Supreme Court Strikes Down IEEPA Tariffs: Billions in Refunds Up for Grabs

The law is the International Emergency Economic Powers Act, IEEPA for short, and it dates from 1977. It allows the President, in a national emergency, to freeze foreign assets, prohibit transactions and regulate economic dealings with certain countries.

For decades it was the go-to tool for sanctions. What it never was: a basis for tariffs. No president had ever used it that way.

That is exactly what the Court had to decide. And it ruled that this law does not support tariffs.

Because Europe talks a lot about this and knows little, here are the mechanics in five sentences.

Duty is owed by the importer, not the foreign seller. If a German machinery maker ships to Ohio and the American customer acts as importer, the customer pays. If the maker ships through its own US subsidiary, the subsidiary pays.

Duty is calculated on the customs value, usually the transaction value of the goods, not the final retail price. The rate depends on the tariff classification and the country of origin.

Origin is not where the goods ship from. Goods packed and shipped in Europe can, for customs purposes, originate in a third country if the substantial processing took place there.

And the rates stack. One product can fall under a general rate, a product-specific rate and a country-specific measure all at once. If you only look at one number, you underestimate your burden.

The ruling hits the tariffs based on this law. From everything the decision and its analysis show, that covers both the general tariffs introduced in spring 2025 and the tariffs justified by trafficking in certain substances and by migration issues.

Tariffs based on other laws are not affected, and there are quite a few. The tariffs on steel, aluminum and copper have their own legal basis, as do those on vehicles, semiconductors, pharmaceuticals and other product groups introduced over the past year.

So if you expected this ruling to end American tariff policy, you overestimated it. What ends is one particular way of making it.

This is the part that limits the ruling's reach in practice. On February 20, 2026, two more documents were signed.

The first ends certain tariff measures, in other words, enforcement of what the Court had just struck down.

The second imposes a temporary import surcharge, justified by fundamental problems in international payments. That is a different legal basis, a different tool, and one used very rarely in history.

For you as an importer, this means the legal basis has changed, but not necessarily the cost. Anyone hoping to import on the old terms from February 21 was disappointed that same evening.

Every customs department in America is wrestling with this right now, and the honest answer is: maybe, partly, and not automatically.

If a duty was collected without a valid legal basis, there is in principle a right to a refund. In practice, everything comes down to procedure. Who protested in time? Are the entries still open or already closed? Which deadlines apply to which entry?

US customs law keeps an import entry open for months before it is closed (liquidated). While it is open, corrections can be made. After that, it gets difficult.

Hence the most important practical advice in this article: if your company imported goods into the United States last year, have someone check which of your entries are still open. This is time-critical, and it is not something to leave until summer.

The real substance of the decision is constitutional, not trade policy. Under the US Constitution, the power to levy taxes and duties belongs to Congress. A tariff is a duty.

If a president wants to impose tariffs, he needs authorization from Congress. Those authorizations exist, but they come with procedures: investigations, deadlines, hearings, findings.

So the Court did not say there can be no tariffs. It said they must go through the proper channels. For European businesses that is good news, because procedures are predictable and emergency orders are not.

First: tariff risk is contract risk. If you ship to the United States, your contracts should state who bears tariffs, what happens when they change, and at what level of cost an adjustment can be demanded. Contracts without such clauses caused serious losses last year.

Second: import value can be structured, within the law. How a product is classified, where it originates and what value duty is based on are questions with plenty of room and plenty of risk. Take them seriously and you save legally. Ignore them and you overpay or end up audited.

Third: a US company changes your position. As importer of record you have different duties and different rights than a foreign seller. For many European manufacturers, their own US sales company is not just a tax matter but a customs matter too.

For European observers, one detail of this ruling is more remarkable than the outcome: who made it.

The six-to-three majority cut right across the usual lines. Justices appointed by presidents of both parties stood on the same side, on a question that went straight to the power of the sitting President.

This is the part of the American system Europeans tend to miss when they read the headlines. This country has an independent judiciary that rules against the sitting President when it sees fit, and its rulings are obeyed.

If you are thinking about building a business and holding assets here, that is exactly the information that matters. Not whether the politics are pleasant right now, but whether there are working limits. There are.

Your open entries. Which are not yet finally closed, and which already are? Only open ones can be corrected without much trouble.

Your tariff classifications. A great many European manufacturers use classifications someone picked once and nobody has checked since. In a year when rates change repeatedly, a wrong classification can be costly, or refundable.

Your contracts with American buyers. Who bears the tariffs, what applies when they change, and what happens with a refund? That last point is new and will spark debate in the coming months: if the importer gets a refund but the buyer bore the tariffs economically, whose money is it?

Sort out these three points and you will get through this year, whatever tool is chosen next.

In a year like this, any pricing that assumes a fixed tariff rate carries an open position. If you promise American customers prices for twelve months, you take on a risk you do not control.

There are three workable answers. Agree prices excluding duty and show it separately. Agree an adjustment clause above a set threshold. Or shorten price commitments to one quarter.

All three are awkward for sales, and far less painful than a margin wiped out by a signature in Washington.

One point gets lost in this debate, and it hits many small sellers harder than any tariff rate: the de minimis exemption for low-value shipments.

For years, shipments below a certain value could enter the United States duty-free with minimal paperwork. A large share of cross-border e-commerce relied on this rule, in both directions.

Over the past year this exemption has been suspended, for postal shipments as well as every other mode of transport. Every single parcel now becomes a customs entry with a declaration, classification and duty.

For a European seller shipping single items to American consumers, this changes the math more fundamentally than any percentage. The cost per shipment is the same regardless of value, and it hits small orders hardest.

If that is your model, check whether a US company with its own warehouse is the better route. Bulk importing instead of single shipments changes the numbers completely. Start with E-commerce and dropshipping.

The temporary import surcharge is, as the name says, temporary. What comes next depends on which tools the administration chooses and how quickly the required procedures run their course.

Realistically, expect a year with several changes of course. For businesses that need to plan, that is the most uncomfortable situation of all: not high tariffs, but uncertain ones.

If you have to deal with this, work in scenarios rather than forecasts. What happens at zero, at ten and at twenty-five percent? If your answer holds up in all three cases, you can keep going, whatever the next document looks like.

If you want your US import and distribution structure reviewed, talk to Mount Bonnell Advisors in Austin, Texas. Retailers can start with E-commerce taxation, and for entering the market, see Entering the US market.

Consultation & implementation

If you'd like to find out what this means for your own situation, the best step is to book a consultation.