In a 6-3 ruling issued on February 20, 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose tariffs, such that all tariffs imposed under IEEPA since February 2025 (i.e., the Mexico, China, and Canada IEEPA Fentanyl/Immigration Tariffs; Brazil IEEPA Tariff; India IEEPA Tariff; and IEEPA Reciprocal Tariffs) (collectively, IEEPA Tariffs) are unlawful. 

In this alert, we answer the most pressing questions facing importers, including those surrounding refund processes, the imposition of a new Section 122 Tariff, and more. 

Why did the Supreme Court find the IEEPA Tariffs to be unlawful? 

According to the majority opinion, the IEEPA Tariffs are unlawful because the statutory text of IEEPA does not authorize the president to impose tariffs to address a national emergency. In short, the terms "regulate... importation" in the statute do not provide clear congressional authorization for imposing tariffs. The majority held that the ordinary meaning of the term "regulate" does not include the power to tax, or in this case, impose tariffs. 

Can importers stop paying IEEPA Tariffs now?

Yes. The IEEPA Tariff codes in the Harmonized Tariff Schedule of the United States (HTSUS) are no longer in effect as of 12:00 a.m. EST on February 24, 2026. 

How can importers pursue refunds of IEEPA Tariffs paid? 

The Supreme Court decision did not address refunds. As such, it is not entirely clear how the refund process will unfold. Here are three possible categories of refund mechanisms to consider. 

• Customs and Border Protection (CBP) uses an existing administrative process to issue refunds. CBP could instruct importers to request IEEPA Tariff refunds through existing mechanisms. For unliquidated entries, these refunds could be requested via the Post Summary Correction (PSC) process. For liquidated entries, CBP could use the protest process (although we believe this outcome is unlikely, given that the issue is likely "non-protestable" and the Supreme Court agreed that the issue falls within the Court of International Trade's (CIT) exclusive jurisdiction under 28 U.S.C. § 1581(i)). Additionally, CBP recently established a new electronic refund process through the Automated Clearing House (ACH), which may be used to process IEEPA Tariff refunds.  
• CBP creates a new administrative refund process for importers. CBP may establish a new IEEPA-specific claims process following the Supreme Court's decision in order to facilitate the processing of refund requests. CBP used this approach to establish a refund process following litigation related to the Harbor Maintenance Tax in the 1990s. While still hypothetical, the documentation for such a program would likely require a detailed assessment of all IEEPA Tariffs paid by an importer, accompanied by the submission of CBP Form 7501 (Entry Summary) and other supporting documentation delineating refund amounts requested. 
• The issue is addressed through further litigation. If the administration does not act independently to establish a refund process, the issue will very likely be litigated, starting with V.O.S. Selections, Inc. v. United States, No. 1:25-00066 (Ct. Int'l Trade 2025). On February 24, 2026, the plaintiffs in V.O.S. Selections filed a Motion for Permanent Injunctive Relief, which asks the CIT to direct the government to "promptly refund all tariffs paid, with interest, under IEEPA," among other things.
   
  Currently, there is uncertainty surrounding whether the CIT will find it has the authority to issue relief nationwide or whether it can only issue relief to plaintiffs that have filed suit. If the latter, importers have two years from the initial implementation of the IEEPA tariffs (until February 2027) to file an action under 28 U.S.C. § 1581(i), so there is plenty of time for an importer to file an action at a later date if it becomes clearer that individual litigation will be required. 
   
  The government has represented to the CIT that its stipulation regarding the availability of reliquidation (and therefore refunds) will apply to "all current and future similarly situated plaintiffs." In other words, the government has indicated that future plaintiffs should also have the availability to recover refunds and it is very likely that the CIT would find that prior position applies to all future plaintiffs.
   
  At the moment, all IEEPA refund cases in the CIT are subject to the CIT's blanket stay of such cases, except for the V.O.S. Selections case heard by the Supreme Court. It is unclear whether the CIT will lift that stay in the near-term or leave it in place until the V.O.S. Selections case is litigated to conclusion.

As of February 25, 2026, no refund process has been established by CBP or the CIT. 

What was the administration's immediate response?

On February 20, 2026 President Trump published a presidential proclamation to implement a new global 10 percent tariff under Section 122 of the Trade Act of 1974 (Section 122 Tariff). The Section 122 Tariff applies to all imports from all nations, effective 12:01 a.m. EST on February 24, 2026, until July 24, 2026.

On February 21, 2026, Trump announced via Truth Social that he will increase the global Section 122 Tariff to 15 percent, but no new presidential proclamation has been published reflecting this rate increase, and the most recent Cargo Systems Messaging Service (CSMS) guidance indicates that the rate remains at 10 percent. 

Section 122 authorizes the president to enact a "temporary import surcharge" (i.e., a tariff) whenever "fundamental international payments problems require special import measures to restrict imports... to deal with large and serious United States balance-of-payments deficits." According to the proclamation, the U.S. currently faces such a deficit. 

Are there limits to the president's ability to impose tariffs under Section 122? 

Under the statute, the president is subject to only two limitations: (1) a maximum rate of 15 percent and (2) the tariff is only authorized for 150 days, unless extended by Congress.

There is an open question regarding how long the president may keep the Section 122 Tariff in place. As noted, the statute limits such actions to 150 days unless Congress authorizes an extension. It is unclear, however, whether the president will attempt to re-impose a new Section 122 Tariff on day 151, asserting that the same statutory conditions exist and starting a new 150-day period. We believe such a move would be against the text and spirit of the law and would quickly be subject to legal challenges. 

Are there any exemptions to the new Section 122 Tariff?

Yes, there are several exemptions to the Section 122 Tariff, which broadly mirror IEEPA Tariff exemptions. Key exemptions are:

• Products that were loaded and in transit on the final vessel before 12:01 a.m. EST on February 24, 2026, and are entered before 12:01 a.m. EST on February 28, 2026, are exempt (referred to as the "on-the-water exemption").
• Certain HTSUS codes are exempt from the Section 122 Tariff. The exemptions are largely the same as IEEPA Reciprocal Tariff exemptions, but there are a few additions and removals. For example, certain codes under Chapter 49 (covering "books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans") and subheading 4820.20.00 (covering exercise books) have been removed from the list of exemptions. Conversely, certain codes under heading 8524 (covering "flat panel display modules, whether or not incorporating touch-sensitive screens") have been added to the list of exemptions.
• Products subject to Section 232 tariffs (e.g., steel, aluminum, automotive, etc.) are exempt.
• United States-Mexico-Canada Agreement (USMCA)-qualifying products are exempt.
• Certain products eligible for preferential treatment under Chapter 98 are exempt.

How does the Section 122 Tariff stack with existing tariffs? 

As noted above, similar to the IEEPA Tariffs framework, the Section 122 Tariff will not apply to products that are already subject to Section 232 Tariffs (e.g., Section 232 Tariffs on autos and auto parts or on lumber). 

However, for products where only a portion of the product is subject to a Section 232 Tariff, the Section 122 Tariff will still apply to the other portion of the product. This is consistent with the IEEPA Reciprocal Tariffs. In other words, for those products, only the value of the non-steel/aluminum/copper content of an imported article will be subject to the new Section 122 Tariff. For example, for an article comprised of both steel and non-steel components, and subject to the Section 232 Steel Tariff, the importer would pay the Section 232 Tariff on the value of the steel content and the Section 122 Tariff on the value of the non-steel content of the article. 

Can importers challenge the new Section 122 Tariff?

Currently, we believe the prospects of successfully challenging the Section 122 Tariff are low. 

As noted above, the president may invoke Section 122 to impose tariffs when a "large and serious" balance of payments deficit exists. Members of the trade community have questioned whether Section 122 was truly intended to address a "trade deficit" of the kind that the president has referenced. An importer seeking to challenge such the Section 122 Tariff on that basis could file suit at the CIT. 

However, the terms "large and serious" are subjective, which may give the administration some flexibility in imposing this tariff. Moreover, in holding that the IEEPA Tariffs were unlawful, the CIT indicated that Section 122 could be an appropriate mechanism for addressing the administration's deficit-related concerns. See V.O.S. Selections, Inc. v. United States, 772 F. Supp. 3d 1350, 1374–75 (Ct. Int'l Trade 2025) ("Trade deficits are one of the key balance-of-payment deficits and can be directly impacted by mechanisms such as import quotas and tariffs, as authorized by Section 122. As a result, tariffs responding to a trade deficit fit under Section 122 because they 'deal with [a] large and serious United States balance-of-payments deficit[]'" (internal citations omitted)). 

A related ambiguity is whether Section 122 permits the president to apply different tariff rates to different countries. A reasonable reading of the statute indicates that any tariff imposed under Section 122 must be uniform across all countries. See 19 U.S.C. § 2132 ("Import restricting actions... shall be applied consistently with the principle of nondiscriminatory treatment... [i]mport restricting actions... shall be of broad and uniform application...." (emphasis added)). However, the president could plausibly argue that country-specific tariffs are not outright forbidden by the statute and may be necessary to remediate the balance of payment crisis. The statute also provides an avenue to exclude certain products, which the president has already used to exempt specific products. 

The administration has not indicated whether it plans to pursue such differentiated rates, though it remains possible. For variable, country-specific tariffs, the administration may instead rely on Section 301.

What other authorities can the administration use to impose tariffs moving forward? 

• Section 301 of the Trade Act of 1974 allows the president to investigate and respond to foreign trade practices that are unfair or harmful to U.S. commerce. Before taking any action (which may include imposing tariffs), the U.S. Trade Representative (USTR) must conduct an investigation, which can last up to a year but can be shorter if "expeditious action is required." These investigations usually focus on a specific country accused of unfair behavior. If the USTR finds the claims valid, it must first consult with that country. Moreover, the USTR must conduct public hearings and review comments before implementing any tariff under Section 301. 
   
  During a press conference on February 20, 2026, Trump indicated that he would initiate "several" new Section 301 investigations in response to the Supreme Court's decision. In a subsequent statement, USTR Jamieson Greer asserted that his office plans to launch investigations into a wide range of unfair trade practices. Notably, Greer stated that these investigations will involve "most major trading partners." The administration could launch one trade deficits investigation that targets multiple countries, as was the case with the investigation on digital services taxes (DSTs), which investigated one allegedly unfair practice involving several countries. 
   
  Although Section 301 procedurally requires steps that can slow the process, such as consultations with foreign governments and opportunities for public comment and hearing, the administration still has room to move quickly. If the government chooses to prioritize speed, it can advance these investigations on an accelerated timeline despite the statutory requirements.
   
  The U.S. will also continue existing Section 301 investigations involving countries such as Brazil and China, which could result in new tariffs on products of those nations.
• Section 338 of the Tariff Act of 1930 authorizes the president to impose tariffs of up to 50 percent on imports from countries that "discriminate" against U.S. commerce as compared to other nations. This authority has never been used to impose tariffs and would require the president to show that a country was specifically discriminating against the U.S. 
   
  Under the administration's theory of the case, countries have been "discriminating" against the U.S. by imposing tariffs and other trade restrictions on U.S. commerce. The statute thus appears to be a good fit for the president's tariff authority now that the IEEPA Tariffs have been declared illegal. 
   
  However, the fact that the administration chose to use Section 122 (which can be imposed for a maximum of 150 days and has a maximum rate of 15 percent), as opposed to using Section 338 (which has no deadline and a maximum rate of 50 percent) may indicate that the White House does not feel as confident about relying on the Tariff Act of 1930. 
   
  Currently, there is a question as to whether the president may invoke Section 338 without a prior agency finding of discrimination. The statute requires that the International Trade Commission (ITC) "ascertain" and report such discrimination. However, the statute authorizes the president to enact tariffs "whenever he shall find as a fact" that discrimination has occurred. This language suggests that the president's authority is not conditioned on any procedural requirement that an investigation first occurs.
   
  We would not be surprised if the president relied on Section 338 to impose additional tariffs. 
• Section 232 of the Trade Expansion Act of 1962 authorizes the president to restrict imports determined to pose a threat to national security following an investigation by the Department of Commerce. These tariffs are typically imposed on a sectoral or product-specific basis (e.g., steel, aluminum, auto parts) and as such would not apply broadly to all products originating from a certain country, as was the case with IEEPA Tariffs. Prior to enacting such tariffs, the administration needs to start an investigation, which can take up to 270 days.
• Section 201 of the Trade Act of 1974 authorizes the president to increase tariffs when imported products cause, or threaten to cause, serious harm to U.S. industries that produce similar or directly competing products. Prior to the enactment such tariffs, affected parties must file a petition with the ITC and demonstrate that they are suffering serious injury, and the ITC must conduct an investigation. A wide range of remedies is available, but any relief can last only up to four years, with the possibility of a one‑time extension for an additional four years.

Is it possible that new tariffs will be applied retroactively (e.g., to products that will receive refunds from the IEEPA Tariffs)? 

No. The Supreme Court has explained that statutes, rules, and regulations cannot be applied retroactively, unless clearly authorized by Congress (and, in the case of a rule or regulation, the agency). Sections 232, 301, 122, and 338 do not include clear authorization for the administration to impose tariffs retroactively. Moreover, imposing tariffs retroactively would not be consistent with the statutory framework established by Congress.

Sections 301 and 232 require that the administration first initiate an investigation, provide stakeholders with notice and an opportunity to comment, and then decide the appropriate retaliatory measure. The language used is always prospective, and therefore, the statute only authorizes the president to impose tariffs following consideration of the comments he received from stakeholders. It would be contradictory for the statute to require comments from stakeholders on ongoing threats/burdens on U.S. trade, while at the same time authorizing retaliatory and retrospective action that targets imports that entered the country before the initiation of the investigation.

Section 338 explicitly states that the president's new tariffs will apply to those products that enter into the country 30 days after the date that he issues the proclamation establishing the new tariffs.

Although Section 122 does not include similar language, an attempt to retroactively apply tariffs under Section 122 (as well as Sections 232, 301, or 338) would likely face immediate scrutiny and result in legal challenges before the CIT. We believe the CIT would likely issue an injunction that would prevent the administration from collecting such tariffs.

How does this decision impact existing trade agreements? 

As currently written, the proclamation does not contain an exception for the trade deals signed by the president, and the prior IEEPA-based HTSUS codes that implemented country-specific rates or exemptions under those trade deals have been terminated. As a result, importers may have to pay more than the maximum rate established under those deals. 

For example, the maximum tariff rate under the EU-U.S. deal is 15 percent. This includes the Most Favored Nation (MFN) duty, plus the IEEPA Reciprocal Tariff. Therefore, under the deal, importers would not have pay more than 15 percent in tariffs, except when the MFN rate was already more than 15 percent, in which case the importer would pay only the higher rate and no IEEPA Tariffs. Moreover, certain EU-originating products were exempted from paying the IEEPA Tariff (an exception that went beyond the general list of HTSUS codes that were already exempted). Conversely, under the Section 122 proclamation, "all products of any country" must pay a 10 percent tariff in addition to the MFN rate. Therefore, a product with a 12-percent MFN duty rate will now have to pay a total of 22 percent in duties and tariffs (as opposed to 15 percent), even if that product previously complied with the terms of the EU-U.S. deal. The EU has already announced that it is pausing work on the implementation of the EU-U.S. trade deal as a result of the Section 122 announcement.

Additionally, it is currently unclear whether the president has the authority under Section 122 to implement product-specific exemptions to the Section 122 Tariff, as was the case with IEEPA. If he finds he has such authority, imposing differentiated rates under Section 122 could be used to continue implementation of the existing trade deals. At the same time, in a Truth Social post on February 23, 2026, the president warned that "[a]ny Country that wants to 'play games' with the ridiculous supreme court decision, especially those that have 'Ripped Off' the U.S.A. for years, and even decades, will be met with a much higher Tariff, and worse, than that which they just recently agreed to."

In short, as it stands now, the Section 122 Tariff does not account for existing trade agreements and those country-specific HTSUS provisions are gone.

What should importers do now to secure a refund of IEEPA Tariffs paid?

There is still significant uncertainty regarding the most likely and most viable path to secure refunds and the approach for each company may be unique to the company's needs and the financial impact of unreimbursed IEEPA Tariffs. Here are high-level considerations of the advantages and disadvantages of several different approaches.

Submit Post-Summary Corrections (PSCs)

• What to Know: A PSC is an administrative process to correct information submitted on an entry before the entry liquidates. Importers are required to file PSCs within 300 days of the date of entry and at least 15 days before the scheduled liquidation date.
• Advantages: The PSC process is an existing process for importers to secure refunds on unliquidated entries, so it would be a more streamlined approach – if CBP permits this option.
• Disadvantages: Currently, CBP is automatically rejecting PSCs filed to remove IEEPA Tariffs, so this approach is unlikely to be successful in the near term. Additionally, the PSC process only covers entries that are unliquidated and would not provide relief for liquidated entries.

File Protests

• What to Know: A protest is an administrative process to challenge a decision by CBP. In this context, importers could challenge the liquidation of entries that collected IEEPA Tariffs. Protests must be filed within 180 days of the date of liquidation.
• Advantages: The protest process is an existing process for importers to secure refunds on liquidated entries, so it would be a more streamlined approach – if CBP permits this option.
• Disadvantages: It is likely that the collection of IEEPA Tariffs will be considered a "non-protestable" issue and protests will be denied or rejected on that basis. Protests can only be made regarding a "decision of the Customs Service." Since CBP was merely administering the IEEPA Tariffs, collection of duties imposed by the executive is likely not considered a "decision of the Customs Service." While there is no harm in filing a protest, companies may not want to expend the resources given the low chance of success. Additionally, the protest process only covers entries that have already liquidated and would not provide relief for unliquidated entries.

File Lawsuit at the CIT

• What to Know: Nearly 2,000 individual importers have filed lawsuits before the CIT to challenge the lawfulness of the IEEPA Tariffs and potentially secure refunds on liquidated and unliquidated entries through that mechanism. Importers have two years from the accrual of the cause of action (until February 2027) to file this type of action.
• Advantages: As noted above, it is not clear whether individual lawsuits will be required or whether the V.O.S. Selections litigation will resolve the refund issue for all importers. If it is ultimately determined that importers must file individual lawsuits in order to obtain refunds on liquidated and unliquidated entries, filing a lawsuit would secure this refund opportunity.
• Disadvantages: There is still a lot of uncertainty around the refund issue and the necessity of individual litigation, so filing a lawsuit now may end up being moot. Additionally, all IEEPA cases before the CIT are currently stayed automatically upon filing. It is unclear whether the CIT will lift the stay soon or wait for the refund issue to be resolved. Therefore, there may be no movement in the case for some time after filing. Lastly, some companies are concerned about potential retaliation from the administration, though that concern is somewhat mitigated by the large volume of importers that have already filed.

Based on the above considerations, we do not believe it is necessary for importers to take immediate action (be it filing PSCs, protests, or CIT complaints) because there is still significant uncertainty regarding the path toward refunds. There is a strong possibility that an entirely new IEEPA-specific refunds process will be established. Companies may want to wait and monitor the situation to see which option or options are most viable before proceeding. With that said, we understand that some importers are not inclined to wait and would prefer a belt-and-suspenders approach to cover all bases. There is no harm in pursuing any of the above options, even while we await further guidance from CBP or the CIT. 

Regardless of an importer's preferred approach, companies should start preparing for a potential claims process by gathering the import data necessary to calculate the amount of IEEPA Tariffs paid. Specifically, importers can catalog all IEEPA Tariffs paid separated by liquidated and unliquidated entries, noting the relevant HTSUS codes, amounts, and entry dates. This will position importers to file quickly once a refund process is established (whether it is through PSCs, protests, the CIT, or an IEEPA-specific claims process).

The tariff landscape is rapidly shifting. It is imperative for companies to review the tariff classification, country of origin, and value of their U.S. imports, and consider making supply chain adjustments, as appropriate, to limit tariff exposure. Our Customs & Import Trade team can help importers evaluate the various options and pursue next steps as the refund issue continues to unfold over the coming days, weeks, and months. Should you have any questions about these strategies or the content of the tariffs themselves, please contact: 

Richard A. Mojica, rmojica@milchev.com, 202-626-1571

Adam P. Feinberg, afeinberg@milchev.com, 202-626-6087

Brittany Huamani, bhuamani@milchev.com, 202-626-5911

Julia M. Herring, jherring@milchev.com, 202-626-1486

Igor Sampley dos Santos, isampleydossantos@milchev.com, 202-626-6077

or any attorney on our Customs team.

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