Tax insight

US Supreme Court decision on IEEPA tariffs reshapes trade authority and introduces potential refund opportunity

Insight
7 minute read
February 25, 2026

What happened? 

The US Supreme Court on February 20 held that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs absent clear congressional authorization. In a 6–3 decision, the Court concluded that although IEEPA permits the President to “regulate” importation during a declared national emergency, that language does not clearly authorize the imposition of tariffs.

The Court emphasized that the Constitution assigns to Congress the authority to “lay and collect Taxes, Duties, Imposts and Excises” and applied separation-of-powers principles in determining that tariff authority of significant economic and political magnitude requires explicit statutory delegation.

The decision removes IEEPA as a standalone legal basis for tariffs imposed under national emergency declarations. The Court did not provide detailed guidance regarding retroactive consequences, leaving refund-related questions to lower courts and administrative processes.

Why is it relevant?

The ruling explicitly eliminates the ability of the executive branch to rely on IEEPA as a standalone tariff authority. With more than $170 billion in IEEPA-related tariffs collected to date, a significant potential refund opportunity now exists across impacted industries. However, the pathway to refunds remains uncertain and will depend on further court proceedings and administrative guidance.

Although IEEPA tariff authority has been invalidated, alternative statutory trade tools remain available to the Trump administration. Following the February 20 ruling, President Trump issued an Executive Order terminating the additional ad valorem duties previously imposed under IEEPA, consistent with the Supreme Court’s ruling. He then issued a Proclamation invoking Section 122 of the Trade Act of 1974 to impose a “temporary” 10% ad valorem duty on most goods entering the United States. President Trump posted on social media that he would increase the rate to 15% but no new executive order has yet been issued to that effect. He also issued a separate Executive Order continuing the suspension of duty-free de minimis treatment for covered imports. In light of this and the potential for future actions, companies should expect continued trade policy activity, even as refund mechanics and administrative procedures develop.

Actions to consider

Companies potentially affected by IEEPA tariff refunds should consider:

Inventorying and quantifying total IEEPA-related duties paid, categorized by liquidation status
Mapping Post Summary Corrections (PSC) and protest deadlines to preserve rights
Modeling refund timing under multiple administrative scenarios
Reviewing contractual tariff pass-through provisions
Reassessing transfer pricing policies that incorporated tariff costs
Coordinating across trade, tax, finance, and legal functions.

Early preparation may be critical. While courts and US Customs and Border Protection (CBP) determine the appropriate refund process and timing, companies that have organized and analyzed their data may be better positioned to act promptly once formal guidance is issued.

For more details, read the full Tax Insight linked below.