Overview
This article is current as of March 4, 2026
On February 20, 2026, the US Supreme Court issued its highly anticipated decision regarding the lawfulness of President Trump's use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs. In a 6-3 decision, the Court found that IEEPA does not authorize the president to impose tariffs. Importantly, although only the Fentanyl Tariffs and the Reciprocal Tariffs were challenged in the case before the Supreme Court, this decision strikes down the use of IEEPA for any tariff action. As a result of this decision, IEEPA duties will no longer be collected starting February 24, 2026.
On March 4, 2026, the Court of International Trade (CIT) in Atmus Filtration, Inc. v. United States ordered US Customs and Border Protection (CBP) to refund IEEPA duties on all unliquidated entries for all importers. The decision did not fully address liquidated entries, with the court only ordering reliquidation and refunds for those entries where liquidation is not yet final. The decision may be appealed to the US Court of Appeals for the Federal Circuit. If affirmed, importers would not need to individually apply for protests or appeal to the CIT for unliquidated entries to be receive refunds for IEEPA tariffs.
President Trump immediately announced his intention to re-impose tariffs using other authorities. On the evening of February 20, 2026, the White House issued a proclamation imposing a temporary 10% tariff on imports into the United States under Section 122 of the Trade Act of 1974. These tariffs take effect on February 24, 2026 and are scheduled to remain in place for 150 days, until July 24, 2026. Nearly all merchandise previously exempted from IEEPA tariffs continues to remain so under the new Section 122 regime. President Trump later announced his intention to increase this tariff rate to 15%, but no formal change has been made. In a formal statement on the IEEPA decision, Ambassador Greer stated that the administration intends to initiate several investigations under Section 301 of the Trade Act on an "accelerated timeframe" as an alternative tool for imposing tariffs.
Background
During his second term, President Trump relied on IEEPA to impose tariffs on imports from Canada, Mexico, and China, ostensibly to address both illegal immigration and trade in fentanyl (Fentanyl Tariffs), starting February 2025. Another set of tariffs was announced on April 2, 2025, designated as "Liberation Day," where President Trump again used IEEPA to impose a 10% global tariff baseline and higher rates on countries to reduce significant US trade deficits (Reciprocal Tariffs).
Multiple cases were filed in a number of courts challenging these tariffs. On May 28, 2025, the Court of International Trade (CIT) issued a single opinion in V.O.S. Selections v. United States and Oregon v. Department of Homeland Security (collectively "V.O.S. Selections"), vacating these IEEPA-based tariff actions. The court held that presidential authority under IEEPA is not "unbounded" and rejected its use to address trade deficits, and found no articulated connection between tariffs on lawful imports and drug trafficking to support the fentanyl tariffs. The next day, the US District Court for the District of Columbia also enjoined the tariffs in Learning Resources Inc. et al. v. Trump, concluding more broadly that IEEPA does not authorize tariffs at all and identifying additional violations of the Administrative Procedure Act. These cases are detailed here.
On August 29, 2025, the US Court of Appeals for the Federal Circuit, in a 7–4 en banc decision, affirmed the CIT's ruling in V.O.S. Selections on the merits. The court held that although IEEPA grants the President authority to "regulate" foreign commerce, this does not include imposing sweeping tariffs without limits on scope, amount, or duration. A detailed analysis of this opinion can be found here.
The case reached the Supreme Court in late 2025 when the government filed its appeal. The Court agreed to hear it along with Learning Resources in January 2026.
Supreme Court's Majority Opinion: Why IEEPA Does Not Authorize Tariffs
The bottom line of the Supreme Court's decision is straightforward: IEEPA does not give the President authority to impose tariffs. The Court's majority opinion was supported by six Justices (Roberts, Sotomayor, Kagan, Gorsuch, Barrett, and Jackson).
In holding that IEEPA does not authorize imposition of tariffs, the Court rejected the government's reliance on IEEPA's provision allowing the President to "regulate … importation" during a declared national emergency. The Court framed the issue against a basic separation-of-powers backdrop: tariffs are fundamentally taxes on imports, and the Constitution assigns taxing authority to Congress. With the government not claiming any inherent presidential power to impose tariffs in peacetime, the case turned on whether Congress in fact delegated that tariff power in IEEPA.
The Court concluded the answer is no. Although "regulate" can be a broad term, the Court emphasized that a general power to regulate trade is not normally read to include the power to tax, particularly where Congress knows how to confer tariff authority expressly (using terms like "duties" or "tariffs") and did not do so in IEEPA. The Court also stressed that IEEPA covers "importation or exportation," and reading "regulate" to include taxes would imply authority to impose export taxes, which the Constitution prohibits—an additional reason to reject the government's reading. Finally, the Court found that IEEPA's surrounding verbs (e.g., "block," "prohibit," "nullify") and decades of practice show IEEPA functioning as a sanctions and transaction-control statute, not a revenue-raising tariff statute. The Court then dispatched a variety of fallback arguments (put forward by the government and the dissent) that tariffs are simply another form of permissible "regulation," including comparisons to other contexts and previous cases.
Next Steps for Companies
Unsurprisingly, the Supreme Court decision did not address a critical issue for companies – the question of refunds. In fact, Justice Kavanaugh raised this in his dissent, noting that: "The Court says nothing today about whether, and if so how, the government should go about returning the billions of dollars that it has collected from importers. But that process is likely to be a ‘mess[.]'" Speaking after the decision on Friday, President Trump stated that the justices' silence on the refund process means the question "has to get litigated" in lower courts, maybe "for the next five years."
As a result, companies still face uncertainty regarding the process for obtaining refunds on IEEPA tariffs that companies have already paid. As discussed in a prior post, how difficult any refund process will be will depend in significant part on how difficult the Trump administration decides to make it. The administration could fight against refunds for parties other than named plaintiffs or attempt to impose substantial additional steps to refund duties paid.
The Use of "Protest First, then Appeal"
Under the long-standing procedures for claiming refunds of duties or tariffs collected on imports, importers typically must file a protest with US Customs and Border Protection (CBP) within 180 days of liquidation of a specific entry. Liquidation usually occurs approximately 10 months after importation, so a protest typically is due within approximately 16 months of importation. This 180-day deadline is strictly enforced and importers must closely monitor the liquidation status of their entries, and the corresponding 180-day deadline for each such entry. Given that the first entries subject to IEEPA tariffs were made in February 2025, the earliest deadline for protest of entries would be June 2026.
Therefore, as a result of the Supreme Court decision, an importer could directly protest with CBP on the basis that IEEPA duties were illegally collected and should be refunded. The Trump administration could direct CBP to honor these protests and refund duties collected. But in the event that CBP denies the protest, the importer would have the right to appeal that denial to the US Court of International Trade (CIT) – the same court that initially decided that the Fentanyl Tariffs and the Reciprocal Tariffs were contrary to law.
However, in December 2025, the CIT issued an opinion in a case called AGS Company v. US, which said that this "protest first, then appeal" strategy was not necessary for companies to protect any refunds that result from a Supreme Court decision overturning the IEEPA tariffs. Specifically, the CIT held that because Plaintiffs challenge the legality and constitutionality of Executive Orders issued by the President, in such a case, a § 1581(a) protest would be futile because "all that Customs is authorized to do is collect the" duty. In other words, because Customs has no authority to make any decision regarding the legality or constitutionality of the Executive Orders at issue, the CIT – not Customs – has the jurisdiction to review any challenge related to duties paid.
On this basis, while importers have the ability to directly protest with CBP and may want to try to use this option relying on the Supreme Court's decision, past precedent from the CIT suggests that such challenges will likely be unnecessary to protect a company's ability to receive refunds. However, companies may still find it prudent to file protests due to the novelty of this situation.
Entry Liquidation
Another concern of companies relates to the ability to obtain refunds on entries that had been liquidated, with companies filing cases at the CIT requesting that the court suspend liquidation while the Supreme Court decision was pending. The CIT has rejected these requests stating that the US government has stipulated that it will not prevent reliquidation if the IEEPA tariffs are found to be unlawful. The CIT has also emphasized that the government's stipulation regarding reliquidation applies to all current and future similarly situated plaintiffs.
Pending CIT Litigation and Potential Case Management Procedures
In anticipation of the Supreme Court overturning the IEEPA tariffs, hundreds of companies have been filing lawsuits at the CIT as well as other lower courts in efforts to protect any refunds owed. On December 23, 2025, the CIT issued a standing order that automatically stayed all newly filed suits from importers seeking IEEPA tariff refunds until the resolution of the Supreme Court decision. The court has also stated that it would impose case management procedures if needed after the Supreme Court decision. Accordingly, importers should closely monitor the CIT's next steps and discuss with experienced litigation counsel what action to take to protect their right to obtain refunds.
Looking Forward
Within hours of the Supreme Court's ruling, President Trump announced that he would utilize other authorities to reinstate tariffs on most imports and continue other existing tariffs. Most immediately, the President promised that he would sign an Executive Order on Friday, February 20, to impose a 10% global tariff under Section 122 of the Trade Act of 1974. However, the President may only impose a Section 122 tariff for a maximum of 150 days, with any extension beyond that period requiring congressional approval.
President Trump also said the administration will initiate new trade investigations to provide additional authority under Section 301 of the Trade Act of 1974, which grants the President the authority to impose tariffs in response to unfair foreign trade practices or violations of US trade agreements. Section 301 does not impose limits on the level or duration of tariffs, but it does require a formal investigation that can take up to a year to complete. During his first term, President Trump imposed extensive Section 301 tariffs targeting China, a practice that has continued in the current administration. Use of Section 301 would allow President Trump to target specific countries, but due to need to conduct an investigation, its use may be more limited. The administration could choose to focus Section 301 actions on the largest countries or on the trading partners that have signed trade deal frameworks or final agreements with the United States – including the United Kingdom, European Union, Japan, South Korea, and India.
The President could also consider using Section 338 of the Tariff Act of 1930 to impose future tariffs. Section 338 authorizes the President to impose tariffs of up to 50% on countries that take discriminatory trade measures, directly or indirectly, against the United States. Section 338 grants the President broad discretion to determine what constitutes discrimination against US commerce. It also allows the President to take further retaliatory measures if countries subject to Section 338 tariffs continue or escalate their discriminatory conduct. This provision has not been invoked in decades, and no President has ever used it to impose tariffs. Moreover, the statute contains limitations including a 50% cap on tariffs and a mandatory 30-day delay in the collection of tariff revenue.
Congress could also provide the administration with new tariff authority either within the text of IEEPA or through the passage of a new bill. This does not seem likely, particularly as the 2026 midterm elections near, and the House of Representatives voted to revoke the IEEPA tariffs on imports from Canada earlier this month. Further, President Trump repeatedly downplayed the prospect of seeking tariff authorities from Congress in a press briefing after the decision, saying directly that he "doesn't need to" given all the other existing tariff authorities he can utilize. However, individual legislation – like the Sanctioning Russia Act of 2025 that would impose tariffs up to 500% – enjoy broad support in Congress and may be an alternative tool for levying more targeted sanctions.
Effects on Trade Deals
The Trump administration has pursued reciprocal trade deals with a wide range of trade partners over the past year, concluding framework or final trade deals with 19 partners to date. The terms of these deals vary, but they generally include reductions of US tariffs in exchange for increased market access, purchase and investment commitments, and reductions in foreign tariffs. The US has lowered the Reciprocal Tariff rate on imports in many of these deals.
While the Supreme Court's decision affects the Reciprocal Tariffs underpinning the trade deals, it is likely that the US and trading partners will continue to negotiate these deals and will abide by the commitments. The US will be able to use the Section 122 tariff as a point of leverage and for many trading partners, preferential treatment under other US actions – in particular, the Section 232 sectoral tariffs – is even more valuable than a Reciprocal Tariff rate reduction. Further, many trading partners will want to avoid becoming a target of a Section 301 investigation, and will avoid backing out of or ceasing negotiations for a US trade deal.
Steptoe's International Trade team is closely monitoring the legal, policy, and procedural implications from the Court's ruling. If you need support evaluating what this means for your business, our team is ready to assist.
