On February 20, 2026, the U.S. Supreme Court made a major ruling that invalidated a sweeping set of tariffs imposed by President Trump. If your business imports goods into the United States, this decision could affect you, and the window to act may be short.
Here's a plain-English breakdown of what happened, what comes next, and what steps businesses should consider taking right now.
What Did the Court Actually Decide?
In a 6–3 decision written by Chief Justice John Roberts (Trump v. V.O.S. Selections, Inc. and Learning Resources, Inc. v. Trump), the Court ruled that the president does not have the authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA).
IEEPA is a law that lets the president respond to national emergencies by taking economic actions, things like blocking transactions or freezing assets. President Trump had used it to justify broad, sweeping import tariffs affecting goods from countries around the world.
The Court said: not so fast. The power to "regulate" imports, which is what IEEPA grants, is not the same as the power to tax imports. Tariffs are a form of tax, and taxing is a power that belongs to Congress, not the president.
Three of the six justices in the majority (Roberts, Gorsuch, and Barrett) relied on what's called the major questions doctrine, the legal principle that if a president wants to do something with enormous economic consequences, Congress must have given clear, explicit permission. The other three majority justices (Kagan, Sotomayor, and Jackson) agreed the tariffs were unlawful but for a simpler reason: IEEPA's plain text just doesn't give the president tariff power, full stop.
Justices Thomas, Alito, and Kavanaugh dissented.
Can Businesses Get Refunds?
This is the big question, and the Court's ruling was silent on it. The majority opinion says nothing about what happens to the tariffs that have already been paid.
That said, there are strong legal reasons to believe refunds should be available. According to analysis by Skadden, Arps, Slate, Meagher & Flom LLP (published February 24, 2026), the path to a refund depends on the status of your customs entries:
If Your Entry Has NOT Been "Liquidated" Yet
Liquidation is the point at which U.S. Customs and Border Protection (CBP) officially closes out your import entry and sets the final amount you owe. If your entry hasn't been liquidated yet, you may be able to file a post-summary correction (PSC), essentially an amended filing that removes the now-invalid IEEPA tariff charges.
If Your Entry HAS Already Been Liquidated
You have two main options:
- File a formal protest with CBP
- File a claim directly with the Court of International Trade (CIT)
Skadden's analysis notes there are good arguments for going straight to the CIT, especially because CBP was simply following presidential orders that have now been declared unlawful, making the standard administrative protest process potentially pointless.
The CIT is expected to set up a formal process to handle the wave of refund claims, building on the nearly 2,000 cases already filed. On December 15, 2025, the CIT had already ruled in AGS Co. Auto. Sols. v. U.S. Customs and Border Prot. that it has the authority to order refunds even after liquidation, and the U.S. government had conceded it would not fight that authority.
Who Actually Gets the Refund Money?
Here's where things get complicated, and potentially contentious.
Under U.S. regulations (19 C.F.R. § 24.36), refunds go to the importer of record, the company that officially brought the goods into the country and paid the tariffs. But in many supply chains, the economic cost of those tariffs was passed down the line to wholesalers, retailers, and ultimately consumers.
This creates a messy situation:
- A buyer who absorbed tariff costs through higher prices may argue the importer is obligated to share the refund.
- An importer that doesn't pursue a refund could face lawsuits from business partners or customers who bore the cost.
- An importer that does receive a refund could face legal claims from downstream parties arguing the importer would be unjustly enriched if it kept the money.
California case law (Javor v. State Bd. of Equalization, 1974) has established that companies may actually have an obligation to pursue refunds in some circumstances when end consumers paid the inflated costs.
What About Your Contracts?
Before doing anything else, businesses should pull out their commercial contracts and read them carefully. Many contracts have provisions that directly address tariff responsibility, and those provisions will shape who is entitled to refunds, and who could face a lawsuit.
Watch for clauses that:
- Require the seller to try to reduce tariff costs before passing them to the buyer
- Provide credits or rebates when tariff rates go down
- Shift tariff costs depending on the trade environment at the time of the deal
If your contract shifts the cost of tariffs to a party other than the importer of record, that party may have grounds to demand the importer pursue a refund and pass it along. Skadden's analysis recommends that companies proactively open those conversations with counterparties before a dispute arises.
What Happens to Trump's Trade Deals?
Over the past year, the Trump administration negotiated a series of bilateral trade agreements with other countries. Those deals set specific import duty rates, and most of them were implemented through executive orders that cited IEEPA as their legal authority.
With IEEPA tariffs now struck down, those trade agreements are on shaky ground. On February 20, 2026, the same day as the ruling, President Trump signed an executive order directing that IEEPA-based tariffs "shall no longer be in effect."
If the administration wants to preserve the tariff terms embedded in those deals, it will need to reimpose them under different legal authority.
So What Tariffs Are Still Legal? What Comes Next?
The president still has other tools available. Justice Kavanaugh's dissent identifies five other statutes that could be used to impose tariffs. Here's a quick breakdown:
Section 232: National Security Tariffs (Trade Expansion Act of 1962)
The president can impose tariffs after the Commerce Department conducts an investigation and finds a national security threat. No cap on rates or duration. Already used heavily in Trump's second term for steel, aluminum, cars, copper, lumber, and more. Trump announced on February 20, 2026 that he intends to use Section 232 again.
Section 122: Balance-of-Payments Tariffs (1974 Trade Act)
Allows import surcharges of up to 15% to address serious trade deficits. No investigation required. But tariffs expire after 150 days unless Congress votes to extend them. Trump moved quickly to impose a near-universal 10% tariff under this authority after the ruling, with stated plans to raise it to 15%.
Section 201: Safeguard Tariffs (1974 Trade Act)
Used when a surge of imports is hurting a domestic industry. Requires an International Trade Commission investigation. Tariffs can last up to 8 years. Has been used before, including in 2018 for solar panel components.
Section 301: Unfair Trade Practices (1974 Trade Act)
Lets the U.S. Trade Representative impose tariffs on countries engaging in unfair trade practices. Country-specific, flexible, and widely expected to be used to recreate some of the bilateral trade deal tariffs. Can last up to 4 years, with unlimited extensions.
Section 338: Discrimination Tariffs (Smoot-Hawley Tariff Act of 1930)
Allows tariffs against countries that discriminate against U.S. commerce. Has never been used in modern times, so its exact scope is unclear. Allows tariffs up to 50% with no time limit.
What About the "De Minimis" Exemption?
One related issue still unresolved: the elimination of the de minimis exemption, which had allowed packages valued under $800 to enter the U.S. duty-free. The Trump administration suspended this exemption using IEEPA authority.
That suspension is already being challenged in court (Axle of Dearborn, Inc. v. Dep't of Commerce), and the case was on hold pending the Supreme Court's ruling. But on February 20, 2026, President Trump signed a new executive order continuing the suspension of de minimis treatment, again citing IEEPA, signaling the administration intends to fight to keep it in place despite the ruling.
What Should Businesses Do Right Now?
Based on the Skadden analysis, here are the key action items:
- Review your customs entries. Identify any imports subject to IEEPA tariffs and check whether they've been liquidated or not. Time limits may apply.
- Preserve your rights. If entries are approaching liquidation deadlines, act now before those deadlines pass and your options narrow.
- Read your contracts. Look specifically for provisions about tariff responsibility, credits, rebates, mitigation obligations, and refund rights.
- Talk to your counterparties. If you're not the importer of record but may have borne the cost of these tariffs, open a conversation now, before someone files a lawsuit.
- Watch for the CIT's guidance. The Court of International Trade is expected to establish a formal process for refund claims. Stay tuned for announcements.
- Reassess your tariff exposure going forward. New tariffs under Section 122 and Section 232 are already being announced. Businesses should model their exposure under these new authorities.
The Bottom Line
The Supreme Court's February 20, 2026 ruling is one of the biggest developments in U.S. trade law in years. It doesn't end tariffs, but it does end the president's ability to impose them unilaterally under IEEPA, and it opens the door to potentially billions of dollars in refunds for businesses that paid those tariffs.
The situation is still evolving fast. New tariffs are being announced under different legal authorities, refund procedures haven't been fully worked out, and contract disputes are likely to follow. Businesses that move quickly and get organized now will be in the best position to protect their interests.
This article summarizes a legal analysis published February 24, 2026 by Skadden, Arps, Slate, Meagher & Flom LLP. It is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance specific to your situation.