On February 20th, 2026, the Supreme Court of the United States ruled that the President does not have the power to impose tariffs under the International Emergency Economic Powers Act (IEEPA), invalidating a broad range of duties that had been applied to imports.
As a reminder, President Trump has used IEEPA to implement a broad range of tariffs on nearly all countries across the world, including the universal 10% baseline tariff, fentanyl tariffs on China, Canada, and Mexico, and individualized “reciprocal” tariffs applying to specific countries, including Brazil and India.
Summary of the Ruling
The case was decided February 20, 2026. It examined whether the International Emergency Economic Powers Act (IEEPA) authorizes the president to impose broad tariffs on imports.
- In a 6–3 decision, the Supreme Court held that IEEPA does not authorize the president to impose tariffs.
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The Court’s decision invalidated all tariffs under IEEPA, which includes:
- Universal Reciprocal Tariffs from “Liberation Day” (~10% for most countries)
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Tariffs imposed on China, Canada, and Mexico in respect to fentanyl
- China: 10%
- Canada: up to 35%
- Mexico: up to 35%
- Country-specific tariffs imposed on India, Brazil, and others
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The Court’s decision does not impact tariffs imposed under:
- Section 301 (25% on Chinese goods)
- Section 232 The Court’s decision does not impact tariffs imposed under Section 301 (25% on Chinese goods) and Section 232 (50% on aluminum and steel products from all countries, except UK at 25%). These tariffs will continue to be collected.
Duties imposed pursuant to IEEPA, including all modifications and amendments, will no longer be in effect and will no longer be collected for goods entered for consumption or withdrawn from warehouse for consumption, on or after 12:00 a.m. Eastern Time on February 24, 2026.
IEEPA Tariff Refunds
Following the Supreme Court’s decision, importers that paid tariffs under IEEPA may ultimately be entitled to refunds. However, the Court did not provide any direction on how refunds should be administered, and no formal process has been established. Additional guidance from U.S. Customs and Border Protection (CBP) and further rulings from lower courts will be required before there is clarity. As a result, refunds – if they occur at all – should be expected to involve a lengthy and uncertain process.
In practice, entries will likely fall into three categories, with the refund path depending on their current status:
- Entries that remain unliquidated (still open).
- Liquidated entries that are still within the 180-day protest window.
- Liquidated entries that are outside the protest window.
Depending on which category applies, the potential course of action could range from filing an amendment or protest with CBP to pursuing litigation before the Court of International Trade. Given the procedural complexity and anticipated legal developments, importers should not assume that refunds will be automatic or timely.
The President’s Response: New Global 10% Tariff
After the Supreme Court struck down the IEEPA tariffs, President Trump responded in an impromptu press conference, stating that a new 10% tariff on all imports would be implemented within days. He indicated the administration would pursue alternative legal authorities to replace the measures rejected by the Court.
Shortly thereafter, the White House issued a proclamation and accompanying fact sheet titled President Donald J. Trump Imposes a Temporary Import Duty to Address Fundamental International Payment Problems. The action invokes Section 122 of the Trade Act of 1974 to apply a 10% global tariff effective February 24. Under this authority, the tariff may remain in place for up to 150 days unless Congress approves an extension.
Over the weekend, President Trump further announced via Truth Social that the global tariff rate would increase from 10% to 15%, effective immediately. While no additional Executive Order, proclamation, or fact sheet has yet been released formalizing the increase, it is expected before February 24. If issued as indicated, the 15% tariff would apply in addition to existing MFN rates for 150 days, through August 23.
On February 25, the Federal Register published a Presidential Proclamation imposing a temporary import surcharge of 10%. The surcharge goes into effect on February 24, 2026, and is scheduled to remain effective through July 24, 2026, unless changed sooner. Certain products are not subject to the surcharge, including products already subject to Section 232 tariffs.
The Expected Impact
The Supreme Court’s decision to invalidate a significant portion of the tariffs imposed by President Trump was largely anticipated. What remains unclear is the longer-term impact as businesses adjust to a shifting trade environment.
- The economic impact. The macroeconomic impact of the ruling is expected to be limited, at least in the near term and pending the administration’s next steps. Economists generally characterize the fallout as narrow, with potential upside for tariff-sensitive sectors such as retail and manufacturing. While GDP growth slowed to a 1.4% annualized rate in the fourth quarter – largely due to the government shutdown – stronger growth is anticipated in early 2026, supported by fiscal stimulus and a more accommodative monetary backdrop. Some caution that a short-term export drag could emerge if companies accelerate imports ahead of future tariff actions.
- Some help for inflation. The decision removes, for now, a modest inflationary pressure at a time when core inflation is running at 3% annually. Federal Reserve officials have estimated tariffs contribute roughly half a percentage point to inflation, though primarily as a temporary effect. Eliminating those tariffs reduces a potential headwind for the Fed as it evaluates interest rate policy this year. Market expectations for rate cuts remain largely intact, with analysts broadly concluding that the ruling is unlikely to materially alter the macro outlook or Fed strategy.
- Relief for the market. Financial markets responded positively, with equities rallying as investors weighed improved earnings prospects and reduced trade policy volatility. Although Treasury yields moved slightly higher, the reaction was measured. The ruling signals a shift toward more procedurally constrained trade policy, which may dampen headline-driven volatility while increasing focus on fiscal dynamics and supply conditions, particularly in fixed-income markets.
- Uncertainty for refunds. The potential cost of refunding previously collected tariffs remains uncertain, with estimates ranging from $85 billion to as high as $175 billion. The Supreme Court did not directly address the refund mechanism, leaving the issue to lower courts and creating significant procedural ambiguity. Some analysts question whether large-scale retroactive refunds will ultimately materialize, noting the legal and administrative complexity involved.
The administration has already signaled it will pursue alternative legal authorities to reinstate tariffs, including a newly announced 10% levy under Section 122 of the Trade Act of 1974. Key questions now center on the downstream effects – including potential price impacts, whether companies will pursue tariff refunds, and how the Federal Reserve may factor these developments into its policy decisions.
What Comes Next
Despite the ruling, tariffs are unlikely to disappear. Only those implemented under the International Emergency Economic Powers Act were struck down, leaving other trade measures intact. The administration retains alternative legal pathways to impose new tariffs, though some would require congressional approval or are subject to time limits. Given the administration’s stated commitment to trade enforcement, further tariff action – potentially including escalation – remains a meaningful possibility.
In a rapidly shifting trade environment, Evergreen Resources is built to support customers at every step – with dedicated tariff and logistics specialists, deep customs and compliance expertise, diversified global sourcing, and the operational agility to navigate complex clearance requirements and keep supply chains moving with minimal disruption.
If you’d like to discuss how these changes may affect your packaging procurement or supply chain strategy, contact us at [email protected] or visit our website to get started.
