Supreme Court Strikes Down Tariffs: Big Win for Importers

On February 20, 2026, the Supreme Court of the United States (U.S.) struck down the tariffs imposed by President Trump’s administration under the International Emergency Economic Powers Act (IEEPA), stating that the statute does not give the president unilateral authority to impose tariffs. The court ruled by a vote of 6–3 that Congress did not confer broad tariff‑setting authority through IEEPA and that the inherent power to impose duties under Article I, Section 8 remained with Congress.

The Supreme Court’s highly anticipated decision in the tariffs case, Learning Resources, Inc. v. Trump, was issued when the nine justices were scheduled to return from recess. The U.S. Supreme Court upheld the ruling passed by the U.S. Court of International Trade (CIT) in May 2025, which was later upheld by the Federal Circuit, where the Trump Administration’s IEEPA-based tariffs are deemed unlawful. The Supreme Court considered the legality of, and struck down, the Trump Administration’s IEEPA-based tariffs, including the fentanyl-related tariffs on goods from Canada, Mexico and China, as well as the “reciprocal” tariffs imposed on virtually every country in the world. Note that tariffs based on non-IEEPA authorities, including Section 232 and Section 301, were not being challenged in this case; meaning, current and future tariffs under these authorities will remain unaffected.

The Supreme Court ruling forces the Trump Administration to confront the potential dismantling of trade frameworks that were built upon the IEEPA-based tariff system. IEEPA reciprocal tariffs underpinned several recent agreements with trade partners around the globe. Now, the administration may have to unwind or renegotiate concessions in those agreements if it is unable to establish valid legal authority that would require importers to pay tariffs consistent with the negotiated terms.

Historically, when a tax is overturned or deemed unconstitutional, taxpayers who previously paid this tax expect to receive refunds. However, even though the Supreme Court invalidated the IEEPA tariffs, it did not specify the path to recovery of refunds. Justice Kavanaugh’s dissent noted that the ruling could require billions of dollars in refunds and that the refund process could be a “mess.” Nevertheless, the majority’s decision established the unlawfulness of the duty collection. Importers must take proactive administrative and legal steps to secure refunds, as reimbursement may not be automatic. Please refer to our previous article Preparing for the Tariff Supreme Court Case Decision – What Importers Need to Know, where we discussed some of the immediate action points for importers to ensure they get their refunds.

The Trump Administration has previously stated that it has already prepared a “next-day plan” to reimpose duties using different legal statutes that were not part of the tariff case challenged at the Supreme Court. These alternative legal authorities include Section 232 (national security), Section 301 (unfair trade practices) or Section 338, which allows for tariffs up to 50% without a prior investigation. Additionally, the administration could also pivot to a 10% baseline tariff implemented under Section 122 of the Trade Act of 1974 instead of IEEPA. Section 122 allows presidents to impose tariffs of up to 15% for up to 150 days to resolve trade imbalances. While all these actions could restore some level of tariffs, given that the IEEPA tariffs now stand invalidated, alternative tariff authorities vary in terms of implementation, timeline and likelihood of legal challenges. Section 232- and 301-based tariffs require investigation processes before they can take effect, which can take several months even when expedited. On the other hand, new Section 122- or 338-based tariffs might not require as much time and do not rely on an investigation process, despite other limitations. Section 122 and 338 tariffs, however, would be more likely to face legal challenges (perhaps even more so than the administration’s IEEPA-based tariffs) due to the untested and seemingly broad nature of the underlying authorities.

Importers can meet their obligation under the U.S. Customs and Border Protection (CBP) rules to exercise “reasonable care” by adopting a viable import compliance program, which is likely to increase in importance after this ruling by the Supreme Court. Importers need to be careful in ensuring that all import data accurately reflects valuation, classification and country of origin details, especially if the administration adopts new tariff measures to compensate for the loss of IEEPA tariff revenue. Meanwhile, importers should identify entries where IEEPA tariffs were paid and have a plan for protecting potential refunds, whether by timely filing protests, filing suit at the CIT or both.

Navigating today’s uncertain tariff landscape is a critical challenge for multinational companies. Withum’s Global Transfer Pricing Strategies Services Team collaborated with Baker Hostetler’s International Trade and National Security Team on this article to share practical perspectives and strategic considerations that can help organizations think through trade and compliance changes with greater clarity and operational awareness.

Author: Marina Gentile, Partner and Lead, Global Transfer Pricing Strategies | [email protected]

Contributing Author: Mike Snarr, Baker Hostetler | [email protected]