In a landmark decision on February 20, 2026, the Supreme Court held that the International Emergency Economic Powers Act (IEEPA), an economic sanctions law, does not authorise the president to unilaterally set tariffs. That ruling has now unleashed a legal scramble that promises years of complex litigation over who owes what to whom.
More than 2,000 companies, including Costco and FedEx, have filed lawsuits seeking refunds for the illegal tariffs they paid.Penn-Wharton Budget Model economists estimate that IEEPA-based tariff collections total approximately $175 billion to $179 billion. Lenovo and Nintendo are among the tech companies now in court, along with fitness wearable maker Whoop, vacuum manufacturer Dyson, and printer company Epson.
The decision itself is unambiguous.The majority opinion, written by Chief Justice John Roberts and joined by Justices Sonia Sotomayor, Elena Kagan, Neil Gorsuch, Amy Coney Barrett and Ketanji Brown Jackson, stated that the IEEPA does not give the president the power to set tariffs. Two justices appointed by Trump sided with the majority, signalling broad judicial consensus on the constitutional limits of executive power.
But the ruling left the refund machinery to courts and bureaucrats, and the result has been chaos.Judge Richard Eaton of the U.S. Court of International Trade wrote that "all importers of record" were "entitled to benefit" from the Supreme Court ruling.Eaton's order on the refunds was issued in a lawsuit filed by one importer, Atmus Filtration, but applies to every duty that was paid in connection with the IEEPA tariffs. (Atmus, based in Nashville, Tennessee, makes filters and other industrial products.)
Yet here is where fiscal responsibility meets administrative reality.CBP's existing technology was making it impossible to immediately comply with Eaton's order. "In light of the Court's March 5, 2026 amended order, CBP is now facing an unprecedented volume of refunds. Its existing administrative procedures and technology are not well suited to a task of this scale and will require manual work that will prevent personnel from fully carrying out the agency's trade enforcement mission."CBP said it would make all possible efforts to have new functionality ready for use in 45 days.
The numbers are staggering.A report from the Cato Institute conservatively estimated that tariff interest is running at around $23 million a day. The longer the refund process drags, the larger the government's financial exposure.
What makes this particularly thorny is that the tariff costs were passed along the supply chain.Manufacturers might, for example, sue for a share of any refunds given to suppliers that jacked up the price of raw materials to cover the tariffs.Consumers, though, are unlikely to enjoy a refund windfall. The higher prices they've had to pay would likely be hard to attribute to a specific tariff. Consumer class actions are already forming, but proving causation will be contentious.
By the day after the Supreme Court ruling, Trump had promised to set new global tariffs under Section 122 of the Trade Act of 1974 to the maximum 15% allowed, after initially calling for a 10% tariff hours after the ruling. Section 122 allows for the president to set such universal tariffs, limited to 150 days and require congressional approval for extension, to deal with serious balance-of-payments deficits. The administration has pivoted to other legal tools, so the tariff debate is far from over.
Strip away the rhetoric and ask the simple question: the administration spent months insisting refunds would be straightforward if the Supreme Court overruled them. Now it is claiming the refund process is impossible without a 45-day technology overhaul. That inconsistency ought to concern anyone who values institutional honesty.
What has become clear is that the legal foundations of trade policy matter. The Supreme Court did not ban tariffs; it said the president cannot impose them unilaterally without congressional authority. That is a separation-of-powers issue, not partisan politics. The court majority included two Trump appointees. The institutional question now is whether the government executes the refund process fairly and swiftly, or whether it becomes another vehicle for delay.