On Feb. 20, 2026, the U.S. Supreme Court issued a high-stakes 6-3 ruling that has sent ripples through the global trade community. The Court determined that the Trump administration exceeded its legal authority by using the International Emergency Economic Powers Act (IEEPA) to bypass Congress and levy broad import duties.
For numerous businesses, this development represents not merely a legal update but a substantial opportunity for recovery, with more than $175 billion in IEEPA tariffs potentially available. Nevertheless, although the ruling permits the possibility of refunds, several administrative and political obstacles presently impede access to these funds.
Which tariffs are now considered “illegal”?
The Court’s decision specifically targets duties that relied on IEEPA authority. If your business has been paying the following, you may be entitled to a refund:
- Reciprocal tariffs: The broad, baseline duties recently applied to most global trading partners
- "Trafficking" tariffs: Specific duties aimed at Canada, Mexico, and China that were intended to curb illicit drug flows
Which tariffs are staying in place?
It is important to note that tariffs levied under other established trade statutes remain active and enforceable. This includes:
- Section 232 Trade Expansion Act of 1962: National security-based duties on steel and aluminum
- Section 201 Trade Act of 1974: Global safeguard duties on products such as solar panels and washing machines
- Section 301 Trade Act of 1974: Duties on Chinese goods related to unfair trade practices
Why tariff refunds aren't automatic (yet)
While the estimated “pot” of refundable duties sits between $130 billion and $175 billion, several factors are complicating the recovery process:
- The CBP shutdown: As of Feb. 14, the Department of Homeland Security (DHS) — which oversees Customs and Border Protection (CBP) — is in a partial government shutdown. With many non-essential staff furloughed, the administrative capacity to process more than 300,000 potential claims is severely diminished.
- Liquidity concerns: There are valid questions regarding whether the Treasury has the immediate "refund mechanism" to pay out such a massive sum without specific Congressional action.
- Procedural uncertainty: Guidance is still pending on whether refunds will be issued automatically or if companies must proactively file protests for every entry to protect their rights.
The “Backup Plan”: In a series of announcements following the Supreme Court decision, President Trump issued a proclamation imposing a 10% global import surcharge under Section 122, then moved to raise that 10% rate to the absolute statutory limit of 15% under Section 122.
On Feb. 24, 2026, the 15% surcharge officially went into effect and will statutorily expire on July 24, 2026. Certain goods were excluded from the surcharge, including energy and critical minerals, pharmaceuticals and medical ingredients, specific agricultural products like beef, fruit and vegetables, and existing Section 232 goods like steel and aluminum to avoid unlawful “stacking” of tariff surcharges.
Strategic recommendation: Move to “ready” status
The most important thing your business can do right now is quantify your exposure. Don't wait for a formal government portal to open before you start doing the math.
If you have impacted inventory, you should:
- Isolate IEEPA payments: Separate your duty payments by statute to identify exactly how much was paid under the now-invalidated IEEPA rules.
- Audit entry summaries: Ensure you have digital copies of all CBP Form 7501s for the affected period.
- Monitor “liquidation” dates: The window to file protests is often narrow; knowing when your entries “liquidate” is critical to preserving your legal right to a refund.
We are continuously monitoring the “unwinding” process related to this ruling. If you would like our team to help you quantify your potential refund or review your recent import data, reach out to your Mowery & Schoenfeld advisor.