Background

Shortly after returning to office, President Trump imposed tariffs under IEEPA. That statute grants the president the power to “regulate . . . importation” to address an “extraordinary threat” that the president has declared to be a national emergency. President Trump declared a national emergency with respect to the influx of fentanyl and other illegal drugs from Canada, Mexico, and China, as well as to the “large and persistent” US trade deficits. These declarations were the basis for imposing the so-called “fentanyl” and “reciprocal” tariffs, respectively.

The tariffs were immediately challenged before the CIT and the US District Court for the District of Columbia. At the CIT, a three-judge panel found that IEEPA does not authorize any of the president’s tariffs because they do not address the problems identified in the president’s national emergency declarations. The US Court of Appeals for the Federal Circuit affirmed, and the government appealed to the Supreme Court.

After declining to transfer the case to CIT, the district court also found that IEEPA does not authorize the tariffs. The government bypassed the US Court of Appeals for the DC Circuit and petitioned the Supreme Court, which agreed to hear both cases together.

The Court’s ruling

In a 6-3 opinion written by Chief Justice Roberts, the Supreme Court found that IEEPA does not authorize the president to impose tariffs at all. The Court started with the proposition that the Constitution vests the power to tax – which the founders understood to include the power to impose tariffs – in Congress, not the executive. Congress therefore would have had to delegate tariff-imposing authority to the president. The Court stated that, had Congress intended to delegate such a power to the president, it would have done so expressly. The majority pointed to several examples of statutes where Congress did expressly delegate the authority to impose tariffs to the president.

With these principles in mind, the Court found that IEEPA’s text, while granting the president authority to “regulate . . . importation,” does not automatically include the power to tax. Further, the Court noted that IEEPA lists nine different ways for the president to exercise his authority, but does not include any revenue-raising power (such as taxes or tariffs). Finally, the Court noted that presidents have uniformly not found such a broad power to impose tariffs in IEEPA or its predecessor statute. Thus, the Court concluded that the president’s tariffs were unlawful and affirmed the decision of the Federal Circuit.

The Supreme Court’s decision to affirm the Federal Circuit means that, as of today, Customs may not lawfully collect duties under the IEEPA and the president’s “reciprocal” and “fentanyl” tariffs are permanently enjoined. Additionally, the Court vacated the decision of DC district court and remanded with instructions to dismiss that case for lack of jurisdiction. However, the majority did not address the questions of whether refunds are available or what process importers should use to obtain them, nor did it address the legality of trade deals negotiated with various countries while the tariffs were in place.

What happens next

On February 20, 2026, President Trump issued an executive order rescinding the IEEPA tariffs. Pursuant to that order, Customs announced in a bulletin published on February 22, 2026, that it would cease collection of IEEPA tariff duties as of February 24, 2026.

With regard to refunds, the only mention of this issue is found in Justice Kavanaugh’s dissent, where he adds very little other than noting the process will likely be a “mess.” However, the Court did provide some basic procedural guidance, discussed in more detail below. Additional litigation will likely determine the thorny question of whether, and to what extent, importers who paid tariffs can receive refunds. For the time being, though, the Court implied that parties should use the normal channels for challenging the amount or imposition of a tariff duty, depending on the status of each claim or entry (as discussed in more detail in the following section).

At a press conference convened hours after the Court released its opinion, President Trump vowed to re-impose the tariffs under different legal authorities. This comes after many weeks of telegraphing by the president and other administration officials that they would do so if the Court ruled against them. Since then, the president has taken several actions to fulfill that promise, even as he issued an executive order rescinding the IEEPA tariffs.

Tariffs under Section 122 of the Trade Act of 1974

On February 20, 2026, President Trump issued a proclamation imposing a 10% tariff under Section 122 of the Trade Act of 1974. On February 21, 2026, the president announced he would issue another proclamation raising the tariff rate to 15%. It will take effect on February 24, 2026, and last for 150 days (until July 24, 2026). It applies to all articles imported into the United States, with several exceptions.

Notably, the tariff will not apply to imports of the following items, among others: (i) goods considered to be of Canadian or Mexican origin under the US-Mexico-Canada Agreement (so-called “USMCA compliant” goods); (ii) goods listed in Annexes I and II to the February 20 proclamation, which include certain critical minerals, agricultural products, pharmaceuticals, and electronics (among other categories); or (iii) goods subject to Section 232 tariffs (meaning there will be no “stacking” of the new tariff on existing or future Section 232 tariffs).

Investigations under Section 301 of the Trade Act of 1974

Further, President Trump has directed Ambassador Greer and the Office of the US Trade Representative to initiate investigations under Section 301 of the Trade Act, which is the first step toward imposing tariffs or other trade restrictions under that statute. Administration officials have said in the recent past that “all of the United States’ major trading partners” could be subject to such investigations and eventually to tariffs if those investigations conclude the foreign trading partner’s policies are either “unreasonable” or “unjustifiable and discriminatory,” and that those policies “burden and restrict” US commerce. Ambassador Greer’s statement issued on February 20, 2026 confirms that “several” investigations will be initiated against “many” trading partners.

Avenues for refunds

As noted above, the Court’s majority did not discuss or decide the question of availability or process for refunds. Instead, by affirming the decision of the Federal Circuit, vacating the decision of the DC district court and instructing that court to dismiss for lack of jurisdiction, the Supreme Court has effectively directed that refund questions will be answered by the CIT in the first instance.

Importers should thus anticipate that the customs duty and tariff refund procedures, and CIT precedents applicable to those processes, will likely apply when seeking refunds of IEEPA tariffs. Importers should take a careful look at their import entry universe to determine which path they should take when claiming a refund. That path will vary based on the liquidation status of each entry. All importers should also be attentive to the tax implications of any refund obtained. Because duty refunds are prior-period cost recoveries, obtaining a refund could require income recognition in the year received, potential amended returns, and book-to-tax adjustments. For importers seeking refunds, then, alignment between legal and tax capabilities is necessary.

Importers with open entries

Importers with customs entries which Customs has not yet liquidated should theoretically have the simplest path to a refund. For such entries, importers should be able to revise the entries to exclude IEEPA tariffs by filing a post-summary correction (PSC). Customs would then presumably liquidate the entry without applying the IEEPA tariff and refund payment made upon entry. To ensure this option remains available, importers with entries that may be about to liquidate (typically around 315 days from entry) should consider requesting an extension of the liquidation period. If necessary, importers should first submit the liquidation extension request and obtain approval prior to submitting their PSC and then file the PSC at least 15 days before the new liquidated date, as obtaining refunds through PSCs would be the most efficient method.

Importers with liquidated entries within the statutory 180-day period

For entries already liquidated but still within 180 days of liquidation, importers should file customs protests to seek a refund. Customs will then decide the protest and presumably reliquidate the entry to remove the IEEPA duty. If Customs denies such a protest for whatever reason, the importer may then contest that denial before the CIT.

Importers with closed entries

For entries liquidated more than 180 days ago, the protest procedure does not apply. Thus, importers with such closed entries will need to seek relief through an action before the CIT. In a related case before the CIT, the government confirmed that it would not object to reliquidation of entries outside the protest period on which IEEPA tariffs were paid if the Supreme Court found the tariffs unlawful.