On February 20, 2026, the U.S. Supreme Court, by a vote of 6 to 3, held that President Donald Trump lacked authority under the International Emergency Economic Powers Act (IEEPA) to impose tariffs. The Court expressly concluded that the President’s statutory authority to “regulate imports” in a national emergency does not include the power to impose tariffs, because tariffs constitute a form of taxation and taxation, including duties, is vested under the U.S. Constitution in Congress. Legal commentary further emphasizes that the decision opens a path for companies to pursue refunds of IEEPA tariffs already paid, although the Supreme Court did not itself specify a refund mechanism.
What Trump introduced and why it was challenged
The Trump administration relied on the IEEPA, historically used primarily for sanctions and emergency economic measures, to introduce broad tariffs. Two principal categories of measures were implemented under the IEEPA. The first consisted of so called “trafficking” tariffs on imports from Canada, Mexico, and China, justified by the fentanyl crisis. The second consisted of so called “reciprocal” tariffs announced in April 2025, including a baseline 10 percent rate on imports from almost all countries and higher rates for selected states, justified by trade deficits characterized as an extraordinary threat. These tariffs were challenged by businesses affected by increased costs and by a group of U.S. states, arguing that the IEEPA confers neither tariff authority nor a general taxing power on the President, and that such measures impermissibly circumvent Congress’s constitutional competence.
Why the decision is legally significant and yet narrowly targeted
The Supreme Court grounded its decision primarily in the interpretation of the IEEPA itself. The key line of reasoning is straightforward. In the Court’s view, “regulation of imports” is not the same as “taxation of imports.” The IEEPA contains no explicit reference to tariffs or duties, and it cannot be read to confer an unlimited power to impose tariffs at the President’s discretion, without constraints as to scope, rate, and duration. Some Justices also supported the outcome by reference to the major questions doctrine, namely the requirement of clear congressional authorization for measures with massive economic and political impact, but the core holding stands even without that doctrine. At the same time, the decision is tightly bound to the IEEPA. It does not automatically end U.S. tariff policy or invalidate tariffs imposed under other legal authorities.
What is invalidated and what remains in force
As a result of the ruling, all tariffs imposed under the IEEPA fall, including the fentanyl related and “reciprocal” tariffs, and the decision logically calls into question other IEEPA tariffs imposed later against particular countries. Conversely, the ruling does not affect tariffs imposed under other statutory regimes, nor other trade remedies such as antidumping and countervailing duties. For companies, this means that assessing any refund claim requires precise identification of the legal basis under which a particular duty was collected.
Refunds, what is clear today and what is not
The Supreme Court did not address refunds expressly, which is why attention is now focused on the U.S. Court of International Trade and on procedural tools available within U.S. Customs and Border Protection (CBP). Estimates suggest that more than USD 175 billion collected as IEEPA tariffs could become the subject of refund claims. It is already apparent, however, that refunds will not be “automatic” in the sense that all payors would receive money back without taking any action. A key factor will be whether an import entry is still open, meaning CBP has not yet issued a final determination of duties, or whether CBP has already issued such a final determination and the duties have been finally liquidated.
If CBP has not yet finally determined the duty amount and the entry is not formally closed, market practice is likely to develop around the importer’s ability to correct customs data so that the unlawful IEEPA tariff is excluded from the calculation, followed by CBP closing the entry without those duties. If the entry has already been closed and CBP has formally confirmed the final duty amount, the usual routes include an administrative protest or request for review within the statutory time limit, and potentially litigation. In all cases, it will be critical to have complete and accurate customs and payment documentation for each affected import.
Who is already acting and why this matters to the market
One visible early example cited is FedEx, which filed suit in the U.S. Court of International Trade seeking a full refund of IEEPA tariffs paid. Procedurally, it matters that the claimant acted as the importer of record, meaning it has direct customs documentation for the relevant entries and can evidence specific payments. At the same time, other major players are appearing in these refund disputes, and a wave of litigation can be expected.
Tariffs are not ending
The Court’s decision did not halt the administration’s broader tariff agenda, it removed a specific instrument. Shortly after the ruling, Trump announced a substitute approach, and the administration has indicated it will rely on other legal authorities. We expect this to involve a temporary across the board tariff within a time limited framework. Practically, this means businesses should not assume that tariff uncertainty has automatically ended. Rather, it is shifting into other legal regimes that are procedurally more demanding, staged over time, and potentially just as contentious in litigation.
A separate question will be who is entitled to the refund
A distinct issue will be who should ultimately benefit from any refunded duties. While, under customs rules, the party generally entitled to seek a refund is the importer that paid the duty and is identified in the customs records, it may be that the economic burden of the tariff was borne by another party. Many companies passed increased duties through into pricing, charged them as surcharges, or addressed them via adjustments to contractual terms. This naturally raises the question whether, and under what conditions, commercial partners or customers may demand that the importer transfer part of the refunded amount or reflect it in subsequent settlements. It will therefore be important to determine whether the relevant contracts allocate the duty burden, address entitlement to any refund, or impose obligations to actively seek cost reductions. In practice, alongside the customs process it may be necessary to review contractual documentation and set a framework for pursuing refund claims and handling refunded amounts vis a vis commercial partners.
Conclusion
The U.S. Supreme Court’s decision of February 20, 2026 invalidated tariffs imposed by President Trump under the IEEPA on the basis that the statute did not grant him authority to impose tariffs. This brings the refund question to the forefront and creates room for refund claims of potentially extraordinary scale. Companies that paid IEEPA tariffs should consider taking active steps to protect their rights, in particular by timely work with customs records, identification of affected entries, and assessment of the appropriate procedural route before CBP or the U.S. Court of International Trade.
Our law firm has long specialized in customs and tax law and advises businesses on customs and compliance processes as well as on contentious matters. If you paid tariffs imposed under the IEEPA in the past period, we recommend promptly assessing the scope of affected imports and preparing the documentation needed to pursue a refund claim. Upon request, we can provide a targeted assessment of your position, propose an appropriate procedural strategy before CBP or the courts, and coordinate with foreign partners in cross border supply chains.
