On February 20, 2026, the U.S. Supreme Court held that the International Emergency Economic Powers Act (“IEEPA”) does not authorize the President to impose tariffs. In a 6‑3 decision, the Court struck down the sweeping tariffs—both the “reciprocal” and “drug trafficking” tariffs—the administration had imposed under IEEPA on imports from virtually all U.S. trading partners. This opinion will have significant consequences for supply chains across all industries.
Summary of the Court’s Ruling
- The Court held that IEEPA’s authorization to “regulate” importation cannot be stretched to include the independent power to impose tariffs, noting that the statute contains no reference to tariffs or duties.
- The decision affirms earlier lower‑court rulings that tariff authority remains a power reserved to Congress, absent clear statutory delegation.
- The Court did not decide whether or how the federal government must handle refunds of tariffs already paid, including an estimated $200+ billion under the now‑invalidated tariffs.
- The Administration appears poised to continue pursuing tariff‑driven trade strategies under alternative legal mechanisms. This means we may see new or shifting tariff strategies soon.
Why This Matters for Businesses
The ruling has immediate and significant implications for companies involved in cross-border supply chains, including anyone who imports raw materials, components, or other goods.
- Pricing Impacts: With the tariffs vacated, many industries will likely see shifts in pricing for imported goods, including raw materials and components. Companies will likely benefit from lower pricing on imported materials and components.
- Revisiting Tariff Relief: Many businesses gave or received temporary price relief to offset IEEPA‑related tariffs. With the legal basis for those tariffs now eliminated, companies should consider whether such relief remains warranted or should be renegotiated going forward.
- Potential Refund Opportunities: Although the Court declined to address refunds for tariffs already paid, we are evaluating options for businesses to seek refunds of the now invalidated tariffs. Litigation in the U.S. Court of International Trade (“CIT”) remains the most viable path, with numerous lawsuits already filed. If you want to pursue refund opportunities, we suggest acting quickly. With billions of dollars at issue, we expect a rapid increase in the lawsuits filed in the CIT. Some of these claims are subject to strict timing and documentation requirements.
