The Supreme Court’s ruling against the use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs brings a critical, albeit uncertain, shift for U.S. businesses. While the decision removes a significant drag on GDP and provides a potential path for cost relief, businesses must act proactively. Companies should immediately consult counsel to file timely protests (within 180 days) for possible duty refunds and maintain rigorous documentation to navigate continued trade policy volatility.
The Impact of Ruling
The Court’s decision acknowledges that executive authority under IEEPA does not extend to the broad imposition of tariffs, a move industry groups view as essential for restoring predictability to global supply chains. Tariffs imposed under Section 232 (national security, such as steel and aluminum) and Section 301 (trade practices, including many China-origin goods) were not included in this decision.
For many firms, this ruling potentially reverses years of increased operating costs that necessitated layoffs, price hikes, and delayed capital investments. However, the immediate economic impact is expected to be incremental rather than transformative, as businesses remain cautious of potential alternative trade policies or workarounds from the administration.
Section 122 Tariffs
Following the Supreme Court’s decision to invalidate IEEPA tariffs, the Trump administration replaced those tariffs with Section 122 tariffs under the Trade Act of 1974. The new tariffs apply at a uniform rate of 15% and are scheduled to remain in place for 150 days, from February 24 through July 24, 2026. The administration may request an extension from Congress or shift duties to other authorities.
Just how this latest news will affect international and domestic commerce and filter down to prices, jobs and growth in the US and countries around the world remains a big question mark. It seems as if domestic and foreign leaders and business owners and executives are, for the most part, operating under the assumption that as long as Trump is in office, tariffs are here to stay in one form or another.
Trump may not be able to impose tariffs as rapidly or broadly as he has to date. However, there are other provisions he can use to issue more targeted tariffs. Accordingly, we feel that Trump’s tariff agenda survives with new legal foundations and a messy transition period.
Actionable Steps for Business Leaders
Because refunds will not be automatic and the legal environment remains fluid, businesses should prioritize the following steps:
- Secure Legal Remedies: Do not wait for government action. Engage customs counsel to determine eligibility for refunds and ensure all necessary protests or administrative claims are filed within the required 180-day window.
- Pursue Protective Litigation: Consider filing in the U.S. Court of International Trade (CIT) to preserve your legal rights to reliquidation, as administrative processes alone may not be sufficient to secure payouts.
- Maintain Strategic Resilience: Given the risk of future policy shifts, continue to diversify supply chains. Do not treat this ruling as a permanent reset; rather, use it as an opportunity to solidify your competitive position by streamlining operations and building cash reserves or lines of credit.
- Monitor Policy Developments: Stay informed about potential legislative or executive alternatives, as the administration may seek new legal avenues to maintain tariff structures.
By shifting from a reactive posture to a strategy of meticulous documentation and legal preparedness, firms can better insulate themselves against ongoing trade instability.
FAQs
What was the basis for the decision by the Supreme Court?
The U.S. Supreme Court ruled 6-3 that Trump has exceeded his authority by invoking the “emergency powers” law for tariffs.
What should business owners do next that were impacted by this decision?
Business owners should identify tariff payments made dating back to early 2025 and identify which were made to the International Emergency Economic Powers Act tariffs, which will be the primary candidate for refunds
How will the payments for future refunds be handled?
The responsibility of sorting out refunds has been left to the lower courts.
How might the government challenge claims for tariff refunds?
The Treasury Department is expected to argue in court that companies lack standing to claim a refund if they passed 100 percent of the tariff cost to consumers. If the company didn’t technically lose money, does the government get to keep the now-invalidated tax? This could take years to litigate.
What will be the reaction by the White House from this decision?
The White House has already signaled that it will utilize other methods to maneuver around this tariff decision including the recent Section 122, 15% tariff.
What is Section 122?
Section 122 allows the President to impose temporary import surcharges or quotas to address significant trade imbalances. The authority is limited to 150 days unless Congress approves an extension, and rates cannot exceed 15 percent. Unlike other trade tools that target specific countries or products, Section 122 applies broadly and uniformly.
How have Trump’s tariffs impacted the US trade deficit?
Trump’s 2025 tariffs have not meaningfully reduced the overall U.S. trade deficit. While the total trade gap (goods and services) saw a minor decline of approximately $3 billion from 2024 to 2025, this was driven entirely by an expanding surplus in services. Conversely, the trade deficit in physical goods—the primary target of the tariff policies—actually widened by approximately 2.1%.
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The information presented here should not be construed as legal, tax, accounting, or valuation advice. No one should act on such information without appropriate professional advice and after a thorough examination of the particular situation.
