Tax insight

US Supreme Court invalidates IEEPA tariffs

Insight
3 minute read
February 20, 2026

What happened?

The US Supreme Court on February 20 issued its decision resolving a challenge to President Trump’s authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA). In a 6-3 ruling, the Court held that IEEPA does not provide statutory authority for the President to impose tariffs, emphasizing that the Constitution assigns to Congress the power to “lay and collect Taxes, Duties, Imposts and Excises.” Although IEEPA permits the President to “regulate” importation during a declared national emergency, the Court concluded that this language does not clearly authorize the imposition of tariffs. Applying separation-of-powers principles, the Court reasoned that the authority to impose broad-based tariffs is a matter of “economic and political significance” that requires clear congressional authorization.

The decision included concurring and dissenting opinions addressing the scope of executive emergency powers and the proper application of the major questions doctrine.

Why is it relevant?

The Court’s ruling clarifies the legal foundation for tariffs imposed pursuant to national emergency declarations and constrains the executive branch’s ability to rely on IEEPA as a standalone basis for tariff authority. The decision effectively eliminates IEEPA as a standalone tariff authority, significantly altering the legal foundation for existing IEEPA-based tariffs and limiting the administration’s flexibility and speed in pursuing future tariff actions.

The Court did not provide extensive guidance on the retroactive consequences of its ruling, leaving potential uncertainty regarding refund claims to the lower courts to resolve.

Practical considerations

Operational impact: Beyond the legal implications, the real challenge now is operational. Companies will need to rapidly model which IEEPA tariffs may be refundable and quantify their opportunity, because any refund process is likely to be highly congested. Customs brokers will be under significant strain, with limited capacity to manage a surge of refund claims across thousands of importers. Those that move quickly, with clear data and a defined strategy, could be better positioned to get in front of the line as refund mechanisms take shape.

Customs capacity facing companies: Even where tariff refunds may be available, many companies will face internal capacity constraints. Customs and trade compliance teams are already stretched managing day-to-day filings, enforcement activity, and ongoing tariff changes. Layering a large-scale refund exercise on top, requiring detailed entry reviews, coordination with brokers, and tight procedural deadlines, could be challenging without additional resources or external support. Companies that underestimate this workload risk timing delays to their financials while creating potential compliance issues if they request refunds on the wrong tariff lines.

Planning actions for companies: For the portion of IEEPA tariffs that may be refunded, companies should focus on three critical considerations. First, robust modeling is essential to understand true opportunity and eligibility at the entry level. Second, CFOs should consider the timing of potential refunds given procedural and capacity constraints. Third, execution risk is real; customs brokers and in-house trade compliance teams already are operating at capacity, and the added volume of refund activity could strain processing timelines. Companies that plan across all three dimensions may be better positioned to recover value.

PwC will issue a more detailed Tax Insight addressing the US Supreme Court’s decision in the coming days.