Authored by CM Law Partners Mike Piazza and Peter Cassat, this client alert examines the U.S. Supreme Court’s landmark decision invalidating tariffs imposed under IEEPA and outlines the immediate implications for importers, potential refund strategies, and the Administration’s likely next steps.

The Bottom Line

On February 20, 2026, the U.S. Supreme Court issued its long-anticipated ruling on the Trump Administration tariffs imposed in April 2025 under the International Emergency Economic Powers Act (IEEPA). By a vote of 6-3, the Court held that the tariffs are unlawful. Specifically, the Court held that IEEPA, which gives the President broad emergency powers to “regulate” foreign transactions, does not include the power to impose tariffs, because the power to tax belongs to Congress alone absent clear delegation of this authority to the Executive Branch.

This decision invalidates the tariffs that have applied to imports from Canada, Mexico, China, and dozens of other countries since early 2025 — tariffs that reached as high as 145% on Chinese goods and covered virtually all imports from every U.S. trading partner.

However, this is not the end of tariffs. As Justice Kavanaugh noted in his dissent, “numerous other federal statutes authorize the President to impose tariffs and might justify most (if not all) of the tariffs at issue in this case — albeit perhaps with a few additional procedural steps.” Put simply, the Court found that the President used the wrong legal tool. Many other tools remain available, and the Administration is likely to use them immediately, as evidenced by President Trump’s comments just hours after the decision was made public.

If businesses take nothing else from the decision, those that paid IEEPA tariffs should start exploring refund options while also preparing for the possibility of new tariffs under different legal authorities. At the same time, businesses should continue revisiting their supply and distribution agreements impacted by tariffs.  In some cases, terms can be included that help to mitigate the risk of uncertainty with respect to tariff impacts.

What the Court Decided

Chief Justice Roberts wrote the majority opinion, joined in full by Justices Gorsuch and Barrett, and in significant part by Justices Sotomayor, Kagan, and Jackson. Justices Thomas, Alito, and Kavanaugh dissented.

The core of the decision is straightforward: the Constitution gives the taxing power to Congress, not the President. Tariffs are taxes. When Congress wants to let the President impose tariffs, it says so explicitly and puts limits on how much, how long, and on what products. IEEPA’s language authorizing the President to “regulate … importation” does not include the power to tax, and no President had ever read it that way in the statute’s nearly fifty-year history.

The dissenters, led by Justice Kavanaugh, argued that tariffs are a traditional way to “regulate” imports, that prior Presidents had imposed tariffs under similar language, and that the majority was reading the statute too narrowly. Importantly, the dissenters further noted that the President can likely reimpose most of the now invalid IEEPA tariffs under other statutes.

What This Means for Your Business — Key Takeaways

The IEEPA tariffs are invalid, effective immediately. Any tariff imposed solely under IEEPA lacks legal authority. Companies currently paying these tariffs should see collection cease, though the timing will depend on how quickly U.S. Customs and Border Protection (CBP) implements the decision.

Tariffs may come back under different laws. The Court’s ruling is limited to IEEPA. The President retains tariff authority under several other statutes, each of which requires specific procedural steps — investigations, agency findings, and in some cases rate caps — but which could ultimately support many of the same tariffs.

Refunds are likely but complicated. The Court acknowledged that the Government collected billions of dollars in now-unlawful tariffs but expressly declined to address refund mechanics, calling the process likely to be a “mess.” Companies should begin the refund process promptly (described in more detail below).

Trade deals may be uncertain. The Government argued that IEEPA tariffs helped negotiate trade deals worth trillions of dollars with countries including China, the United Kingdom, and Japan. The Court recognized this decision “could generate uncertainty regarding various trade agreements.” Companies with obligations under recently negotiated trade frameworks should assess whether those arrangements remain stable.

Congress could fix this if it wants to. The Court did not say Congress cannot give the President tariff power under IEEPA — only that Congress has not done so. Congress could amend IEEPA to expressly authorize tariffs, though the political dynamics of such legislation are uncertain. One U.S. Senator has already suggested doing so as quickly as possible.

What the Administration Is Likely to Do Next

The Administration has several paths to reimpose tariffs. Each requires more process than IEEPA did, but several offer broad authority with few hard limits on rates or duration.

National Security Tariffs. This is the Administration’s strongest option. Federal law lets the President “adjust the imports” of any product that threatens national security, with no cap on rates or duration. The Supreme Court has previously upheld tariffs under this authority, and today’s decision expressly left that precedent intact. The main hurdle is procedural: the Secretary of Commerce must conduct a formal investigation and issue a report finding that imports of a specific product threaten national security. The Administration could launch investigations across product categories to rebuild tariff coverage using this option. Indeed, President Trump indicated that some of these investigations are already underway. One important caveat: the dissenters warned that today’s reasoning could eventually be used to challenge national security tariffs too, since the underlying statute also does not use the words “tariff” or “duty.” The majority distinguished this statute on narrow grounds — broader discretionary language and a nearby reference to “duties” — but future litigation could test those distinctions.

Unfair Trade Practices Tariffs. The President can impose duties on countries engaging in unfair trade practices, with no explicit rate cap. This was the legal basis for the first-term tariffs on Chinese goods. It requires a formal investigation by the U.S. Trade Representative and is best suited for targeting specific countries rather than imposing universal tariffs.

Safeguard Tariffs. The President can impose duties on imports that cause or threaten “serious injury” to a domestic industry, but with a 50% rate cap and a mandatory phasedown after one year. It requires a finding by the U.S. International Trade Commission.

Balance-of-Payments Surcharge. The President can impose a temporary surcharge to address trade deficits, capped at 15% for 150 days. This is the most limited option but could be relevant to the trade deficit tariffs specifically.

Discriminatory Trade Practices Tariffs. The President can impose tariffs when a foreign country places burdens on U.S. commerce, subject to a 50% cap.

New Legislation. The Administration could ask Congress to amend IEEPA or pass new tariff legislation, though this path depends on political will and legislative timing.

The bottom line is that all these alternatives require more process including formal investigations, agency determinations, and in many cases rate caps or time limits. Reimposing tariffs under these statutes will take time, in some cases days but in other cases weeks to months, giving companies a potential window of tariff relief.

But as U.S. Trade Representative Jamieson Greer said just hours after the decision, the Trump Administration trade policies remain the same and now will be implemented through other statutory options, ensuring continuity in the tariff regime.  In fact, the Executive Order President Trump immediately signed imposing a new, temporary 10% global tariff, was promptly increased to the maximum rate of 15%.  No doubt other tariff alternatives will be pursued before these tariffs expire in 150 days.

How Companies Can Seek Refunds

Chairman Atkins highlighted the pay-versus-performance (PvP) rule as an example of excessive complexity. One panelist described it as “a very complex calculation” that is difficult to produce and interpret-“sort of disclosure written by economists for economists.” Another noted the rule has “necessitated further explanatory disclosure to address any confusion created for investors.” The Chairman agreed the SEC should simplify PvP disclosure to make it easier for companies to prepare and more useful for investors.

Immediate Action Items:

File Protests with CBP. Importers may file administrative protests challenging entries on which IEEPA tariffs were assessed. Key deadlines and actions:

• • File within 180 days of liquidation — review all protest deadlines immediately
  • File protective protests now for entries already liquidated where deadlines are approaching
  • For unliquidated entries, flag them and request reliquidation without IEEPA tariffs once CBP issues guidance
  • Unliquidated entries are in the strongest position – CBP may be required to liquidate without IEEPA duties

Pursue Litigation in the Court of International Trade (CIT). The CIT is the specialized federal court with exclusive jurisdiction over tariff disputes. Key considerations:

• • Available after exhausting administrative remedies or if CBP denies your protest
  • Legal merits are strong given the Court’s clear ruling
  • Be aware of specific CIT filing deadlines and procedural requirements
  • Engage counsel early to preserve all options

Monitor for Government-Wide Refund Programs. Given the scale of tariffs collected-potentially billions of dollars-CBP or Treasury may establish a centralized refund process. Actions to take:

• • Monitor Federal Register notices for refund program announcements
  • Watch for CBP guidance and executive orders addressing refund procedures
  • No program has been announced yet, but volume may necessitate streamlined processing
  • Subscribe to CBP trade alerts and check agency websites regularly

Consider Court of Federal Claims. If other avenues prove unavailable or inadequate, importers may pursue claims for illegal exactions. Key points:

• • Six-year statute of limitations provides a longer runway
  • Theory: Government collected money without legal authority and must return it
  • This is a less-tested path and may face procedural hurdles
  • Best used as a backup option if CBP protests or CIT litigation are unsuccessful

Evaluate Class Actions or Consolidated Litigation. Thousands of importers paid IEEPA tariffs across a wide range of products and countries. Consider:

• • Watch for coordinated litigation efforts in the CIT
  • Assess whether joining a class action would be more efficient than individual claims
  • Consult with counsel on the pros and cons of each approach

Be Aware of Potential Complications:

• • “Passing-on” defenses: The Government may argue importers who passed costs to customers are not entitled to full refunds
  • Resource constraints: High claim volume will strain CBP and court resources, potentially causing delays
  • Government resistance: Given fiscal impact, the Government may resist or delay refunds-Justice Kavanaugh noted refunds “would have significant consequences for the U.S. Treasury”

Ongoing Management of Supply Chain Risk:

The continuing lack of certainty will mean that it remains even more important for businesses to take measures to mitigate their contractual risk across major supply and distribution agreements.  In addition to evaluating upcoming renewal rights and contract extensions, many companies are introducing modified contract terms specifically targeted at mitigating tariff risk and addressing the right to seek refunds:

• • Consider dynamic price adjustment clauses that allow for automatic or negotiated repricing when tariffs change beyond a defined threshold.
  • Include tariff refund and clawback provisions to address when refund obligations and credits may be triggered.
  • Many companies are now including enhanced Incoterm clarification to address post-execution tariff increases.
  • Businesses also will need to consider the impact of the Court’s invalidation of the IEEPA tariffs on existing trade agreements that impact pricing under current terms.
  • It remains important to evaluate these terms in the context of existing or enhanced force majeure or hardship clauses that may excuse performance based on material changes in tariff rates.

Critical Next Steps-Act Now:

• • Audit import records to identify all entries on which IEEPA tariffs were paid
  • Confirm liquidation status for each affected entry
  • Calculate protest filing deadlines (180 days from liquidation)
  • File protective protests immediately where deadlines are approaching
  • Engage counsel to evaluate the best refund strategy for your situation

Time is critical. Protest deadlines are running, refund procedures remain uncertain, and the Administration’s next move could come at any time.

Conclusion

Today’s decision means the IEEPA tariffs are unlawful and must end. But tariffs themselves are not going away — the Administration has other legal tools available, and reimposition under alternative statutes is a matter of when, not if. Companies should use this window to pursue refunds of IEEPA tariffs already paid while preparing for a new round of tariffs that may look similar in substance but rest on different legal foundations.

Speed matters, as the Administration’s next move could come at any time. The team at CM Law LLP is ready and able to guide and assist you through the refund process, and to analyze the impact and validity of any future tariffs.

This Client Alert is for informational purposes only and does not constitute legal advice. Please contact the authors for guidance specific to your circumstances.

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About CM Law

CM Law (cm.law) – formerly Culhane Meadows – is the largest national, full-service, women-owned & managed (WBE) law firm in the United States. Designed to provide experienced attorneys with an optimal way to practice sophisticated law while maintaining a superior work/life balance, the firm offers fully remote work options, a transparent, merit and math-based compensation structure, and a collaborative culture. Serving a diverse clientele—from individuals and small businesses to over 40 Fortune-ranked companies—CM Law is committed to delivering exceptional legal services across a broad spectrum of industries.

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The foregoing content is for informational purposes only and should not be relied upon as legal advice. Federal, state, and local laws can change rapidly and, therefore, this content may become obsolete or outdated. Please consult with an attorney of your choice to ensure you obtain the most current and accurate counsel about your particular situation.