US | Webinar: IEEPA litigation: understanding legal compliance and customs brokerage basics

Tariff Refunds and Compliance Crunch

The U.S. Supreme Court decision on February 20, 2026, declared that the International Emergency Economic Powers Act (IEEPA) cannot be used to impose tariffs, overturning tariffs President Trump levied starting in February 2025 on grounds including drug trafficking from Mexico and Canada, opioid flows from China, and reciprocal measures against trade deficits.

These tariffs generated massive revenue—estimates place collected duties at around $129-175 billion across millions of entries—but the Court's reasoning rested on constitutional fundamentals: tariffs are taxes, Congress holds the power under Article I, and IEEPA's language allowing the president to 'regulate importation' during emergencies stops short of delegating taxing authority.

The immediate fallout hit importers hard. U.S. Customs and Border Protection halted collection of IEEPA tariffs effective February 24, 2026, following an executive order terminating the relevant orders. Yet refunds are far from automatic. Importers must proactively file protests within 180 days of entry liquidation to preserve refund claims, or pursue reliquidation via post-summary corrections for unliquidated entries, with jurisdiction often landing in the Court of International Trade.

Customs brokers, already stretched, now confront a surge in refund requests, documentation demands, and compliance reviews. Missed deadlines mean lost recovery rights, turning what could be windfall repayments into sunk costs. The administration's rapid replacement with a 15% global tariff under Section 122 of the Trade Act of 1974—combined with ongoing Section 301 and 232 measures—ensures duties remain elevated, but under frameworks with more procedural constraints.

Tensions emerge between speed of executive action and congressional prerogative: the ruling reins in emergency powers but invites litigation over refund mechanics and alternative tariff validity. Importers gain leverage in negotiations with suppliers over cost allocation, yet face uncertainty if prolonged court battles delay repayments or if the government resists on a massive scale.