How the Supreme Court Ended the IEEPA Tariffs — and Triggered the Largest Duty Refund in U.S. History

The legal history behind today’s $166 billion refund program is compressed into an unusually short window: one Supreme Court decision in February, one Court of International Trade order in March, and one CBP deadline met on April 20. Together they produced the largest import-duty refund in U.S. history.

The ruling that started it all was issued on February 20, 2026. In a 6–3 decision, the Supreme Court held that the International Emergency Economic Powers Act — a 1977 statute giving the president broad authority to respond to foreign threats — does not authorize the president to impose tariffs.

The case

The case the Court decided, Learning Resources v. Trump, consolidated challenges from importers and trade groups to the “reciprocal” and emergency-based tariffs the administration imposed beginning in February 2025 and expanded over the course of the year.

The administration’s legal argument was that the U.S. trade deficit constituted a national emergency and that the president’s IEEPA authority — originally written to allow asset freezes and trade bans against hostile foreign powers — was broad enough to include the imposition of new import taxes. The importers argued that tariffs are taxes, that the Constitution vests the power to tax in Congress, and that IEEPA’s text never contemplated the imposition of duties.

The Supreme Court agreed with the importers. Penn Wharton’s Budget Model summarized the holding cleanly: In its 6-3 ruling on Friday, February 20, 2026, the Supreme Court decided that the International Emergency Economic Powers Act (IEEPA) does not grant the President the power to unilaterally impose tariffs of indefinite scope.¹

The ABC News report of the ruling framed the holding in constitutional terms: In a 6-3 decision, the Supreme Court on Feb. 20 found that Trump usurped Congress’ tax-setting role last April when he set new import tax rates on products from almost every other country, citing the U.S. trade deficit as a national emergency that warranted his invoking of a 1977 emergency powers law.²

What the ruling did not decide

The majority opinion was focused on whether IEEPA authority extended to tariffs. It was not focused on what should happen to the tens of billions of dollars already collected. On that question, the Court was notably silent.

The consulting firm PwC, in its client briefing the day of the ruling, observed: The Court did not provide extensive guidance on the retroactive consequences of its ruling, leaving potential uncertainty regarding refund claims to the lower courts to resolve.³

That uncertainty was significant. The federal government had, by early 2026, collected an enormous sum under the now-invalidated authority. Penn Wharton estimated reversing the IEEPA tariffs will generate up to $175 billion in refunds.¹ CBP’s own count, reported by the Associated Press, put it at about $166 billion on over 53 million shipments across more than 330,000 importers.²

Somebody had to decide how that money got back into the hands of the importers who paid it. The Supreme Court passed that question to the lower courts.

The Court of International Trade steps in

The lower court that inherited the refund question is the U.S. Court of International Trade, a specialized federal court based in New York that hears customs and trade disputes.

In the weeks following the Supreme Court ruling, thousands of importers filed suit at the CIT seeking refunds. By mid-March, the consulting firm EY reported that the Supreme Court referred the question of duty refunds for IEEPA tariffs to lower courts. The CIT order provides relief for entries affected by IEEPA tariffs, but the discussion of specific refund mechanisms is ongoing.⁴

On March 6, CBP filed its own declaration with the CIT detailing the scope of the refund problem. The agency made clear in that filing that processing the refund volume through its existing, entry-by-entry procedures would take millions of work-hours. As Cherry Bekaert summarized the CBP filing: CBP noted that processing this volume of refunds under its existing procedures would require 4,431,161 working hours.⁵

Later in March, the CIT ordered CBP to build a new refund mechanism, giving the agency a 45-day extension to develop the technology. That 45-day clock landed on April 20, 2026 — the date CBP launched the CAPE tool.

A news summary from Yoopya News described the sequence plainly: In March, the U.S. Court of International Trade (CIT) ordered Customs and Border Protection (CBP) to design a system to repay duties on affected entries, setting a tight 45‑day timeline that now points to April 20 as the start date for refund claims.⁶

The interest that has been running all along

One of the quieter consequences of the Supreme Court’s holding — and the delay between ruling and refund — is the federal interest tab. Under 19 U.S.C. § 1505(c), the government pays interest on excess duty deposits from the date the importer paid until the date of refund. That clock started running from the moment each IEEPA payment cleared.

The U.S. Chamber of Commerce, citing CIT, reported: The interest rate is 6% at present. CIT has noted that ‘interest is accumulating every day, with approximately $650 million accruing per month,’ a fact that hopefully will incentivize expeditious refunds.⁷

The Cato Institute produced an even larger figure in a March analysis, reported by CBS News: The delay in refunding companies for emergency tariffs invalidated by the high court is costing U.S. importers a total of $700 million per month, or $23 million per day, based on the interest owed on the illegally collected duties.⁸

The Cato report went further, projecting that a full year of refund delay could cost $8.4 billion in additional interest alone.⁸

What the ruling did not touch

The scope of the Supreme Court’s holding was narrow in one important respect. It addressed IEEPA as a basis for tariffs. It did not address — and did not disturb — the other statutory tools under which the U.S. government imposes trade remedies.

PwC summarized the doctrinal impact this way: The decision effectively eliminates IEEPA as a standalone tariff authority, significantly altering the legal foundation for existing IEEPA-based tariffs and limiting the administration’s flexibility and speed in pursuing future tariff actions.³

But as Yoopya News reported in its explainer of the refund program, The current refund plan covers tariffs imposed under IEEPA that were struck down by the Supreme Court, not all Trump-era trade measures. That means: Duties imposed under traditional tools such as Section 301 (China trade actions) and Section 232 (steel and aluminum) remain in place unless separately challenged.⁶

A separate 10 percent tariff, imposed under Section 122 of the Trade Act of 1974, took effect for entries filed on or after February 24, 2026 — four days after the Supreme Court ruling. Section 122 is a statute Congress specifically enacted to give the executive a lawful, time-limited tariff tool. As trade analysts at FreightFigures wrote, Section 122 is a separate legal authority under the Trade Act of 1974 and is not part of the IEEPA refund process. Entries filed on or after February 24, 2026 continue to owe the 10% Section 122 tariff.⁹

Congress responds

In the weeks after the ruling, Congress moved on the refund question directly. In March, the Senate introduced the Tariff Refund Act of 2026 (S.3905), which would codify a 180-day statutory deadline for CBP to complete IEEPA refunds.

The bill text reads, in relevant part: The Commissioner of U.S. Customs and Border Protection shall, not later than 180 days after the date of the enactment of this Act, refund, with interest, to each importer of a covered article all duties imposed under the International Emergency Economic Powers Act.¹⁰

The bill also expresses a sense of Congress that importers, wholesalers, and larger businesses, especially those that raised prices or passed on direct costs from those unlawful duties while they were in place, should pass on the refunds to their customers, including small businesses and families impacted by those duties.¹⁰

The refund pass-through provision is aspirational rather than mandatory — importers are the legal recipients of refunds and are not required to share them — but the language signals congressional interest in the downstream beneficiaries. Meanwhile, class-action litigation in federal courts is pursuing the same question through a different door.

What the ruling means going forward

The immediate effect of Learning Resources v. Trump is the $166 billion refund program launching today. But the doctrinal effect is larger. By holding that IEEPA does not support tariffs, the Court has narrowed the set of statutory tools a future president can use to impose new duties unilaterally. PwC concluded in its client memo that the ruling significantly alter[s] the legal foundation for existing IEEPA-based tariffs and limit[s] the administration’s flexibility and speed in pursuing future tariff actions.³

Whether Congress will move to re-authorize a broader tariff authority, or whether future administrations will rely more heavily on Sections 122, 232, 301, and 338, is a question for the next several years. For importers with money tied up in the IEEPA pool, the practical answer is shorter: today, April 20, 2026, is the first day they can start getting it back.

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Sources

1. Penn Wharton Budget Model, University of Pennsylvania, “Supreme Court Tariff Ruling: IEEPA Revenue and Potential Refunds,” February 20, 2026.
2. ABC News (AP report), “Trump tariff business refunds: Businesses can claim refunds starting Monday,” April 20, 2026.
3. PwC, “US Supreme Court invalidates IEEPA tariffs,” February 20, 2026.
4. Ernst & Young (EY), “5 actions after the Supreme Court tariff ruling,” March 2026.
5. Cherry Bekaert, “IEEPA Tariff Refund Update: Phase I CAPE Set for April 20, 2026,” April 2026.
6. Yoopya News, “Supreme Court Ruling Triggers Up to $166 Billion in Trump Tariff Refunds — Here’s What to Know,” April 16, 2026.
7. U.S. Chamber of Commerce, “IEEPA Tariff Refunds: Guide & FAQ for Small Businesses,” uschamber.com, 2026.
8. CBS News, “Tariff refund delays could cost U.S. taxpayers $700 million a month in interest,” March 4, 2026 (citing Cato Institute).
9. FreightFigures, “CBP CAPE Tool Goes Live April 20, 2026,” April 2026.
10. U.S. Congress, S.3905 — Tariff Refund Act of 2026, 119th Congress. congress.gov