The Supreme Court ruling on tariffs in February was a bit of a shock, or at least one part of it was. The fact that they left the remedy wide open to a degree is surprising. This article will cover what we know at this point, but know that I wrote this a few days after the decision, and there are far more questions than answers.

The ruling essentially made International Emergency Economic Powers Act (IEEPA) tariffs illegal but not all tariffs or their application. The court said it was a misuse of this particular rule and that the debate was over two words: “restrict trade.” Is a tariff a tax or a tool used to restrict trade? Let’s focus on the impact. 

Any trade deal struck since April 1, 2026, would have new tariff agreements in place regardless of the SCOTUS ruling. These are new legal agreements (once signed) and they take the place of the IEEPA tariffs. Nineteen countries or geographic entities have formal trade agreements, including Argentina, Bangladesh, Cambodia, Taiwan, Ecuador, El Salvador, the European Union, Guatemala, India, Indonesia, Japan, Malaysia, North Macedonia, South Korea, Thailand, Switzerland, the United Kingdom and Vietnam. Some of these nations are minor trade partners, and the deals are related to security and geopolitical positions more than any economic effects. 

Others would technically still be under IEEPA tariffs and would be subject to a new tariff scheme. The two largest remaining are China and Brazil. Canada and Mexico are technically under IEEPA tariffs as well, but 90% or more of the products traded should be running under USMCA tariff exclusions. The signed formal trade deals have the power of treaty law and can’t be altered easily—it generally takes Congressional action. 

There are a few approaches the administration might use instead. The two primary replacement vehicles for the IEEPA gap are sections 122 and 232. Section 122 (Trade Act of 1974) includes up to a 15% surcharge and a balance-of-payments justification and can be deployed immediately with no lengthy investigation. It could be applied without a long Congressional review, but it is limited to 150 days. That may give the administration the time to get a legal trade deal in place. 

Section 232 (Trade Expansion Act of 1962) is used for national security justification, has no rate cap and is already used for steel and aluminum. The framework is well-established and frequently used. It is commodity-specific and not usually used against an entire country. 

A third option—Section 338—allows the president to impose tariffs of up to 50% for five months on any country found to be “discriminating” against U.S. commerce. This has never been used and has no investigation timeline requirement. It is triggered by presidential proclamation. 

A controversial fourth option has also emerged. It is Section 301 of the 1974 Trade Act, and it is being applied to almost every trading partner. It requires that nations prove they are not producing with forced labor, and it may include if they are importing from countries that do. There is a lot of paperwork involved and plenty of legal fights are expected.

Another problem is that SCOTUS threw the processing of refunds back down to the Court of International Trade (CIT). More than 1,000 companies have already prefiled a motion to recover tariffs paid in the first part of 2026. (I recommended this months ago when the case went to SCOTUS.) This could, and probably will, amount to nearly $400 billion in refunds granted to companies in China and elsewhere. The U.S. consumer has already paid the tariff hit, as these importers generally hiked their prices to cover the cost of the import tax. The consumer will get no refund, and refunds to the importer will be paid by the U.S. taxpayer.

The process has not yet been released by the court. But CIT will specifically handle the process of determining how to file, who is eligible and the timing of refunds. A similar process took more than two years to get actual refunds processed. Don’t expect this to be quick. 

According to legal precedence, consumers will have no claim to recover their tariff payments. The legal system has historically allowed a company down the supply chain to try and recover some tariffs, but the key is how the contract’s details were specified. A tariff pass-through clause should have been written into the supply agreement. Any federal refunds will go directly to the importer of record, period. From there, anyone else down the supply chain must go to the importer of record to try and recover any tariffs paid under IEEPA. It comes down to the agreement.

If a contract said, “price adjusts for tariffs imposed,” the refund likely stays with the importer. If a contract said, “buyer reimbursed seller for tariff costs,” the buyer has a contractual claim back to the importer for their share. If no clause exists, it becomes a negotiation and litigation question about whether the original tariff surcharge was a “temporary compliance adjustment” or a “permanent repricing.” If A or B exists above, it will be subject to clear documentation on how much the importer paid for the tariffs and what percentage of those were passed to the customer. 

Beyond this, it gets sticky, and relationships matter. Before demanding a partner fully disclose their real costs (what percent were tariffs and what was passed on), a firm should evaluate its relationship with the supplier. In any scenario, it’s going to be a mess.  

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