On Friday, February 20, 2026, the Supreme Court overturned two levels of broad global tariffs on imported goods imposed by the current administration. In a 6-3 decision, the court stated that the administration exceeded its authority in invoking the 1977 International Emergency Economic Powers Act (IEEPA) to impose both the broad “Liberation Day” reciprocal tariffs and expanded tariffs on Chinese goods. The decision also included more targeted tariffs meant to address issues related to fentanyl trafficking.
A Quick Recap
On February 1, 2025, President Trump declared multiple “national emergencies” to invoke the IEEPA law to first impose the fentanyl trafficking-related tariffs primarily on China, Canada and Mexico. There were numerous issuances and decisions from the administration, both pausing tariffs and issuing new ones on Chinese imports for months after the initial imposition.
On April 2, 2025—what the administration calls Liberation Day—the President announced sweeping global reciprocal tariffs across all countries with increased rates for nations that had trade surpluses with the United States. In the months since these tariffs were imposed, multiple additional announcements have raised and lowered tariffs on specific countries, depending on negotiations between those countries and the administration, as well as retaliatory tariffs imposed by other foreign nations. This not only created a much greater tax burden on businesses engaged in importing and exporting goods but also introduced additional administrative uncertainties across the business landscape.
Why Were These Tariffs Struck Down?
The Supreme Court ruled that the IEEPA does not give the President or the executive branch the authority to issue broad global tariffs like those imposed by the administration last spring. While split in their reasoning, the majority of justices agreed that the IEEPA does not grant the executive branch explicit authority to use tariffs as a tool to address foreign policy, economic emergencies, or national security, as stated in the 1977 law.
What Tariffs are Still in Place?
This Supreme Court decision applies only to tariffs imposed under IEEPA. Other tariffs from the current administration, such as the expanded tariffs on steel and aluminum and the Section 232 tariffs on foreign automobiles and parts, are still in place for now. The IEEPA gives the administration the power to impose tariffs on certain quantities of goods under certain circumstances due to national security concerns.
Several routes and methods remain for the President to impose tariffs. However, none are as broad-sweeping or consequential as those struck down by the Supreme Court. In addition, these routes generally require greater substantiation before enactment and are usually temporary. It remains to be seen whether the administration will pursue these.
Tariff Refunds
The answer remains unclear on whether companies can pursue refunds of previously paid tariffs and on the administrative process for these refunds. The Supreme Court did not address the issue of refunds in its decision, leaving it to the lower courts. Thousands of importers have already filed several lawsuits at the U.S. Court of International Trade.
While administration officials had previously assured that refunds would be issued without the need for lawsuits if these tariffs were struck down, there is currently no announced plan for a refund process. Treasury Secretary Scott Bessent told reporters in January that any refunds of tariffs would most likely be spread out up to a year.
Given the evolution of future processes, you should not rely on immediate refunds for previously paid tariffs.
If your company has made strategic decisions based on these tariffs, RKL recommends reevaluating. However, you should remain cautious about changing your strategies, as the threat of additional tariffs and trade barriers from the current administration or other countries remains.
If you have already paid these struck-down tariffs on imports, you should temper expectations for quick refunds, as administration officials are already signaling that processing any potential refunds may take up to a year, if at all.
RKL’s International Tax Team is here to provide not only updates but also any guidance we can offer to you.
Contact your tax adviser if you have any questions.
