APPA February Breaking Trade Talks Office Hours: What’s Next After the Supreme Court’s Invalidation of the IEEPA Tariffs

During the February Breaking Trade Talks Office Hours, APPA’s trade experts analyzed last Friday’s long-awaited ruling from the United States Supreme Court striking down the IEEPA tariffs, and what we might expect going forward.  Our panel also reiterated practical steps that businesses should take to best position themselves for IEEPA tariff refunds once that process is confirmed.   

Here are the key takeaways APPA members should keep front and center as everyone navigates the new post-IEEPA landscape: 

Decision Not Surprising, But Remedies Still Unknown 

Our panel unanimously was not surprised that the Court held that President Trump’s tariffs under IEEPA were illegal.  Craig noted that the 6-3 decision was clean and simple in that there was no authority under IEEPA for the President to impose these sweeping tariffs.  Rafe was disappointed that the Court did not address the refunds issue in its decision; according to him some guidance on this would be helpful to the lower court.  

Rebecca weighed in on the immediate practicalities of the Court’s decision.  On February 23 at midnight CBP removed the IEEPA codes from its system, and at 12:01 am on February 24 new tariffs took effect, with the exception of products in transit.  If you had submitted entries prior to that time period, you might be able to work with your broker and update; if the product did not arrive and nothing cleared, you might be able to adjust your entries and gain some of that back.  However, anything not entered by February 24 at 12:01 might be sitting on middle ground because although global tariffs took effect on February 24 at 12:01, there is an exception for products in transit that had already departed for the United States that are not subject to the global tariffs.  Some products therefore are not subject to either the IEEPA or the global tariffs.   Timing obviously is significant and leads to different results regarding which shipments are covered by which tariffs, so Rebecca advised consulting your broker to determine what you owe.   

Thoughts on Section 122 Tariffs Among Other Alternatives 

Rafe explained that the Section 122 tariffs that President Trump imposed have a limit of 150 days unless Congress authorizes an extension.  Practically speaking, Rafe does not see legislation being enacted in 150 days to extend the tariffs.  The tariffs are currently in force at 10% and can go no higher than 15%, so while the rate is uncertain the parameters are somewhat limited.  Rafe commented that the President is warning countries not to pull out of trade deals or they might face the higher rate.  And while President Trump commented on social media that he was raising the global tariffs from 10% to 15%, there has been nothing official to confirm that. 

Rafe raised the possibility of using the 122 tariffs for 150 days while launching investigations under Section 301 (of the Trade Act of 1974 and used for unfair trade practices) such as those in progress against China and Brazil.   Rafe noted that United States Trade Representative Jamison Greer has indicated the Administration likely would be opening up the lengthy process of 301 investigations into all of the United States’ major trading partners.  It’s an open question as to whether any new investigations not yet started could be completed within the 122 tariff 150 days.   

Also unknown is whether the President will seek to extend 122 tariffs by declaring a new emergency.  While theoretically that could be approved by Congress, in light of simultaneous calls on Capitol Hill both to codify tariff authority and for immediate refunds,  Rafe thinks there is little chance of legislation being enacted in 150 days.  That leaves the Administration’s ultra mechanisms: 

• The Administration could run out the clock for 150 days with the 122 tariffs and then use 338 to impose tariffs of up to 50%
• Although President Trump’s tariffs were not authorized under IEEPA, the statute does permit a president to cut off all trade to a particular nation.  Both President Trump and Trade Representative Greer have made references to possibly halting trade with certain countries and then imposing a licensing fee for them to access United States markets. 

According to Rafe, the only true limits on the Administration’s tariff rates are the reaction of the markets and or the electorate.   

Will Refunds Be Automatic or Require Legal Action? 

Despite there being no legal action requirement, Rebecca noted that this point likely over 1800 companies have already sued to preserve their right to recover funds.  While she expects that even those companies that do not sue for refunds will receive them, she also expects that the refunds will not be automatic and likely will fall somewhere in between.  Those seeking refunds most likely will have to take some action – not necessarily legal -- but that is yet to be decided by the Court of International Trade and then Customs.   

One action Rebecca expects to be required for refunds is reconciliation, so companies should be ready to reconcile what they have paid in tariffs.  Rafe raised the possibility that the Administration could challenge the issuing of refunds and potentially prolong the process, so it could be a long time before anyone recovers any tariff payments.   

Addressing the question of who might be eligible to receive refunds --just manufacturers and brands or the consumer -- Rafe noted that states have already filed claims to recover damages for consumer price increases, but those amounts are difficult to quantify and prove.  All of this adds an additional layer of uncertainty to the process 

Everyone is waiting for the judgment on how to manage the refund process associated with the Supreme Court’s decision.  Current avenues through Customs, such filing post-summary corrections (PSCs) or as  protests, or instead filing a suit in the CIT – might be available but remains to be seen.  It should be noted that the current process requires interest to be awarded with refunds, and that calculation is very dependent on timing. 

Saying the Quiet Out Loud: The Administration Contradicts Its Own Tariff Rationale 

Craig brought up a “fascinating” twist in the Administration’s up and down assertions since day one that tariffs are not paid by the consumers.  In an extreme contradiction last week, Secretary of the Treasury Bessent commented on the recently filed and high-profile Fed Ex lawsuit, stating that the company should explain how to pass along any refunds to its consumers.  Craig offered two possible scenarios in explanation: first, simply that the Secretary simply said something about which President Trump was not happy; and second, the Secretary’s comment provided another angle to add a twist and further drag the refunds process out.  Craig also noted that President Trump’s statement that refunds could be litigated for five years was a way to tip off his senior staff to delay the process.

The Effect of Looming Midterms

According to Craig, before the IEEPA decision, the Administration followed a clear pattern of looking for more certainty regarding tariffs, most likely due to upcoming midterm elections.   With President under water in the polls and therefore in a precarious position leading into midterms, there is a need to calm things down.  While United States Trade Representative Greer appears to have taken on that role, there are no authoritative documents confirming his statements.  For example, Greer said that the United States would raise global tariffs to 15% where appropriate but the Administration is also looking for continuity with nations that have existing or tentative trade deals.  Greer also said that the President does not intend to raise rates on China.  All of this, however, is yet to be confirmed. 

Rafe raised the possibility that the Administration might use 301 investigations as a means to threaten countries with higher rates under 338.  It might be signaling that countries should stick to what they have or be investigated.  

Confirm Whether Prior Tariff Exemptions Might Still Be in Effect

Rebecca noted that some agreements have been exempted from 122 because countries have a standing trade agreement, for instance USMCA and CAFTA for Central American countries.  While a mechanism exists for the President to put in new levels, new tariff codes would be needed for that.   Rebecca advises being aware of what merely has been announced and therefore is just a framework as opposed to actually finalized in a ratified agreement.  Rafe added that the USCMA is in negotiations, which plays into the process; also trade agreements can be brought before Congress and rates can theoretically go above 15%. 

Rebecca explained that Executive Orders Annexes I and II list exemptions from 122 tariffs.  If you had been importing under certain pre-existing exemptions those should carry over, however that cannot be assumed to be automatic. It is extremely important to engage with whatever teams are submitting your entries, as codes for those exclusions are not necessarily the same as in original agreement and new codes are in place to manage exemptions under 122.  The coding system is the only mechanism CBP has to determine what might be exempt. 

Refunds Legislation Introduced 

Rafe discussed the new legislation introduced into the Senate (Tariff Refund Act of 2026) (Senate Bill 3905) that would require refunds to be paid within 180 days after enactment.  While the bill would need bipartisan support and most likely will not progress quickly, Rafe said it could put political pressure on the Administration to do the right thing. 

Rebecca noted that the 180 day period is probably not feasible; currently CBP has 2 years to decide normal everyday refunds.  

Craig commented that politically the bill is a very smart move in calling out that these tariffs are illegal and refunds are owed.  It also is logical and politically savvy to prioritize small businesses under the bill.  

According to Rafe, Bessent’s comment about Fed Ex having to pass any refunds to consumers could be linked to the Administration’s persistent references to tariff rebates.  What is puzzling is the notion that a tariff or tax on business profits would be redistributed to consumers.  However, were the Administration to issue checks to Americans six months before midterms it could certainly steal the Democrats’ thunder.   

Are the Tariffs Protectionist or Mainly Revenue-Generating? 

Rafe noted that the President has used tariffs both to affect policy changes with foreign governments and also as a revenue-generating tool while incorrectly asserting that other countries pay the tariffs.  President Trump’s sensibility that American industry should be revitalized is not all negative impulses; rather it is a question of effectiveness and practicality and the fact that rather than be paid by foreign countries, the tariffs are paid by American companies whose business profits have been impacted significantly.  

Rebecca noted that there already is in place the anti-dumping mechanism to protect domestic industries, but the challenge to that is the time and cost involved to investigate along with the reality that much of time it doesn’t help industry.  Tariffs are quick and broad way of pushing back on foreign products, but if there is no industry here to support it, the question becomes what are you protecting. 

According to Rafe, 232 and 301 tariffs are more designed to deal with negative actions by other countries, both allowing President Trump to respond to motivation to revive American manufacturing but also gave him big foreign policy tool.  Noting the sheer scope and breadth of the reinstated global tariffs, Craig suggested that President Trump might just believe there should be at least a baseline charge for doing business with the US.   

What to Do Now

Rebecca strongly advised that importers should: 

• Focus on immediate compliance and investigate what you need to comply with now that IEEPA or reciprocal tariffs are removed and global tariffs are in place.  Make sure you know what products fall within the scope of global tariffs and what you need to pay.   

• Make sure that your partners clearing entries are doing so appropriately.  The importance of running reporting to know what you have paid and what was subject to IEEPA cannot be overstated.  You will need to know what was in the scope of IEEPA refunds as well as the amount in play in order to make decisions regarding whether to litigate or correct each entry. 

• Make sure to set up ACH accounts at CBP for refunds as money will sit there not accruing interest unless you create an account. 

As we continue to navigate the effects of the Supreme Court’s historic decision and the rapidly evolving tariff and trade landscape, we hope you will continue to make our community stronger by sharing your questions and concerns during our next trade talks, which will be live and take place at Global Pet Expo on Thursday, March 26  in the Pets Unite Us Lounge on the Global Pet Expo floor.  In the meantime, if you have any immediate questions or concerns, please do not hesitate to reach out so we can schedule a complimentary individual call with our team of experts who are here to help you. 

Disclaimer: APPA does not make any representations about the completeness, suitability, or adequacy of the information provided in this blog.  Any information provided are intended for general informational purposes only, they do not constitute a recommendation or solicitation to do or omit to do any action and should not be interpreted as legal, regulatory, or compliance advice. You should seek independent advice from qualified professionals before acting on any information provided and/or to evaluate specific regulatory obligations and operational decisions.