The Great Tariff Pivot: Analyzing the SCOTUS Ruling and the Shift to Section 122
This week, American trade policy experienced a significant change. On February 20, 2026, the Supreme Court of the United States announced its decision in Learning Resources, Inc. v. Trump, with a 6-3 vote, challenging the core of executive tariff power.
For importers, this decision creates a dual scenario: the chance to obtain substantial duty refunds and the instant implementation of a new worldwide tariff system.
The Verdict: Learning Resources, Inc. v. Trump
The Supreme Court determined that the International Emergency Economic Powers Act (IEEPA) does not give the President the power to impose wide-ranging, revenue-raising tariffs. Chief Justice Roberts, speaking for the majority, highlighted that the constitutional power to tax is solely Congress's responsibility.
Historically, IEEPA has been used to freeze assets or block specific transactions during national emergencies. The Court determined that broadening this authority to cover general import duties would disrupt the balance of power among government branches. Consequently, the "Liberation Day" and "emergency" tariffs enacted under this authority are now viewed as unlawful.
The Administration’s Response: The Section 122 Bridge
Within hours of the ruling, the White House announced a move to Section 122 of the Trade Act of 1974. This law enables the President to impose temporary import surcharges of up to 15% for a maximum of 150 days to help address severe balance of payments deficits.
Starting February 24, 2026, a 10% global tariff will be imposed on most imports. Although the President has suggested this rate could increase to the maximum of 15%, the current standard remains at 10%. It is essential to remember that tariffs under Section 232 (steel and aluminum) and Section 301 (China-specific) were not included in this litigation and continue to be in force.
Navigating the "Refund Mess"
Perhaps the most complex outcome of the ruling is the path toward reclaiming billions of dollars in duties paid over the last year. Justice Kavanaugh, though dissenting, noted that the refund process is likely to be a "mess."
Key Obstacles for Importers:
No Automatic Refunds: The government has signalled it will not issue automatic checks. Importers must proactively manage their entries.
The ACE Portal Requirement: To receive any electronic disbursements from U.S. Customs and Border Protection (CBP), importers of record must have an active ACH account set up within the ACE Portal.
Protests and Litigation: For entries that have already liquidated (closed), importers may need to file formal protests or participate in litigation before the Court of International Trade (CIT) to secure their rights.
Market Outlook: Have We Hit "Peak Tariff"?
Although Section 122 was implemented immediately, some market analysts view a positive aspect. Morgan Stanley economists indicate that the most severe phase of the tariff escalation might be over. Since Section 122 has a statutory limit of 15% and lasts up to 150 days, this ruling effectively sets a near term cap on trade barriers.
This change could help stabilize supply chain costs and reduce inflationary pressures over time. However, the long term outlook relies on whether Congress extends these measures or if the administration initiates more targeted sector-specific investigations.
Strategic Recommendations for Shiptech Partners
While the legal dust settles, we recommend that all clients take the following three steps immediately:
Audit IEEPA Exposure: Identify and quantify all duty payments made under the now invalidated IEEPA orders over the past twelve months.
Verify ACE Credentials: Ensure your company’s ACH information is current in the ACE Portal to avoid delays in future refund processing.
Maintain Compliance Continuity: Even with the shift in authorities, continue to document the country of origin and classification with high precision, as enforcement on Section 301 and the new Section 122 duties will remain stringent.
At Shiptech, we remain committed to navigating these complexities alongside you. We are monitoring CBP and the Court of International Trade daily for the first signs of formal refund guidance.