Offit Kurman Blogs

On February 20, 2026 the U.S. Supreme Court issued a landmark decision in Learning Resources, Inc. v. Trump holding that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs. The decision invalidates the reciprocal tariffs and trafficking/immigration tariffs imposed in 2025 under IEEPA and confirms that the power to impose tariffs lies with Congress. The Court did not prescribe a refund mechanism; that responsibility now falls to the U.S. Court of International Trade (CIT) and U.S. Customs and Border Protection (CBP).

Within hours of the decision, the Administration imposed a new 10% tariff under Section 122 of the Trade Act of 1974 (now 15%), effective February 24, 2026, and limited to 150 days (absent congressional action).

This creates two immediate opportunities:

1. Refund claims for prior IEEPA tariffs (available to domestic and foreign companies)
2. Advisory and planning work related to new Section 122 tariffs and potential replacement regimes (Section 232/301)

1. IEEPA Tariffs Invalidated

The Supreme Court ruled that IEEPA does not authorize tariff imposition.
IEEPA tariffs imposed in 2025 are unlawful ab initio. Refunds are not automatic. Importers must act.

2. Section 122 Tariffs Now in Effect

• 15% tariff on most imports entered on or after February 24, 2026
• Limited to 150 days (approx. expires July 24, 2026 unless extended)
• USMCA-qualified goods excluded
• “Goods on the water” exception for certain shipments loaded before Feb 24 and entered before Feb 28

This is a temporary bridge. Section 232 (tariff imposed for national security) and 301 (tariffs imposed on foreign products to counter unfair trade practices) actions may follow.

Those who:

• Imported goods between February 2025 and February 24, 2026
• Paid additional IEEPA ad valorem duties
• Are the importer of record
• Have entries that are unliquidated or recently liquidated
• Did not yet file a protective Court of International Trade (CIT) action
• Refund claims are available to domestic and foreign companies – the controlling factor: who is the Importer of Record on the customs entry

Important:
Only IEEPA duties are refundable — not Section 232 or 301duties.

Downstream buyers may have contract-based reimbursement claims.

1. Tax Litigation / Customs Litigation

• Refund analysis and quantification
• Protest filings
• Protective CIT litigation
• Federal Circuit appeals
• Strategic coordination of administrative and judicial remedies

2. Transactional Tax

• Tariff deductibility analysis
• Accounting method considerations
• Timing of refund recognition
• Contingent asset treatment
• Structuring to mitigate future tariff exposure

3. Corporate & Business Structuring

• Restructuring importer-of-record status
• Creating new import entities
• Evaluating transfer pricing implications
• Risk allocation between affiliates
• Supply chain realignment

4. Commercial Contracts

• Review of tariff pass-through clauses
• Reimbursement rights for downstream buyers
• Force majeure and change-in-law provisions
• Supplier renegotiation strategy
• Indemnification enforcement

5. Commercial Litigation

• Claims between buyers and suppliers over tariff allocation
• Breach of contract actions
• Indemnity disputes
• Class or coordinated actions among distributors

6. Restructuring & Insolvency

• Tariff-driven liquidity pressure
• Claims valuation in bankruptcy
• Recovery of tariff refunds as estate assets

• Entry summaries (CF 7501)
• Duty payment records
• Liquidation dates
• PSC filings
• Contracts allocating tariff responsibility
• ACE and ACH refund account status
• SKU lists affected by Section 122

IEEPA refunds are potentially significant. Deadlines are running. Section 122 tariffs create immediate planning needs.

If you import goods, manufacture overseas, distribute foreign products, or rely on cross-border supply chains, connect with Offit Kurman for consultation.