SCOTUS Strikes Down IEEPA Tariffs: Business Implications and Potential Refund Rights

On February 20, 2026, the U.S. Supreme Court held that the President may not use the International Emergency Economic Powers Act (“IEEPA”) to impose tariffs. In its ruling, the Court reaffirmed a foundational constitutional principle: tariffs are taxes, and the power to impose taxes rests with Congress. Because Congress did not delegate tariff authority under IEEPA, President Trump’s so-called “reciprocal” or “fentanyl” tariffs imposed pursuant to that statute are invalid.

The decision significantly limits executive trade authority under IEEPA, and, consequently, most tariffs imposed by President Trump in 2025, however it is narrow in scope and does not unwind the broader U.S. tariff regime.

Impact of IEEPA Tariffs to Date

Since early 2025, the federal government has collected approximately $170 billion in revenue under Trump’s unprecedented IEEPA-based tariffs and had projected roughly $2 trillion in revenue over the next decade. These tariffs covered a broad range of imports and trading partners, most notably the sweeping “reciprocal tariffs” and tariffs tied to illegal immigration and fentanyl.

While the Supreme Court’s ruling invalidates tariffs imposed under IEEPA, tariffs imposed under other statutory authorities remain in effect, such as those imposed on steel, aluminum and copper imports under Section 232 of the Trade Expansion Act of 1962 and those utilized to offset unfair or discriminatory trade practices or violations of U.S. trade agreements by foreign countries under Section 301 of the Trade Act of 1974.

What This Means in Practice

Importantly, SCOTUS did not invalidate all tariffs imposed since January 2025. Rather, the decision applies only to tariffs grounded in IEEPA.

While the ruling significantly curtails the Trump Administration’s reliance on IEEPA, it does not eliminate tariff risk entirely. Businesses should anticipate that alternative statutory mechanisms may be pursued to achieve similar trade policy objectives. Accordingly, companies with import exposure should monitor developments closely and plan for continued volatility in the tariff landscape.

Next Steps & Potential Administration Response

The Supreme Court did not address whether importers are entitled to refunds of IEEPA tariffs previously paid. Such issue has been remanded to the lower courts and will likely be transferred to the Court of International Trade (“CIT”).

The refund process will, as acknowledged by the Court, be messy and protracted. It’s possible that the Court or the CIT may decide to establish a new administrative refund process or simply rely on existing Customs and Border Protection procedures.

As anticipated, within hours following the Court’s decision, President Trump announced a new 10% global tariff under Section 122 of the Trade Act of 1974. Less than a day later, President Trump proclaimed that he will be raising the rate to 15% “effective immediately.” This tariff will be subject to a 150-day time limit with any extension requiring congressional approval. In the interim, the Trump Administration is widely expected to explore alternative statutory mechanisms to implement similar trade policies, including potential reliance on Section 301 or other authorities. Many of these mechanisms require formal investigations or are procedurally burdensome, making the timing and scope of any replacement measures uncertain.

What Businesses Should Do Now

The Supreme Court’s ruling creates both immediate procedural considerations and longer-term commercial implications. Importers should not assume that duties previously paid will be returned without action. Refunds, if ultimately permitted, are not automatic.

Companies with import exposure should continue to monitor developments closely and incorporate tariff risk into pricing, supply chain, and contract planning. Companies engaging in M&A activity should also factor the potential for refunds into overall deal structure. In the near term, businesses should consider the following actions:

Audit IEEPA Tariff Exposure:Identify affected entries, confirm liquidation status, and calendar applicable deadlines.Preserve Refund Rights:For entries that have already liquidated, importers generally must file a protest within 180 days of liquidation to preserve potential refund rights. For unliquidated entries, a Post-Summary Correction may be available within 300 days of entry. Depending on exposure and entry status, additional protective administrative filings may also be warranted.Account for Refund Potential in M&A Deals:If a seller in an M&A transaction has paid IEEPA-based tariffs, its potential for refunds should be immediately considered and appropriately allocated to avoid a future windfall to buyer. Conversely, buyers should consider the uncertainties in refund timing and process and use proper deal-based mechanisms to mitigate those risks, such as structuring in a refund-specific earn-out or escrow or a conditional purchase price adjustment.Review and Update Commercial Agreements:Tariffs function as ad valorem taxes and should be treated accordingly in contract drafting and negotiation. Companies should confirm which party bears tariff costs, who is entitled to any refund, rebate, remission, or duty drawback, and whether price-escalation, change-in-law, or renegotiation provisions are implicated by shifting trade policy. Contracts that are silent or ambiguous on tariff allocation may expose businesses to uncertainty regarding cost responsibility, potential refund entitlement, or invocation of force majeure, termination, or change-in-law provisions.

*Leech Tishman will continue to closely monitor developments related tariffs imposed by the Trump Administration and advise clients as the legal and regulatory landscape evolves. *

For assistance or additional information, please contact a member of our Corporate Practice Group:

Francesca M. Schiavone, Partner, Pittsburgh ([email protected])

Alexander J. Gase, Partner, Pittsburgh ([email protected])

Michaela Kluska, Associate, Pittsburgh ([email protected])

Molly K. Bleech, Associate, Pittsburgh ([email protected])

Sonny Douglas, Associate (Pending), LL.M. in International Trade, New York ([email protected])