Supreme Court Strikes Down Trump’s IEEPA Tariffs: What Procurement Leaders Must Do Next
•February 20, 2026
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Companies Mentioned
Why It Matters
The judgment reshapes the legal foundation of U.S. trade policy, forcing companies to reassess compliance costs and contract terms while navigating continued tariff uncertainty that could affect supply‑chain profitability.
Key Takeaways
- •IEEPA lacks authority to levy tariffs
- •Refunds require protests, corrections, or litigation
- •Alternative statutes like 232, 301, 201 remain viable
- •Procurement must audit contracts for refund allocation
- •Tariff uncertainty may extend sourcing paralysis to 2026
Pulse Analysis
The Supreme Court’s 6‑3 opinion on the International Emergency Economic Powers Act marks a watershed moment for U.S. trade law. By confirming that only Congress can impose tariffs, the Court dismantled the legal scaffolding behind the sweeping duties introduced during the Trump administration. While the ruling eliminates the IEEPA‑based tariff framework, it leaves the broader architecture of trade policy untouched, preserving the president’s ability to act under other statutes such as Section 232, Section 301, and Section 201. This nuanced outcome signals both a legal victory for importers and a warning that tariff authority remains a moving target.
For procurement executives, the immediate priority is to translate the legal clarity into operational readiness. Importers who paid duties under the invalidated regime must initiate post‑summary corrections, file timely administrative protests, or consider litigation in the Court of International Trade to preserve refund rights, each pathway bound by strict filing windows. Simultaneously, companies need to audit existing supply contracts to determine who bears the cost‑pass‑through and who is entitled to any eventual refunds. Detailed documentation of entry dates, HTS classifications, and payment records becomes essential not only for claim preservation but also for future compliance under any new tariff regime.
Looking ahead, the ruling does not guarantee a calm trade environment. Moody’s forecasts suggest that the administration may pivot to commodity‑based or other statutory tariffs, extending rate uncertainty well into 2026 and creating what analysts call ‘sourcing paralysis.’ Procurement leaders should therefore embed flexibility into sourcing strategies, negotiate clauses that address tariff volatility, and maintain close dialogue with customs counsel. By proactively managing contractual risk and staying attuned to evolving policy signals, firms can mitigate cost shocks and position themselves competitively, regardless of which statutory tool the government ultimately employs.
Supreme Court strikes down Trump’s IEEPA tariffs: What procurement leaders must do next
Key takeaways
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IEEPA tariffs are unlawful, but trade policy isn’t reset. The Supreme Court ruled that IEEPA does not authorize tariffs, reaffirming Congress’ constitutional authority over taxation, but other tariff mechanisms remain available to the administration.
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Refunds are possible, not automatic. Importers may pursue refunds for duties paid under the invalidated tariff regime, but claims require post-summary corrections, administrative protests, or litigation in the U.S. Court of International Trade (CIT), with strict deadlines.
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Expect prolonged uncertainty and “sourcing paralysis.” According to Moody’s, the administration could pivot to commodity-based or alternative tariffs, extending tariff-rate uncertainty into 2026 and leading to more adversarial, short-term supplier negotiations.
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Documentation and contract review are critical. Procurement leaders must map tariff-affected entries, preserve legal standing, and audit supplier contracts to clarify refund rights and cost-pass-through obligations.
On Friday, the U.S. Supreme Court ruled that President Donald Trump’s sweeping global tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful, holding that the statute does not authorize broad tariff powers for the executive branch. The 6–3 decision found that IEEPA, a law originally intended for emergency sanctions, could not be used to levy tariffs—a function the Constitution reserves for Congress.
This is a major legal setback for one of the signature economic tools of the Trump administration’s second term, but it does not necessarily represent an immediate reset of U.S. trade policy. As supply chain leaders, procurement executives and importer teams digest the implications, the question becomes: What next?
What the Supreme Court ruling means
The Court’s decision invalidates the legal basis Trump used for broad tariffs, including “reciprocal” duties on most U.S. trading partners. The ruling may also create avenues for importers to pursue refunds for duties collected under the now-struck tariff regime. But refund processes are complicated, not automatic, and could take years to resolve.
Key points from the ruling:
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The Supreme Court held that IEEPA does not authorize tariffs, reaffirming that only Congress can levy taxes and tariffs.
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The decision could trigger refund claims for duties paid, though implementation is unclear and far from automatic.
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The ruling doesn’t preclude the executive branch from pursuing tariffs under other statutory authorities, such as Section 232 (national security), Section 301 (unfair trade), or safeguard provisions under Section 201, but those routes require additional procedural steps and may face their own legal challenges.
The next phase: Uncertainty, alternatives & economic tension
Even with IEEPA tariffs struck down, supply chains should expect policy reshuffling, ongoing legal activity, and persistent uncertainty.
“Following the Supreme Court ruling against country-based tariffs, the administration may impose additional commodity-based tariffs,” explained Andrei Quinn-Barabanov, Moody’s Supply Chain Industry Practice Lead, in a statement immediately following the ruling. “This could trigger another round of exemption requests and international trade negotiations, potentially prolonging the tariff rate uncertainty and resulting sourcing paralysis well into 2026. Making prudent, long-term sourcing decisions becomes difficult when you can only make solid assumptions about tariffs for some potential vendors, but not for others. This sourcing paralysis may temporarily keep tariff-affected customers and suppliers in an uneasy status quo, leading to 2026 supplier negotiations that are more adversarial and short-term in their outlook.”
In essence, while Supreme Court has provided legal clarity on the issue, it has not provided operational clarity.
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How procurement leaders should respond
For procurement and supply chain leaders trying to figure out how to respond, the law firm of Holland & Knight put out a document in December that explained the next steps for firms.
1. Document everything now
Even as new statutes and regulations evolve, detailed documentation of entries, duties paid, HTS classifications, date of entry and payment records remains essential. This preserves refund claims and supports compliance in future tariff structures.
2. Preserve legal standing & deadlines
Importers should consult customs counsel and brokers to:
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File post-summary corrections (PSCs) for unliquidated entries where feasible.
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File administrative protests within statutory deadlines for liquidated entries.
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Consider protective litigation in the U.S. Court of International Trade (CIT) to preserve rights to reliquidation or refunds.
Refunds won’t be automatic and may take time
Even though the Supreme Court found the tariffs unlawful, companies should not expect automatic refunds. Multiple legal avenues exist—PSCs, protests, and CIT litigation—but each requires affirmative action by importers and careful deadline management. CBP generally will not issue a refund unless a protest is timely filed (usually within 180 days) and litigation in the CIT may still be needed to enforce rights, according to law firm Blank Rome. If entry liquidations have already occurred and deadlines have passed, the ability to claim refunds may be lost unless a court directs otherwise.
Operational & contractual knock-on effects
The ruling raises important questions within supply chains:
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Who bears refund rights? Supplier contracts, pricing clauses and indemnification language may govern whether a company or its trading partner retains refund rights or cost obligations.
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What happens to cost-pass-through arrangements? If tariffs were passed through to customers, contracts may need to be revisited to settle who benefits from refunds or price adjustments.
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How do sourcing decisions change? With new statutory uncertainty and potential sourcing paralysis, as Moody’s suggests, many procurement leaders may find themselves reframing supplier negotiations around volatility risk and contractual flexibility.
Tariff tools still available to policy makers
While the Supreme Court struck down tariffs under IEEPA, it did not eliminate tariff tools entirely. Alternatives include:
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Section 232 (Trade Expansion Act) tariffs related to national security concerns.
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Section 301 (Trade Act of 1974) retaliatory tariffs in response to unfair trade.
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Section 201 (Safeguard Measures) temporary tariffs to protect domestic industries from surges.
Each of these legal authorities requires fact-finding, reporting and procedural steps that involve more than executive fiat.
This ruling is not a reset
The Supreme Court’s decision marks a major legal turning point, but its practical effects will take time to materialize. For supply chain leaders, the key is preparation over reaction: meticulous documentation, early engagement with customs counsel, and strategic contract evaluation will dictate whether your organization gains clarity, avoids paralysis, and positions itself advantageously for whatever tariff regime statutory or negotiated comes next.
FAQs
Q: What did the Supreme Court rule about Trump’s tariffs?
The Court held in a 6–3 decision that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose broad tariffs, reaffirming that Congress holds tariff authority.
Q: Will companies automatically receive refunds for tariffs paid?
No. Refunds require affirmative action through post-summary corrections, administrative protests, or litigation, and strict filing deadlines apply.
Q: Can the administration still impose tariffs under other laws?
Yes. Section 232 (national security), Section 301 (unfair trade practices), and Section 201 (safeguards) remain available, though each requires formal investigations and procedural steps.
Q: How should procurement leaders respond right now?
They should document all tariff-related entries, consult customs counsel to preserve legal rights, review supplier contracts for refund allocation terms, and prepare for continued trade policy volatility.
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