U.S. Supreme Court IEEPA Decision

On February 20, 2026, the Supreme Court ruled 6-3 against President’s Trump use of the International Emergency Economic Powers Act (IEEPA) to enact tariffs on U.S. trading partners. Alongside country-specific tariffs, President Trump also set a minimum tariff baseline of 10% using IEEPA. Many U.S. trading partners have sought trade agreements to reduce their respective tariffs. Following the Supreme Court’s ruling, the Trump administration announced tariffs through different statutory authorities. Companies are now raising questions about refunds and trading partners are evaluating their trade agreements.

This blog will explore the broader effects of these tariffs on international relationships, the U.S. economy, and how businesses are navigating the complexities of compliance and potential refunds. 

Key takeaways

• Decision: In a 6-3 ruling, the Supreme Court struck down the President’s use of IEEPA to enact tariffs.  

• Refund Uncertainty: The Supreme Court did not address refunds for companies that paid IEEPA tariffs.  

• Administration’s Response: The President announced he would use Section 122 to enact a 15% baseline tariff and launched new Section 301 investigations.  

• Supply Chains: As in 2025, transportation and supply chain leaders need to be nimble and adaptable in response to this evolving situation.  

Overview of the Supreme Court striking down IEEPA tariffs

 The Supreme Court's rejection of the President's use of the IEEPA has introduced new levels of uncertainty. Here's an in-depth look at the Court's decision and the administration's quick response to the ruling. 

Majority ruling

The Supreme Court rejected the President’s use of IEEPA, stating that IEEPA does not authorize the power to enact tariffs. The majority opinion found that the administration's actions also violated the major questions doctrine, which requires clear congressional delegation for policies of major national significance. 

Dissenting opinion

The three dissenting justices argued that the major questions doctrine did not prevent the president from imposing tariffs under IEEPA. They contended that the act’s language did, in fact, provide the necessary authority.

Refund uncertainty  

According to the Yale Budget Lab, citing Customs and Border Protection, about $142 billion was collected under IEEPA tariffs in 2025. In their ruling, however, the Supreme Court did not explicitly address whether the administration ought to provide refunds, or how.

Hundreds of companies have already filed for tariff refunds in anticipation of the Supreme Court ruling. The ongoing uncertainty surrounding these refunds will likely continue to play out through the court system. 

 President’s response

In a press conference following the Supreme Court’s ruling, President Trump decried the majority opinion. He then announced that he will enact a 10% baseline tariff on all imports into the U.S. under Section 122.  He has since raised the rate to the maximum 15%. He also stated that the administration will open new Section 301 investigations. The Section 122 tariffs will take effect on February 24, but Section 301 investigations and subsequent tariffs may take many months to complete.

Trade agreements & USMCA

The Supreme Court decision also raises questions about existing trade agreements and ongoing negotiations. Over 20 nations have initiated or signed new trade agreements with the United States. The decision also throws a new element of uncertainty into the U.S. – Mexico – Canada free trade agreement negotiations, which will officially begin mid-2026.

Supply chain impacts of the IEEPA tariffs ruling

 Tariff uncertainty in 2025 prompted widespread import front‑loading, producing volume spikes at major ports in April and late summer and driving the Port of Los Angeles to record container import levels. These surges extended into intermodal networks but failed to generate meaningful freight rate pressure.

Looking ahead, firms without excess or involuntary inventories may use the post‑repeal window to modestly accelerate imports. This could potentially create smaller, short‑lived disruptions across the supply chain. In the medium- to long-term, many tariffs the administration aims to implement will require months-long investigations, providing supply chain leaders time to plan and adapt.

While the removal of IEEPA tariffs may, in theory, reduce upward price pressure on consumers, the impact may remain muted in the short term. Ongoing trade uncertainty and tariff cost pass-through strategies used by companies are likely to limit any immediate relief.

Navigate a complex and uncertain path forward 

The Supreme Court's ruling on IEEPA tariffs has officially ended one chapter of trade policy while immediately opening another. The administration’s pivot to other statutory authorities, like Section 122 and Section 301, ensures that trade uncertainty will persist. For supply chain leaders, the key to navigating this environment is staying informed, remaining adaptable, and preparing for continued volatility in global trade dynamics. 

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Frequently asked questions about IEEPA tariffs

What is the International Emergency Economic Powers Act and how did the Trump administration use it?

IEEPA authorizes the President to respond to any unusual and extraordinary threats to U.S. national security, foreign policy, or the economy. Provided that there is a declaration of a national emergency, the President may “regulate…importation.'

IEEPA has historically been used to enact sanctions but never tariffs. In early 2025, the administration declared emergencies related to fentanyl, immigration, and trade imbalances. In a September 2025 analysis, the Congressional Research Service found that the administration had enacted 77 national emergencies invoking IEEPA, 46 of which were still in place. The administration then relied on the phrasing of “regulate… importation” to enact sweeping tariffs against trading partners. The IEEPA tariffs became the cornerstone upon which the administration reconfigured global trade, as well as Section 232 and Section 301 tariffs.

What is the “major questions” doctrine?

The “major questions” doctrine is a legal principle enforced by the Supreme Court holding that if Congress wishes to delegate powers of major political or economic significance to an executive agency, it must do so with clear and explicit statutory language. 

What are Section 122, 201, 232, 301, and 338 tariffs?

Section 122 allows the President to enact tariffs at a maximum of 15% to address international balance-of-payment problems. After being in place for 150 days, the President must seek congressional approval to renew the tariffs. Section 122 has never been used and remains untested.

Section 201 allows the President to impose tariffs if the International Trade Commission finds that a surge in imports is threatening serious injury to domestic U.S. industries. The maximum tariff rate is 50% and there is a required phase-down requirement, as well as a total limit on how long the tariffs may remain in place.

Section 232 allows the President to set tariffs on categories of imports following a Department of Commerce investigation into their impact on national security. There is no maximum tariff rate or time limit. 

Section 301 tariffs follow from an investigation by the U.S. Trade Representative to assess whether a foreign country’s actions create unjustifiable burdens or restrictions on U.S. commerce or if there were trade agreement violations. Section 301 tariffs have been used against China and certain Chinese industries, as well as Nicaragua, and there are pending investigations against China and Brazil. 

Section 338 allows the President to impose tariffs on goods from countries that discriminate against U.S. commerce, similar to Section 301. The maximum tariff rate is 50%. It is unclear if an investigation by the International Trade Commission is first required.