ordered the Trafficking and Reciprocal IEEPA Tariff regimes to be vacated and their operation permanently enjoined as to all importers. Details of implementation were left, in the first instance, to the Government, but subsequent appellate proceedings short-circuited that process.
The CAFC ordered that the CIT reconsider its approach in light of the standards established by the Supreme Court in CASA, which was issued after the CIT’s opinion and largely, but not entirely, constrains federal courts in being able to extend remedies beyond the specific parties that brought the case to the court. Notably, the CAFC specifically stated that it is “neither affirming nor reversing the CIT’s holding” that constitutional considerations require a universal injunction here. The Supreme Court majority did not address this question. Thus, the ultimate remedy may look much the same as what the CIT originally ordered, but further proceedings will likely be necessary to determine the scope of the remedy to address the unlawful assessment of IEEPA tariffs. And it is possible that whatever the CIT determines on remedy, further challenges may follow.
Of course, the Government could voluntarily undertake to issue refunds especially given filings made by the Government in other “me too” appeals. Such an action could occur at any time, but is not guaranteed. Short of such voluntary self-enforcement, the IEEPA tariffs paid are likely to remain with the U.S. Treasury until further order from the CIT.
How Can I Secure My Refunds?
In the meantime, importers should protect their interests administratively to the extent possible, which may be necessary to secure refunds of IEEPA tariffs paid on past entries. For example, importers could file post summary corrections (if made possible by CBP) for unliquidated entries and administrative protests once entries have liquidated. Indeed, if a court were to find that the collection of unlawful IEEPA tariffs is a “protestable” action by CBP — which past tariff litigation at least suggests is a possibility — then refunds may be precluded in the absence of such protests.
Moreover, as has been reported, many companies have decided to file their own “me too” appeals challenging the legality of the IEEPA tariffs. Such action generally is not a substitute for taking the administrative steps noted above. While there appears to be no harm in such a filing, there also appears to be no urgent basis to do so, given the Government’s recent stipulations accepting the CIT’s authority to reliquidate entries, the two-year window to challenge unlawfully assessed IEEPA tariffs, and no established advantage to being “first-to-file.”
Meet the New Tariffs, Not Quite the Same as the Old Tariffs
With the Supreme Court having determined IEEPA-based tariffs to be unlawful, a Proclamation pursuant to Section 122 of the Trade Act of 1974 (19 U.S.C. § 2132) became the bridge in the evolution of the Trump Administration’s tariff policy.
In relevant part, Section 122 permits the President to impose import duties “not to exceed 15 percent ad valorem…in addition to {duties} already imposed, if any” for up to 150 days, “to deal with large and serious United States balance-of-payments deficits.” Thus, the President’s Proclamation cites “a large and serious deficit,” including a “deficit in selling goods and services overseas,” “quarterly deficits in {the U.S.} return on investment or labor,” and a “deficit in voluntary transfers, such as remittances.” The Proclamation expressly reframes this as “run{ning} a trade deficit” and the CIT’s IEEPA decision observing that Section 122 authorized the President to “respon{d} to balance-of-payments deficits, and specifically trade deficits.”
The Proclamation provides that, beginning with products entered at 12:01AM Eastern Standard Time on February 24, 2026, “all articles imported into the United States shall be subject to a 10 percent ad valorem duty rate,” in addition to “any other duties, taxes, fees, exactions, and charges applicable to such products” (e.g., most-favored nation, antidumping, countervailing, and Section 301 duties, as the case may be) except “tariffs imposed under Section 232.” Per the Proclamation, and faithful to the statute’s 150-day expiration period, this Section 122 duty shall remain in place until 12:01AM Eastern Daylight Time on July 24, 2026, unless the time period is extended by Act of Congress or truncated by further Proclamation. In this regard, the United States Trade Representative is instructed to monitor the international payments deficit problem and inform the President if, inter alia, suspension, modification, or termination of the Section 122 tariffs might be appropriate. Although a subsequent social media post indicated that the surcharge would be increased to the 15 percent statutory maximum, that has not yet been implemented by a further Proclamation.
Are There Exemptions to Section 122?
Section 122’s general rule is that duties “shall be of broad and uniform application with respect to product coverage except where the President determines, consistently with the purposes of {Section 122}, that certain articles should not be subject to import restricting actions because of the needs of the United States economy.” The statute names several non-exhaustive examples, including “the unavailability of domestic supply at reasonable prices, the necessary importation of raw materials,” and “avoiding serious dislocations in the supply of imported goods.” Other “uniform” exceptions are permitted “where import restricting actions will be unnecessary or ineffective in carrying out the purpose of {Section 122}, such as with respect to articles already subject to import restrictions, goods in transit, or goods under binding contract.”
Given these standards, Friday’s Proclamation incorporates relatively lengthy passages justifying certain product exemptions by reference to the foregoing examples. As a practical matter, however, the exceptions identified largely echo the same exceptions that had been incorporated into the IEEPA Reciprocal Tariffs or identified as part of the Potential Tariff Adjustments for Aligned Partners. For example, it covers all headings of the Harmonized Tariff Schedule of the United States (HTSUS) found on the April 11, 2025, Presidential Memorandum which expanded the list of articles excluded from the Reciprocal Tariffs.
The exemption categories include:
- Certain critical minerals, metals used in currency and bullion, energy and energy products, pharmaceuticals and pharmaceutical ingredients, electronics, and articles of civil aircraft, ground flight simulators, and their parts and components;
- Natural resources and fertilizers that cannot be grown, mined or otherwise produced in sufficient quantities to meet domestic demand;
- Certain agricultural products including beef, tomatoes, and oranges;
- Products subject to existing or future Section 232 tariffs; however, for products partially subject to Section 232 tariffs (g., certain aluminum and steel derivative products), the Section 122 duty shall apply to the part of the product to which Section 232 tariffs do not apply;
- Products entered free of duty as a good of Canada or Mexico under the USMCA;
- Textile and apparel products entered free of duty as a good of Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, or Nicaragua under the DR-CAFTA;
- Information materials, donations, and accompanied baggage; and
- Products entered under certain headings of Chapter 98 of the HTSUS.
The specific products falling within these general categories are identified in paragraph 2 of Annex I and in Annex II to the Proclamation.
There is also a narrow, timebound on-the-water exception applicable to goods that “(i) were loaded onto a vessel at the port of loading and in transit on the final mode of transit prior to entry into the United States, before 12:01 a.m. eastern standard time on February 24, 2026; and (ii) are entered for consumption, or withdrawn from warehouse for consumption, before 12:01 a.m. eastern standard time, February 28, 2026.”
More to Come Under Section 301?
The President and other members of his Administration have signaled an intent to pursue new tariffs under Section 301 (19 U.S.C. § 2411). While the Administration has not yet published notice of new Section 301 investigations or otherwise formalized its action, the intention appears likely to be in position to impose tariffs under Section 301 during the 150-day period for Section 122 tariffs.
Section 301 is the same statute under which the President imposed tariffs on most products of the People’s Republic of China during the first Trump Administration. In relevant part, Section 301 authorizes the USTR to take action to eliminate acts, policies, or practices of a foreign country that are “unjustifiable and burdens or restricts United States commerce” or “unreasonable or discriminatory and burdens or restricts United States commerce.” Action responsive to the first category of practices is mandatory; action responsive to the second category is discretionary. Tariffs imposed under Section 301 have, thus far, withstood legal challenges, although it is possible that the Supreme Court may hereafter take up review of those matters.
There is no ambiguity about whether tariff action falls within the scope of the Executive Branch’s Section 301 powers; it does. Tariffs imposed under Section 301 may target goods regardless of whether they relate to the foreign government action or policy underlying the Section 301 action, and need not be applied on a most-favored-nation (i.e., across-the-board) basis.
Although Section 301 provides for “modification” of existing measures, the President referenced “initiating” such investigations and acknowledged that “it’s a little bit longer process.” While relevant provisions contemplate a 12-month deadline for completing Section 301 proceedings, there is no minimum timeline and required procedures, including consultations, are limited. In fact, the statute contemplates scenarios in which “expeditious action is required” and USTR concludes its investigation and determines remedial actions before soliciting public input. Indeed, the factual basis for an affirmative finding of “unreasonable” acts that burden U.S. commerce could in theory be drawn from existing reports, such as the 2025 National Trade Estimate Report on Foreign Trade Barriers, making a quick-turnaround investigation appear more feasible.
It is also important to note that while the purpose underlying Section 301 is to create leverage to negotiate the elimination of the act, policy, or practice that is “unjustified” or “unreasonable,” Section 301 does not — unlike other trade-related remedies, e.g., antidumping and countervailing duties — have a binding statutory process for evaluating necessity and discontinuing actions. 19 U.S.C. § 2417(c) does provide for automatic termination of Section 301 actions after four years if no member of the domestic industry requests their continuation, but authority to terminate is otherwise discretionary. Even after termination, the statute provides that USTR can reinstate previous actions following specified procedures.
Ongoing Uncertainty with Respect to Reciprocal Trade Agreements
By holding the IEEPA tariffs unlawful, the Supreme Court’s ruling raises the question of how existing reciprocal trade agreements struck between the United States and various other trading partners may be reformulated. Those agreements generally provide for the United States to reduce certain IEEPA reciprocal tariffs, a significant inducement for trading partners, but the agreements do not expressly address the not-then-existing tariffs under Section 122 or Section 301. Nevertheless, insofar as Section 301, at least, appears to impart flexibility necessary for the President to fashion a new tariff regime much like that which was created under IEEPA, the practical result appears likely to be similar. Ultimately, although the labels, prerequisites, and applicable procedures will change, so long as the Trump Administration maintains the tariff policy aims which drove adoption of the IEEPA tariffs, the President likely has the ability to impose substantively similar tariffs, once the necessary prerequisites are satisfied.
In such a scenario, the reciprocal trade agreements may remain largely intact, with IEEPA-related concessions simply supplanted by analogous concessions with respect to tariffs under Section 122 and/or Section 301.
Both Section 122 and Section 301 contemplate the adjustment of tariffs imposed thereunder pursuant to negotiations. Under Section 122, while duties are generally imposed on a non-discriminatory basis, an exception exists where “the President determines that the purposes of {Section 122} will best be served by action against one or more countries having large or persistent balance-of-payments surpluses” and “may exempt all other countries from such action.” As for Section 301, as noted above, its purpose is to create leverage to negotiate the elimination of the act, policy, or practice that is “unjustified” or “unreasonable.” It thus provides for, e.g., USTR to “enter into binding agreements” with trading partners that commit to eliminate such measures. USTR may invoke these authorities to update the existing reciprocal trade agreements as necessary.
Conclusion
The Supreme Court’s determination that IEEPA does not confer tariff-making authority upon the President does not preclude the President from adopting tariffs pursuant to other legal authorities. Indeed, the President’s Executive Orders and Proclamations issued on the same day indicate that tariffs are here to stay in one form or another, although we have already begun to see changes in the structure under which tariffs are being asserted and negotiated.
The important question regarding the availability of refunds and the process under which refunds may be sought also remains unsettled as the Supreme Court’s decision returns this aspect of the dispute to lower courts. In the meantime, importers should consider protecting their right to any such potential refunds through the administrative process, where possible. Whether a judicial process will be created to maximize refund efficiencies for importers will likely be determined in the coming months.
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The attorneys, licensed customs brokers, compliance professionals, economists, and trade specialists of Cassidy Levy Kent regularly assist companies in evaluating their supply chains to ensure compliant market access and adjust for tariff-related developments, both mitigating burdens and taking advantage of opportunities. Businesses should be aware of the possible outcomes when planning or reviewing their supply chains.