Supreme Court Strikes Down IEEPA Tariffs: The Refund Process Will Be Messy

By Brett W. Johnson, Derek Flint, T. Troy Galan, and Thomas Williams

On February 20, 2026, the U.S. Supreme Court held in Learning Resources, Inc. v. Trump, and the consolidated case Trump v. V.O.S. Selections, Inc., that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs unilaterally.¹ The decision invalidates both the “reciprocal” tariffs and the drug-trafficking tariffs imposed under IEEPA.

For importers, the immediate question is whether, how, and when refunds can actually be obtained. On that issue, the U.S. Supreme Court provided no roadmap. To the contrary, the dissent warned that the United States “may be required to refund billions of dollars,” that the process is likely to be a “mess,” and that the majority opinion “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.”

In practical terms, the U.S. Supreme Court resolved the merits and sent the hardest problem back into the trade litigation system. Because the U.S. Supreme Court’s decision does not establish an automatic refund mechanism, does not identify the correct procedural vehicle, and does not address how litigants should pursue refund rights, a conservative and defensible approach to preserving refund rights remains what many importers have already been doing: filing suit at the U.S. Court of International Trade to preserve claims.

At the same time, companies should consider notifying suppliers, reviewing contract pass-through provisions, and preparing for disputes over who is ultimately entitled to any refunded amounts.

I. Background

Invoking IEEPA, which authorizes the President to respond to “unusual and extraordinary” foreign threats after declaring a national emergency, President Trump imposed two sets of tariffs, which were subsequently modified by further executive actions. With respect to the drug-trafficking tariffs, the President imposed a 25% duty on most Canadian and Mexican imports and a 10% duty on Chinese imports. The reciprocal tariffs imposed a duty of at least 10% “on all imports from all trading partners,” with dozens of nations facing higher rates.

II. The U.S. Supreme Court’s Holding

In a fractured opinion, the U.S. Supreme Court held that IEEPA does not authorize the President to impose tariffs. The Court emphasized that Article I, Section 8 of the Constitution assigns to Congress “alone . . . access to the pockets of the people.”² The taxing power, which “very clear[ly]” includes the power to impose tariffs, is vested in the legislative branch.³

The U.S. Supreme Court explained that IEEPA authorizes the President to “investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit . . . importation or exportation” of property in which a foreign country has an interest, but that this lengthy list does not include tariffs or duties.⁴

Three of the Justices in the majority also would have relied on the major questions doctrine to strike down the IEEPA tariffs. They reasoned that the Administration asserted “unparalleled authority” to impose tariffs of any amount, for any time, on any product, based on an unreviewable emergency declaration. The three Justices characterized the theory as a “transformative expansion” of executive power with “economic and political significance” that “dwarfs” prior major questions cases.⁵

III. Refunds: The Problem the U.S. Supreme Court Did Not Address

The dissent was explicit about the real-world consequences. It warned that “[t]he United States may be required to refund billions of dollars to importers who paid the IEEPA tariffs, even though some importers may have already passed on costs to consumers or others,” and acknowledged that, as discussed at oral argument, the refund process is likely to be a “mess.”⁶

The U.S. Supreme Court’s majority opinion did not address the refund mechanism. The dissent went further, noting that refunds of this magnitude would “have significant consequences for the U.S. Treasury” and that the U.S. Supreme Court “says nothing today about whether, and if so how, the Administration should go about returning the billions of dollars that it has collected from importers.”⁷

In short, the U.S. Supreme Court decided the legal question and left the operational and procedural consequences unresolved.

Potential Refund Rights – Importers of record that paid tariffs under IEEPA may have viable claims for recovery, but there is currently no clear, uniform process for obtaining refunds. In light of that uncertainty, many companies have chosen to affirmatively protect their refund rights by commencing actions at the U.S. Court of International Trade. Others have chosen to file protests with U.S. Customs and Border Protection — although this approach may pose significant procedural challenges.

Whether litigation or a protest makes sense in any particular case depends on the importer’s tariff exposure and should be evaluated with the assistance of experienced trade counsel, who can also assess alternative strategies on a case-by-case basis.

Pass-through Complications – It is critical for companies to review supply agreements, purchase terms, and pricing provisions to understand how tariff costs were allocated and whether any refund obligations or credits may be triggered.

These issues are often best addressed proactively through informed discussions with suppliers and counterparties, supported by legal advice and, where appropriate, revisions to contractual terms to account for ongoing changes in tariff law and enforcement going forward.

IV. Practical Implications

Although the Court ruled against the IEEPA tariffs, the decision should not be read as a retreat from tariff policy. In substance, the U.S. Supreme Court concluded that the Administration relied on the wrong statutory authority, not that tariffs themselves are unavailable.⁸ As the dissent noted, “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 that IEEPA, as an emergency statute, does not require.”⁹

The practical difference is one of process and timing: unlike IEEPA, these other statutes generally require additional procedural steps before tariffs can be imposed, which means implementation may take longer but remains entirely feasible. Public statements by Administration officials leading up to the decision have already suggested that the Administration is prepared to pursue these alternative pathways.

For importers, this decision should not be treated as a reason to unwind tariff mitigation strategies. If anything, it reinforces the need to continue, and in some cases accelerate, mitigation planning in a tariff environment that remains volatile. 

V. Conclusion

Because the U.S. Supreme Court did not identify the proper mechanism for obtaining refunds, companies affected by the IEEPA tariffs should not assume that refund rights will be implemented automatically or uniformly. A conservative approach to protecting those rights remains to pursue relief at the U.S. Court of International Trade, while simultaneously reviewing supplier arrangements and contract provisions to understand how any refunds would be allocated among the parties.

Further, importers should remain prepared for the possibility that similar tariffs could be reimposed under alternative statutory frameworks, though such actions would likely require additional procedural steps and could be subject to additional constraints.