The Supreme Court’s IEEPA tariff decision: What business needs to know

Amid a lack of clarity over refunds, Washington vows to continue imposing tariffs by other means

What you’ll learn in this article:

• Which tariffs are impacted by the Supreme Court’s recent decision.
• The government’s options for establishing a refund process. 
• What companies can do to ensure they will be eligible for any future refund.  

🎯 Best for: Financial officers and managers, customs brokers, government relations teams.

American importers are taking steps to secure their share of any potential tariff refunds in the wake of Friday’s Supreme Court decision striking down all tariffs implemented under the International Emergency Economic Powers Act (IEEPA). 

Those IEEPA tariffs include the fentanyl-related tariffs levied on imports from China, Mexico and Canada last March, and the Liberation Day reciprocal tariffs first announced last April. In its 6-3 decision, the Supreme Court ruled that IEEPA does not confer the power to tariff imports. 

But the decision made no mention of what will become of the substantial amount of revenue collected under the IEEPA tariffs, which is estimated to be as high as $175 billion. The government has previously stated that it would issue refunds if the IEEPA tariffs were found to be unlawful, but the process for obtaining refunds remains unresolved. 

“The Supreme Court decision has answered one big question about tariffs, but it has also raised a whole bunch of new questions for the businesses affected by the ruling,” says ImportGenius CEO Michael Kanko. “Companies that paid substantial amounts of IEEPA tariffs will want to take steps to make sure they are eligible for refunds if and when those funds are released.” 

Tariffs and refunds: Mixed signals, many options 

The administration has sent mixed messages on the issue of refunding IEEPA tariffs. 

• Government court filings have said that refunds will be issued if the court invalidates the tariffs. 
• President Trump, in a press conference last Friday, said he expects the issue of refunds to be tied up in litigation for years.  
• The government has said that the most commonly-used process for obtaining tariff refunds — the Protest After Liquidation, often referred to as the protest statute — does not apply to IEEPA tariffs. 
• It’s expected that Customs and Border Protection (CBP) will continue to collect IEEPA tariffs until it issues guidance to the contrary. 

The upshot is that businesses are currently without a clear mechanism to obtain refunds. Amid the uncertainty, more than 1,000 companies already filed suit in the Federal Court of Claims, long before Friday’s decision, over the tariffs they have paid. 

To resolve the issue, the administration has a number of options at its disposal: 

• For transactions that have yet to be liquidated through CBP, the government could rely on post-summary corrections to repay recently-paid tariffs. 
• For liquidated transactions, the government could reverse course and refund the tariffs through the existing protest statute. 
• The government could create a temporary clearinghouse to streamline the refund process, as it did back in 1998 when a different Supreme Court decision invalidated harbour freight fees on exports. 
• The government could choose to argue its case in litigation and leave the courts to make the ultimate decisions about which companies will get refunds and how. 

If the courts become the ultimate arbiter of a solution, there remains the possibility of a class-action lawsuit, particularly for small and medium-sized businesses who would not otherwise have the time and resources to pursue litigation on their own. 

What companies can do 

While everyone awaits news on how refunds will be assessed and distributed, there are steps that companies of all sizes can take to set themselves up for any potential refund. 

1. File your IEEPA tariff refund claims, including both protests and post-summary corrections. Note that protests after liquidation must typically be filed within 180 days, which means deadlines loom for IEEPA tariffs paid last year. Speak to your customs broker about the actions they are taking; some brokerages are filing protest claims for all their clients’ IEEPA shipments, going all the way back to February of last year. The protest statute is the most readily-available means of notifying CBP of a claim, and protest filings could become an element of the eligibility rules for IEEPA refunds or for class actions.
   
   
2. Consider getting representation in obtaining a refund. You might get a call or an email from a law firm or agency in the coming days or weeks offering to represent your company through whatever refund process is eventually established, in exchange for a percentage of recovered funds. Numerous such firms are currently looking for importers to represent, and are using trade data to assess potential clients. Be sure to research any potential firm before agreeing to representation.
   
   
3. Stay informed. Service providers in the global trade sector are offering lots of free resources for clients and the public to keep abreast of the latest developments, and ImportGenius is one of them. Register for our upcoming Global Trade Outlook webinar on Thursday, February 26, where our experts will discuss the latest fallout from the Supreme Court decision.

The end of IEEPA, but not the end of tariffs

Within hours of the Supreme Court’s decision, Washington announced that it would levy a tariff of 10% under section 122 of the Trade Act. President Trump later said the tariff would be set at 15%, the maximum allowable under the legislation. 

The section 122 tariffs, which apply to all countries around the world, have already created uncertainties of their own. Among other developments, the European Union has paused its implementation of a recent trade deal with the U.S., arguing that they will result in higher tariffs than those specified in the agreement. 

These section 122 tariffs expire after five months. They can be extended with the approval of Congress, but that approval is not assured, given current divisions over the issue. But Washington has said it can use other enabling legislation to achieve its tariff objectives. 

“The Supreme Court’s decision may have put an end to IEEPA tariffs, but it has not put an end to high-tariff policies or to international tariff disputes,” says Kanko. “Businesses will need to continue managing the uncertainty that tariffs have caused.”

[CT1]