On February 20, 2026, in a 6-3 decision, the Supreme Court struck down a significant portion of President Trump’s tariff program, finding that he exceeded his authority under the International Emergency Economic Powers Act (IEEPA).
For manufacturing professionals who have navigated over a year of fluctuating import costs and supply chain disruptions, this decision provides a moment to breathe, while raising new questions.
Understanding the Ruling
Chief Justice John Roberts, writing for the majority, said the IEEPA does not authorize the president to impose tariffs. The 1977 law allows the president to regulate imports during national emergencies but contains no reference to tariffs or duties. “When Congress grants the power to impose tariffs, it does so clearly and with careful constraints,” Roberts wrote. “It did neither here.”
The ruling invalidates the “reciprocal” tariffs imposed on most U.S. trading partners in April 2025. According to federal data, these IEEPA-based tariffs generated approximately $133 billion through December 2025 and represented roughly half of all tariff revenue the government has been collecting.
What Remains in Place
The Supreme Court’s decision does not eliminate all tariffs affecting manufacturers. This distinction is critical for understanding your continued exposure and planning next steps.
Tariffs that remain in effect include those imposed under Section 232 of the Trade Expansion Act of 1962, which covers:
Steel and aluminum
Automobiles and auto parts
Copper
Trucks
Wood products
These tariffs were imposed using different legal authority and were not challenged in this case. If your manufacturing operations rely heavily on these materials, you will continue to face the same import costs you’ve been managing throughout 2025.
The Refund Question
Perhaps the biggest unknown facing manufacturers is whether companies can recoup tariffs already paid under the now-invalidated IEEPA authority. Estimates suggest total potential refunds could reach $175 billion across all importers.
The Supreme Court’s ruling was notably silent on the refund process. In his dissent, Justice Brett Kavanaugh acknowledged this uncertainty, writing that the refund process “is likely to be a ‘mess'” and noting the Court “says nothing today about whether, and if so how, the Government should go about returning the billions of dollars that it has collected from importers.”
Trade attorneys have offered mixed perspectives. Some argue that because tariffs are itemized when paid, the refund process should be straightforward. Others warn that any rush for refunds could overwhelm the system and lead to significant delays.
Many companies, including major retailers like Costco, have already filed lawsuits demanding refunds. The process will likely require importers to work through U.S. Customs and Border Protection or pursue legal action.
Immediate Steps for Manufacturers
While the full implications of this ruling will take time to understand, manufacturers should consider taking the following steps:
Review your 2025 import records. Identify which tariffs you paid and under what authority they were imposed. IEEPA tariffs are the ones potentially subject to refund. Your customs broker or freight forwarder should be able to help categorize your payments.
Calculate your potential refund exposure. If you paid significant amounts under IEEPA tariffs, quantify the total. This number will be important for both cash flow planning and determining whether pursuing a refund claim makes financial sense for your operation.
Assess your supply chain assumptions. Many manufacturers adjusted their sourcing strategies in response to the tariff environment. Some moved production, others shifted to domestic suppliers, and many built higher costs into pricing structures. The ruling may create opportunities to revisit these decisions, but the administration has indicated it will move quickly to reimpose tariffs under other legal authorities.
Consult with your tax and accounting advisors. The potential for refunds, combined with ongoing tariff uncertainty, creates complex tax planning considerations. Any refunds received will need to be properly accounted for, and your financial projections should reflect the changed tariff landscape
The Bigger Picture
The Supreme Court has established that sweeping, unlimited tariffs imposed at presidential discretion exceed executive authority. However, this doesn’t mean tariffs are disappearing. On February 24, 2026, the President had already announced a 10% global tariff under Section 122 of the Trade Act of 1974, which has not been used in previous administrations.
Moving Forward
The Supreme Court’s decision creates an important inflection point for manufacturers. While the extreme uncertainty of the past year may be giving way to a more structured trade policy environment, tariffs themselves remain a reality.
Your planning should account for multiple scenarios: refunds may or may not materialize, new tariffs will likely be imposed under different authorities, and the timeline for both remains unclear. The manufacturers who emerge strongest from this period will be those who planned for contingencies rather than betting on a single outcome.
Working through the steps outlined above provides a solid foundation for navigating this evolving landscape.
HBK’s manufacturing practice works with business owners navigating complex regulatory and tax challenges across their operations. Our team understands the intersection of trade policy, tax planning, supply chain decisions, and financial strategy. If you need help assessing how this ruling affects your business or evaluating potential refund claims, we’re here to help.
Speak to one of our professionals about your organizational needs
