Supreme Court Invalidates IEEPA Tariffs, Administration Replaces With New Surcharge: What Importers Need to Know

In one of the most consequential decisions in modern U.S. Supreme Court history, the Court has struck down President Donald Trump’s global tariffs imposed under the International Emergency Economic Powers Act (IEEPA). In a 6-3 decision issued on February 20, 2026, the Court held in Learning Resources, Inc., et al. v. Trump that IEEPA does not authorize the president to impose tariffs—this is a power reserved to Congress. As a result, the Court invalidated the IEEPA-based tariffs imposed to address fentanyl-related threats involving Canada, Mexico, and China and broader concerns tied to global trade deficits, including the administration’s “reciprocal” tariff program. 

The administration responded within hours. President Trump announced that the administration would pivot to alternative authorities to reinstate the tariffs. The president issued executive orders (EOs) directing agencies to terminate IEEPA tariff collection “as soon as practicable,” continue the suspension of de minimis treatment, and—via a separate Proclamation—impose a replacement 10% global tariff under Section 122 of the Trade Act of 1974. 

The Section 122 surcharge is temporary (150 days) and the president has already stated it will be increased to 15% (the statutory maximum) for the effective period. Because implementation will depend on follow-on steps by U.S. Customs and Border Protection (CBP), Treasury, and potentially additional proceedings before the Court of International Trade (CIT), importers should expect near-term operational uncertainty. Until CBP updates ACE (Automated Commercial Environment) and issues technical filing instructions, some entries may continue to reflect IEEPA-based duty calculations and/or require post-entry correction.

The Supreme Court’s decision invalidating the IEEPA-based tariffs likely will have immediate impacts for importers and global supply chains. While the ruling creates a basis for importers to claim refunds for IEEPA tariffs as discussed below, the Court left several critical questions unanswered, most notably the fate of the more than USD 130 billion in tariffs already collected. The Court did not address whether the government must return that revenue, nor did it outline any mechanism or timeline for potential refunds. 

It is difficult to predict when the government will take action and official implementation details may evolve as CBP, Treasury, and the courts release further guidance.

Background

In 2025, the Trump Administration imposed tariffs under IEEPA to address two declared threats: 

1. Drug (fentanyl) trafficking from Canada, Mexico, and China; and 
2. The U.S.’s persistent global trade deficits. 

IEEPA authorizes the president to “regulate” importation to address “unusual and extraordinary threats” during a declared national emergency. Businesses and states challenged the tariffs and both the U.S. Court of International Trade (CIT) and the U.S. Court of Appeals for the Federal Circuit held that IEEPA does not grant tariff-imposing authority. The administration appealed, leading to the Supreme Court’s decision (for prior coverage, see the trade alerts dated October 7, 2025 and September 3, 2025).

Supreme Court Holding: IEEPA Does Not Provide Tariff Authority

The Supreme Court rejected the administration’s argument that IEEPA’s authorization to “regulate … importation” includes the power to impose tariffs. Chief Justice John Roberts, writing for the majority, emphasized that IEEPA contains no reference to tariffs or duties, and that the Court would not infer such a significant delegation of taxing authority without a clear statement from Congress. The reasoning aligns with the “major questions doctrine,” which requires explicit congressional authorization for executive actions of major economic or political significance.

The Court noted:

• “IEEPA contains no reference to tariffs or duties.”
• “The Government points to no statute in which Congress used the word ‘regulate’ to authorize taxation.”
• “Until now, no President has read IEEPA to confer such power.” 

The majority further observed that the administration’s interpretation would allow the president to impose tariffs “on imports from any country, of any product, at any rate, for any amount of time,” a reading the Court concluded the statutory language “cannot bear.” The Court acknowledged that while IEEPA allows the president to regulate certain economic transactions during a declared national emergency, that authority does not extend to the imposition of import duties—tariff action must rely on specific trade statutes enacted by Congress.

The Court also clarified that the CIT has exclusive jurisdiction over challenges to the lawfulness of IEEPA-based tariffs and vacated a separate district court ruling that addressed the tariffs’ validity.

Importantly, the Supreme Court did not decide whether importers are entitled to refunds for duties previously collected under IEEPA, nor did it provide a mechanism for repayment. Refund procedures, if any, will likely turn on subsequent government guidance and/or CIT proceedings implementing the decision. Importers should assume refund timing and process remain uncertain unless and until CBP/Treasury and/or the CIT establish a specific mechanism.

What Tariffs Are Impacted and What Remains in Effect

As a practical matter, the Supreme Court decision invalidates tariffs imposed under IEEPA as the legal basis, including the fentanyl-related tariffs on Canada, Mexico, and China and the broader IEEPA-based “reciprocal” tariffs. The EO terminating the tariffs identifies additional IEEPA-based duty actions beyond fentanyl and reciprocal tariffs (including actions addressing Venezuelan oil imports and certain country-specific measures), indicating broader reach across IEEPA-based ad valorem duties. 

The decision does not affect tariffs imposed under other statutory authorities. In particular, 

• Section 232 tariffs (e.g., on steel/aluminum and other covered products) remain in effect;
• Section 301 tariffs (including the various lists covering Chinese-origin goods) remain in effect unless separately modified; and 
• Antidumping and countervailing duties (AD/CVD) and quota measures are unaffected.

Administration Actions Following the Decision

The tariff termination EO acknowledges the Supreme Court’s decision as final and states that the IEEPA-based tariff EOs issued in 2025 are no longer in effect. It directs agencies to terminate collections “as soon as practicable.” While the action is framed broadly, companies should expect a transition period as CBP updates systems and operational instructions. The EO also notes that the underlying national emergencies remain in effect, and that non-duty actions taken under those emergency authorities are unaffected.

CBP issued a Cargo Systems Messaging Service (CSMS) message on February 22 stating that tariffs under IEEPA will no longer be collected for goods entered for consumption or withdrawn from warehouse for consumption, on or after 12:00 a.m. eastern time on February 24, 2026. A CSMS issued on February 20 confirmed that CBP is working with other agencies to examine the implications of the Supreme Court decision and will issue additional technical guidance for ACE filers. Importers should monitor CBP communications closely and coordinate with brokers on any interim filing approaches, including processes for identifying and tracking entries where IEEPA duties were deposited during the transition period.

De Minimis Treatment Remains Suspended

In a separate EO, President Trump continued the suspension of de minimis treatment for low-value shipments (generally entries under $800), even though the suspension was originally implemented through executive actions that also contained IEEPA-based tariff measures. E-commerce sellers, platforms, and express carriers should plan for continued restrictions and related compliance and entry burdens until further notice.

The February 20, 2026 de minimis EO also ties duty collection for international postal shipments (during the transition to a new postal entry process) to the duty rate established by the Section 122 Proclamation and directs that entries for shipments that previously were eligible for de minimis treatment be filed in ACE using an appropriate entry type (subject to the order’s postal shipment procedures).

Replacement Measure: 10% Global Tariff under Section 122

President Trump issued a Proclamation imposing a 10% tariff on imports from all countries under Section 122 of the Trade Act of 1974, effective 12:01 a.m. EST on February 24, 2026. 

Section 122 permits temporary import surcharges for up to 150 days to address balance-of-payments issues. The Proclamation states the tariffs are based on a determination that the U.S. has a “large and serious balance-of-payments deficit,” and indicates the period may be extended only by an act of Congress. It also states that Section 122 authorizes a temporary import surcharge of up to 15% ad valorem, which the president announced—via a Truth Social post on February 21—will be imposed “effective immediately.” 

The effective period for the Proclamation is 12:01 a.m. EST February 24, 2026 through 12:01 a.m. EST July 24, 2026.

The Proclamation includes product- and program-based exemptions described in annexes with HTSUS (Harmonized Tariff Schedule of the United States)-level specificity. The exemptions include certain critical minerals; metals used in currency and bullion; energy and energy products; select natural resources and fertilizers not produced (or not produced in sufficient quantities) in the U.S.; specified agricultural products; certain pharmaceuticals and pharmaceutical ingredients; certain electronics; specified vehicles and auto parts; and certain aerospace products. 

The Proclamation also addresses overlap with other tariff regimes, including how Section 122 is intended to apply where an item is subject to Section 232 (and how partial Section 232 coverage is treated). In addition, articles qualifying for USMCA preferential treatment and certain textile and apparel qualifying for DR-CAFTA preferential treatment are exempt. The Proclamation further states that the Section 122 surcharge is treated as a “regular customs duty,” and is generally in addition to other duties, taxes, fees, and charges (subject to the Section 232 non-stacking rule).

Because the exemptions are annex-driven, importers should validate applicability at the HTSUS line level and confirm broker/system logic is aligned with CBP guidance once issued.

The Proclamation provides a limited in-transit carve-out for goods that were loaded and in transit on the final mode of transport before 12:01 a.m. EST February 24, 2026, and entered for consumption (or withdrawn from warehouse for consumption) before 12:01 a.m. EST February 28, 2026. Companies should anticipate that CBP may apply familiar constraints used in prior in-transit rules once implementation guidance is published. For this purpose, the Proclamation defines “goods in transit” as goods loaded onto a vessel at the port of loading and in transit on the final mode of transit prior to entry into the U.S. before the effective time and entered (or withdrawn from a warehouse) before the cutoff time.

For foreign trade zones (FTZs), the Proclamation specifies that merchandise subject to the Section 122 tariff admitted to an FTZ on or after 12:01 a.m. EST February 24, 2026 must be admitted in Privileged Foreign (PF) status—generally fixing the applicable duty rate for later withdrawal for consumption. FTZ operators and users should promptly assess downstream duty impacts and PF admission procedures. The Proclamation also states that articles (other than those eligible for FTZ “domestic status”) subject to the surcharge admitted into an FTZ on or after the effective date must be admitted as PF status under 19 CFR 146.41.

Practical Considerations for Importers

In the near term, the key question is operational: how quickly CBP will disable IEEPA duty collections in ACE and how it will treat entries filed during the transition. Importers should monitor CBP CSMS messages and coordinate with brokers to ensure entries reflect current instructions, particularly for Chapter 99 reporting.

Refund expectations also remain unsettled. While the Supreme Court has eliminated IEEPA as a viable basis for imposing tariffs, the decision does not establish a refund mechanism. Importers should begin “refund readiness” now by identifying affected entries, preserving entry documentation, and consolidating payment and summary data to support potential administrative action and/or CIT-related procedures should a refund pathway be announced. Unless and until CBP/Treasury and/or the CIT establish a different process, importers should assume existing administrative deadlines and tools may remain relevant, e.g., Post Summary Corrections prior to liquidation and protests within 180 days after liquidation.

Finally, companies should treat the new Section 122 surcharge as a binding compliance requirement beginning February 24, 2026, modelling exposure under the expected 15% rate. This includes confirming whether products fall within annex-based exemptions, evaluating exposure under in-transit rules, and ensuring FTZ PF status requirements are operationalized.