President Trump Imposes New Temporary Global Tariff After U.S. Supreme Court Invalidates Emergency Authority

On Friday, February 20, 2026, the U.S. Supreme Court dealt a significant blow to President Trump's trade agenda, ruling in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act of 1977 (IEEPA) does not authorize the imposition of tariffs. Aside from depriving the President of this tariff power in the future, the ruling gives importers the substantive basis to claim refunds of hundreds of billions of dollars in duties paid over the past year under tariffs that the President imposed pursuant to IEEPA. In response, the President immediately shifted to Section 122 of the Trade Act of 1974, imposing a new temporary worldwide tariff of at least 10% to replace the IEEPA tariffs now found unlawful. Read below to learn what the Court said, what to expect from the Administration next, and what to do now to prepare to claim refunds and to maintain compliance.

The Supreme Court Decision

Learning Resources and its companion case V.O.S. Selections, Inc. v. Trump addressed the breadth of IEEPA, 50 U.S.C. § 1702, which allows the President to "regulate … importation" to deal with certain national emergencies declared by the President, and under which President Trump issued sweeping tariffs that began in February 2025. As we have advised, several states and small businesses challenged President Trump's so-called "trafficking" tariffs on goods from Canada, Mexico, and China and "reciprocal" tariffs on goods from nearly every country, all imposed under IEEPA, which the U.S. Court of Appeals for the Federal Circuit in V.O.S. Selections and the U.S. District Court for the District of Columbia in Learning Resources below found unauthorized by the statute. In a strikingly broad and relatively straightforward 6-to-3 majority opinion by Chief Justice John Roberts, the Court held not only that the trafficking and reciprocal tariffs were unlawful, but that "IEEPA does not authorize the President to impose tariffs" at all.

The majority opinion began with the constitutional principle that taxation, which includes tariffs, is within the power of Congress alone, and then looked to the language of IEEPA to search for congressional delegation to the President of the power "to impose tariffs of unlimited amount and duration, on any product from any country." It noted the absence in the statute of "any mention of tariffs or duties" among the many specific powers that IEEPA confers, explaining that "had Congress intended to convey the distinct and extraordinary power to impose tariffs, it would have done so expressly—as it consistently has in other tariff statutes." "The power to 'regulate … importation' does not fill that void," said the majority, because the power to regulate does not necessarily include the power to tax. "None of IEEPA's authorities includes the distinct and extraordinary power to raise revenue. And the fact that no President has ever found such power in IEEPA is strong evidence that it does not exist."

Based on this plain reading of the statute, the majority of the Court affirmed the Federal Circuit's judgment, which had returned V.O.S. Selections to the U.S. Court of International Trade (CIT) to consider relief. Holding that the CIT has exclusive jurisdiction over the matter, the Court also vacated and remanded Learning Resources with instructions to dismiss. Separately, Justices Roberts, Gorsuch, and Barrett invoked the major questions doctrine to reach this conclusion, whereas Justices Kagan, Sotomayor, and Jackson saw no need to do so. Justice Gorsuch's 46-page concurrence wrote that "the deliberative nature of the legislative process"—which the administration bypassed through claimed executive power—"was the whole point of its design," and that, in language sure to be heralded, "if history is any guide, the tables will turn and the day will come when those disappointed by today's result will appreciate the legislative process for the bulwark of liberty it is." Justices Thomas, Alito, and Kavanaugh dissented, Justice Kavanaugh's 63-page opinion concluding that the tariffs "may or may not be wise policy," but were nonetheless lawful.

The Administration's Response

The Administration reacted quickly both to comply with the Court ruling and to pivot to alternative tariff statutes—a consequence that we previously forecasted. That evening, the President issued an executive order declaring all previously imposed IEEPA-based tariffs ineffective immediately, and ordering U.S. Customs and Border Protection (CBP) to cease collection of IEEPA duties "as soon as practicable." Last night, CBP announced that IEEPA duty collection would cease at midnight tomorrow, February 24.

At the same time, however, the President issued a proclamation imposing a worldwide 10% "temporary import surcharge"—i.e., tariff—under Section 122, 19 U.S.C. § 2132, also effective tomorrow, February 24, with an in-transit exemption through February 28. Exempt from the Section 122 tariff are:

• goods or their content subject to a tariff under Section 232 of the Trade Expansion Act of 1962;
• goods that qualify for preferential treatment under the United States–Mexico–Canada Agreement (USMCA);
• certain textile or apparel goods that qualify for preferential treatment under the Dominican Republic–Central America–United States Free Trade Agreement (CAFTA-DR);
• certain critical minerals, energy products, natural resources and fertilizers, agricultural products, pharmaceuticals, electronics, vehicles and parts, and aerospace products mirroring the IEEPA tariff exemptions; and
• informational materials and donations.

As before, products ineligible for "domestic status" admission to a foreign trade zone (FTZ) must be admitted under "privileged foreign status," and there is no indication that these duties are ineligible for drawback. The following day, President Trump threatened to increase the Section 122 rate to the statutory maximum of 15%, but no proclamation has been issued as of this writing.

As we have explained, Section 122, which has never before been invoked, authorizes the President to impose a tariff for up to 150 days to address a "balance-of-payments" crisis, but new questions ripe for litigation surround whether the trade deficits the President cites to support this tariff meet that standard. The Administration further suggested that, rather than work with Congress to extend this effective period, ending July 24, 2026, it will use the time to prepare further actions under Section 232, 19 U.S.C. § 1862, and Section 301 of the Trade Act of 1974, id. § 2411. President Trump has exercised these powers frequently while in office but, unlike Section 122, they require precedent months-long investigations by the Department of Commerce or U.S. Trade Representative, respectively.

Relief and Next Steps for Importers

Although the Supreme Court did not address the question of prospective relief, the President's recission of the IEEPA tariffs moots the need for the CIT to consider whether and to what extent to issue an injunction. The question of retrospective relief, i.e., refunds of IEEPA duties paid, also went unaddressed and will lie with the CIT. We have advised, the Government has conceded, and the CIT has recognized, that a ruling against the Administration would open up the potential for hundreds of billions of dollars in refunds of any IEEPA duties to the importers of record that paid them. The question now is how to preserve the right to obtain those refunds in the face of the President's statement that "it has to get litigated for the next two years."

As with most cases challenging government action, a party generally is required to exhaust administrative remedies before going to court to seek relief. In the context of recovering duty overpayments, administrative relief would be in the form of a protest filed with CBP to challenge the agency's decision to assess duties, and a court action seeking CIT review under 28 U.S.C. § 1581(a) would be available if a protest is denied. However, as we have explained, in AGS Co. Automotive Solutions v. CBP, one of the nearly 2,000 protective duty refund cases filed in the CIT under § 1581(i) pending the Supreme Court decision, the Court wrote in December that until the Supreme Court ruled, protest remedies were unavailable to claimants because CBP lacked the discretion to decide not to assess duties under the IEEPA tariffs imposed by executive order.

Now that the Court has ruled, the CIT's AGS opinion no longer applies. Until the CIT provides further guidance, or Congress establishes an alternative refund process, importers seeking refunds have two options. An importer may file a protest within 180 days of "liquidation," as explained in our earlier advisory, asserting that CBP assessed duties improperly under an unlawfully imposed tariff. However, the Government may argue that because CBP lacked discretion at the time of assessment, the protest remedy is still unavailable. If that view were to prevail, a direct court case would be the only effective method to claim refunds. A CIT case must be filed within two years of payment of the duties, which at the earliest for the IEEPA tariffs will be February 4, 2027.

An importer is not prevented from filing both one or more protests and a court case while the issue of which avenue for seeking refunds is appropriate is sorted out. At the moment, a company that has already filed a protective case may await CIT guidance; pending cases have all been stayed. For companies that have not filed a protective case, they should check the liquidation dates on each entry on which IEEPA duties have been paid through CBP's Automated Commercial Environment (ACE) portal to ensure that the 180-day deadline is not near, and to prepare protests for those approaching that date. As far as filing a case, importers should consider that, although the deadline to file a CIT case may be nearly a year away, filing earlier may result in quicker refunds if the protest route is ruled improper.

We also note again that only an importer of record that has actually paid IEEPA duties will, under current law, be eligible for payments. That might not sit well with retailers and consumers who purchased imported goods subject to IEEPA tariffs from third-party importers of record and who the Federal Reserve Bank of New York recently concluded have borne the brunt of the tariffs' impact. While the average consumer may be out of luck in recouping any increased costs of goods, we encourage parties in contractual relationships with importers of record to consult counsel to determine whether any private remedies exist in the event that those importers recover duties paid. The same may be taken into consideration by foreign manufacturers who assumed the tariff costs upstream.

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DWT's experienced International Trade, Investment & National Security team is closely monitoring developments from the CIT, the White House, CBP, and Congress and stands ready to guide companies seeking refunds of IEEPA duties or looking to effectively navigate the new tariffs to come. Please contact the authors if you have any questions or need assistance.