The Supreme Court of the United States Strikes Down Trump Administration’s Use of Emergency Commerce Law to Impose Broad Tariffs
Overview
In a significant development for U.S. trade policy, on February 20, 2026, the Supreme Court ruled that the Trump administration’s use of the International Emergency Economic Powers Act (“IEEPA”) to impose (1) overly broad worldwide reciprocal tariffs and (2) fentanyl/penalty/ immigration-related tariffs on China, Mexico, and Canada was unconstitutional.
As a result of that decision, the Supreme Court reaffirmed the Court of Appeals for the Federal Circuit (“CAFC”) decision, and kicked the case back to the Court of International Trade (“CIT”), which has already established an administrative process to manage other IEEPA related cases that are currently pending before it.
Since the Supreme Court ruling did not address the critical issue of refunds for duties that have already been collected, that issue shall “presumably” be addressed by the CIT to determine whether each importer shall now be required to file separately to seek refund or whether importer-wide process is more appropriate to efficiently manage that refund process.
As to how soon importers will stop paying these IEEPA related duties, CBP has stated it will no longer collect these duties on or after 12:00 a.m. eastern time on February 24, 2026.
What Are the Next Steps?
As stated above, the exact procedure for requesting a refund for duties already paid has yet to be provided. Those details will presumably be provided in the forthcoming weeks. In the meantime, some trade practitioners are advocating that importers begin filing Post-Summary Corrections (“PSC”) to amend previously filed data or file protests to seek refunds. While those are viable options when refund details have been clarified, we believe those options are still premature.
Alternatively, since we now have a Supreme Court decision whose finality has been acknowledged by President Trump, (thereby ending all IEEPA-related tariffs, i.e. fentanyl, reciprocal, India/Russia Oil, Brazil, Cuba, Venezuela, and Iran), we believe the most practical option is for importers to consider filing a court case at the CIT, where other similar IEEPA cases are pending.
What Other Alternative Does The Trump Administration Have?
Following the Supreme Court decision, President Trump announced the imposition of a global 10% tariff under Section 122 of the Trade Act of 1974. The following day, President Trump announced that the tariff was to increase to 15%. The Proclamation and Fact Sheet associated with that action stated that the tariff will go into effect at 12:01 a.m. Eastern on February 24th, 2026. As with IEEPA tariffs, there are exemptions, which includes:
- Certain imports listed in the attached Annexes I and II of the Proclamation.
- USMCA qualifying goods.
- Textile and apparel goods that qualify under DR-CAFTA.
- All goods and parts thereof that are subject to Section 232 tariffs (i.e. including, the non-aluminum/steel/copper content).
- Articles “loaded onto a vessel at the port of loading and in transit on the final mode of transit before 12:01 a.m. ET February 24, 2026” and “entered for consumption” before 12:01 a.m. ET on February 28, 2026.
- Chapter 98 qualifying goods, except articles entered under heading 9802, where duties shall be assessed on the value of repairs or alterations.
Fortunately, the above tariff is temporary in nature as it may only be implemented for a 150-day period unless it is extended with authorization from Congress.
