Supreme Court IEEPA tariffs decision: What merchants and consumers should know as a ruling looms

Updated on February 23, 2026, originally posted January 14th. We will be updating this article as more information come in. Additionally, updates will be available on our Trade and Tariff Hub. 

On February 20, 2026, the U.S. Supreme Court issued its long-awaited decision on tariffs imposed under the International Emergency Economic Powers Act (IEEPA). In a 6–3 ruling, the Court held that IEEPA does not authorize the President to impose tariffs.

The majority concluded that the statutory authority to “regulate” foreign commerce does not extend to imposing taxes or duties. Chief Justice Roberts wrote for the majority, joined by Justices Gorsuch, Barrett, Sotomayor, Kagan, and Jackson. Justices Thomas, Alito, and Kavanaugh dissented.

The decision invalidates tariffs imposed under IEEPA in 2025. It does not affect tariffs imposed under other statutory authorities.

The case, Learning Resources, Inc. v. Trump, resolves the core legal question that has driven trade uncertainty for nearly a year: whether IEEPA could be used as a standalone tariff authority.

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Overview of the Supreme Court case

The Supreme Court was reviewing consolidated challenges to tariffs imposed under IEEPA, a statute historically used to authorize economic sanctions during national emergencies. The challengers argue that IEEPA does not grant the executive branch authority to impose broad-based import tariffs and that doing so infringes on Congress’s constitutional power to levy taxes and duties.

Beyond the legal question of authority, the case carries practical significance because it addresses what happens to tariffs already paid if the Court determines they were unlawfully imposed. For merchants and importers, the decision is not only about future trade policy, it is about whether past costs can be recovered and how that recovery would work in practice.

Critically, for refunds to become viable, two things must occur: the Court must invalidate the tariffs, and it must leave open a mechanism (explicitly or implicitly) for refunds to be processed. Invalidating the tariffs alone does not automatically return money to importers.

What tariffs were struck down

The ruling applies specifically to tariffs imposed under IEEPA authority in 2025, including:

• “Reciprocal” tariffs applied broadly to trading partners, including a 10% baseline on imports from all countries and higher rates for select nations

• 25% tariffs on most imports from Canada and Mexico tied to drug trafficking enforcement

• Escalated tariffs on Chinese goods, which had reached effective rates near 145% on many products

• Additional country-specific tariff adjustments, exemptions, pauses, and rate changes implemented under IEEPA

These measures are no longer legally authorized under the Court’s interpretation.

What still stands

The decision is narrow in scope. It does not invalidate other trade authorities. The following remain in effect:

• Section 232 tariffs, including steel and aluminum duties

• Section 301 tariffs on Chinese goods

• Anti-dumping and countervailing duties imposed under separate statutes

Even without IEEPA tariffs, the overall U.S. effective tariff rate remains elevated compared to pre-2025 levels. Merchants should not assume a return to pre-tariff trade conditions.

Timeline of key events

• Early 2025: Tariffs imposed under IEEPA are challenged in federal court by importers and trade groups.

• May 29, 2025: A federal district court issues a preliminary injunction in Learning Resources, Inc. v. Trump, finding that IEEPA likely does not authorize the tariffs.

• Summer–Fall 2025: The case is expedited to the Supreme Court, reflecting its constitutional and economic significance.

• November 5, 2025: The Supreme Court hears oral arguments, with questioning focused heavily on statutory limits and separation of powers.

• Late November 2025: A group of Importers file refund-related actions at the U.S. Court of International Trade (CIT), signaling preparation for potential tariff invalidation.

• November–December 2025: Importers of record begin filing protective actions at the CIT to preserve refund rights as entries approach liquidation.

• January 14, 2026: The Supreme Court was scheduled to release opinions; however the IEEPA tariffs decision was not discussed.

• February 20th, 2026: The U.S. Supreme Court strikes down IEEPA tariffs
• February 24th, 2026: All HTSUS numbers tied to IEEPA tariffs will be inactive in ACE

Why invalidating the tariffs is only the first step

A Supreme Court ruling that invalidates the IEEPA tariffs would be consequential, but it would not, by itself, determine how refunds occur. Refunds depend on legal and procedural mechanisms that govern customs entries, liquidation, and agency authority.

In practice, tariff refunds are not automatic. They are tied to the status of entries and the authority of courts or agencies to order liquidation or reliquidation. That is why much of the attention surrounding the case has shifted from whether the tariffs will be struck down to how relief would actually be administered.

Following the Supreme Court’s February 20 ruling, the White House issued an Executive Order titled “Ending Certain Tariff Actions” formally terminating the collection of additional ad valorem duties imposed under IEEPA.

Under the Executive Order and accompanying U.S. Customs and Border Protection (CBP) guidance (CSMS #67834313), IEEPA duties:

• Will no longer be in effect

• Will no longer be collected

• Apply to goods entered for consumption or withdrawn from warehouse for consumption on or after 12:00 a.m. Eastern Time, February 24, 2026**

Executive Orders terminated

The EO formally ends duties imposed under the following 2025 presidential actions (including amendments and modifications):

• EO 14193 — Northern Border drug trafficking tariffs
• EO 14194 — Southern Border tariffs
• EO 14195 — China synthetic opioid supply chain tariffs
• EO 14245 — Tariffs on countries importing Venezuelan oil
• EO 14257 — “Reciprocal” global tariff framework
• EO 14323 — Brazil-related tariffs
• EO 14329 — Russia-related tariffs

What CBP confirmed (CSMS #67834313)

CBP has provided operational guidance to the trade community:

• Automated Commercial Environment (ACE) programming is being updated.
• All HTSUS numbers tied to IEEPA tariffs will be inactive in ACE as of February 24, 2026.
• IEEPA duties will not be collectible on entries filed on or after the effective time.
• Section 232 and Section 301 duties remain unaffected.

CBP will issue additional Cargo Systems Messaging Service (CSMS) notices as implementation continues.

Refunds: what we know so far

One of the most significant questions heading into this ruling was whether importers would be able to recover duties already paid.

Approximately $175 billion in tariff revenue has been collected under IEEPA since early 2025. With the tariffs now invalidated, attention shifts to the refund process.

Refunds are not automatic. They are governed by customs law, which ties recovery to entry status, liquidation timelines, and court authority.

The most likely pathway involves administrative action. The Court of International Trade (CIT), which had been handling protective actions filed by importers, is positioned to resume proceedings and potentially order reliquidation of affected entries. Federal agencies, including U.S. Customs and Border Protection and the Treasury Department, will likely issue guidance outlining procedures.

Importers of record remain the legally entitled party for any refunds. Merchants that relied on intermediaries, marketplaces, or third-party logistics providers should review importer-of-record structures and documentation.

We expect refund implementation to take weeks or months, not days.

Possible refund pathways

If the Supreme Court invalidates the tariffs, three potential refund pathways may emerge.

• The first is judicial. The Court could theoretically order refunds directly, but this outcome is considered unlikely. The Supreme Court typically resolves legal questions rather than overseeing administrative remedies, especially at the scale involved here.
• The second is legislative. The Court could rule that the tariffs were unlawful but leave it to Congress to authorize or structure refunds. While possible, this path would introduce political uncertainty and likely delay, as any legislative solution would require negotiation and formal enactment.
• The third, and most practically viable, path is administrative. In this scenario, the ruling would require federal agencies such as the Treasury Department and U.S. Customs and Border Protection to outline procedures for issuing refunds. This would likely rely on existing customs frameworks, including liquidation and reliquidation processes, rather than a brand-new system.

Separately, lower courts such as the Court of International Trade could regain authority to order reliquidation and refunds once the Supreme Court resolves the underlying legal question.

What protective actions at the Court of International Trade really mean

The recent wave of filings at the Court of International Trade has raised questions about whether importers must take action now to qualify for refunds later. These filings are best understood as protective and not mandatory.

Importers of record are filing protective actions because customs law operates on strict timelines. Once an entry liquidates, the window to challenge or adjust it narrows significantly. Filing early preserves legal options while the Supreme Court’s decision remains uncertain.

Importantly, filing a protective action is not a prerequisite for receiving a refund if one becomes available. It is a precautionary step taken by importers seeking to ensure they have done everything possible to preserve their rights under the law.

Impact on merchants

For merchants, the ruling has both financial and operational implications.

First, potential recovery of previously paid IEEPA duties may improve margins, cash flow, or future pricing flexibility. For merchants with high import volumes, the impact could be meaningful.

Second, forward-looking tariff exposure tied specifically to IEEPA has been removed. However, trade risk has not disappeared. Section 232, Section 301, and other statutory tools remain available to the executive branch, though they require procedural steps such as investigations and hearings.

Third, Congress now plays a more central role. The Court emphasized that tariff authority requires clear statutory authorization. Congress could amend IEEPA or enact new tariff legislation, but that would require formal legislative action.

Looking ahead, the case underscores a broader lesson: tariff exposure is not static. Merchants expanding internationally or sourcing globally need ongoing visibility into landed costs, compliance accuracy, and trade risk not just during moments of regulatory change, but as a core part of their operating strategy.

Impact on consumers

Consumers are unlikely to see immediate price changes as a result of the ruling. Refunds, if processed, apply to past imports rather than future transactions. Retail pricing decisions are shaped by inventory cycles, contracts, promotional calendars, and competitive positioning.

That said, sustained relief from unlawful tariffs could improve pricing stability in the long term. Reduced uncertainty around import costs gives merchants greater confidence to maintain promotions, expand cross-border offerings, and reduce friction at checkout all of which ultimately benefit consumers.

What to watch next

Three developments are worth watching:

1. Court of International Trade actions related to reliquidation and refund orders

2. U.S. Customs and Treasury guidance on administrative procedures

3. Any shift by the Administration toward Section 232, Section 301, or new statutory authorities like the recently implemented Executive Order on Ending Certain Tariff Actions.

The Supreme Court ruling is a decisive legal milestone. The operational impact will unfold through agency guidance, court implementation, and legislative response.

FlavorCloud will continue updating our Trade and Tariff Hub as new details emerge.