On Friday, February 20th, 2026, the U.S. Supreme Court has ruled that a group of tariffs imposed last year under the International Emergency Economic Powers Act (IEEPA) were not authorized by law.
In a 6–3 decision, the Court concluded that IEEPA does not provide authority to impose broad import tariffs. The law, enacted in the 1970s, was designed to address national emergencies involving foreign threats.
As a result, several tariffs implemented under IEEPA have been invalidated, including:
- A 10 percent baseline duty on most imports
- Higher country-specific duties on certain trading partners
- Additional levies tied to border and public health concerns
These tariffs represented roughly half of the import taxes currently being collected each month.
For businesses that rely on imported raw materials, components, equipment, or finished goods, the ruling may have meaningful financial implications. That includes many manufacturers, construction contractors, and other businesses that have experienced increased costs tied to imported products.
What the Court’s Decision Does and Does Not Do
The ruling is limited in scope, and it applies only to tariffs imposed under IEEPA.
Here is what’s clear at this point:
- The ruling applies only to tariffs imposed under IEEPA.
- Tariffs enacted under other trade laws (Section 232, Section 301, and Antidumping and countervailing duties), including certain national security-based tariffs on steel, aluminum, and automobiles, remain in effect. For a complete list of presidential tariff actions, visit USTR.gov.
- The Court did not address whether or how previously collected tariff payments must be refunded.
Businesses that paid these now-invalidated tariffs are expected to evaluate refund options. However, the procedures, documentation requirements, and timing for repayment have not yet been clarified.
For now, the biggest takeaway and most immediate impact is that tariffs issued under this specific emergency statute may no longer be collected.
Questions We Have
From a tax and business advisory standpoint, we’re still waiting for answers on the following questions:
How will refunds be handled?
- Will businesses need to file formal claims, and what documentation will be required?
What is the timeline?
- When will collection stop, and how long could potential refunds take?
Will new tariffs be introduced under different laws?
- If so, which products or industries might be affected?
How should businesses reflect this change in financial reporting and planning?
- How should companies account for potential refunds or adjust pricing, contracts, and job costing?
For manufacturers and contractors operating on tight margins, these operational details matter more than the ruling itself.
We Are Closely Tracking Guidance
This decision represents an important development in trade policy and may affect tax planning, import costs, cash flow, and pricing strategy.
Although developments are still unfolding, if your business paid significant IEEPA-based tariffs, consider organizing import records and payment documentation, and ensure you can tie your duty payments to specific entries. While there has been no formal guidance on how the refund process will go, it is likely businesses will need to take formal action including post-summary corrections, protests, and even litigation. Taking the time now to ensure your records are accurate and complete may save you some stress down the road and streamline future recovery efforts.
We are closely tracking guidance from the Treasury Department, U.S. Customs and Border Protection, and Congress. As more information becomes available regarding refunds, compliance procedures, or potential replacement measures, we will continue to update through our blog and newsletter.
If you would like to discuss how this decision may affect your organization’s cash flow, pricing strategy, financial reporting, or tax planning, our team is available to help you evaluate next steps.
