On February 20, 2026, the U.S. Supreme Court overruled the tariffs imposed under the International Emergency Economic Powers Act, including the Reciprocal and Fentanyl programs implemented in early 2025. IEEPA-based tariffs will no longer apply.
Tariff Refunds
The immediate question is whether importers will receive refunds of duties previously paid.
Formal direction from U.S. Customs and Border Protection will determine the process, including whether refunds will be automatic, whether protests are required, and how liquidated and unliquidated entries will be handled. Until CSMS guidance is issued, companies should review affected entries and confirm applicable deadlines.
Administration Response: Section 122
In response to the ruling, the Administration has invoked Section 122 of the Tariff Act of 1930.
Section 122 authorizes temporary tariffs of up to 15 percent for a period not to exceed 150 days to address balance of payments concerns. The Administration has implemented a global 10 percent tariff under this authority.
Although temporary by statute, this action introduces a new layer of duty exposure.
Is Section 122 Duty Drawback Eligible?
A critical question for exporters is whether Section 122 duties will be drawback eligible.
The drawback statute broadly permits recovery of duties imposed upon importation, and on its face Section 122 duties would appear to qualify. However, initial eligibility will depend on the Administration’s position.
The forthcoming executive order will direct Customs on implementation, including how these duties are to be treated. Until that order is issued, companies should avoid assumptions and evaluate both eligible and non eligible scenarios.
Practical Considerations
Review historical IEEPA entries and assess potential refund exposure
Monitor executive action and CBP implementation guidance
Evaluate the forward impact of the 10 percent Section 122 tariff
Model drawback positions conservatively until clarified
The Supreme Court’s decision removes the IEEPA framework. The use of Section 122 signals that trade policy remains active and evolving. We will continue to provide updates as additional guidance is released.
