US Supreme Court Ruling Triggers Major Shifts in US Trade Enforcement Strategy

To kick off its 2026 Global Trade and Customs Webinar Series Baker McKenzie’s global customs team led a discussion on the the impact of the US Supreme Court’s recent IEEPA ruling and how the decision reshapes the global trade landscape. Below are the key takeaways from our recent discussion on the ruling. 

1. IEEPA-based tariffs declared illegal

The US Supreme Court’s 20 February ruling limiting the use of the International Emergency Economic Powers Act (IEEPA) as a basis for tariff actions has created immediate uncertainty for importers and global supply chains. With the IEEPA no longer available as an enforcement tool to the US administration, companies importing into the US or relying on recent bilateral arrangements should anticipate near-term disruption as the administration shifts to alternative trade authorities and new tariff measures.

All IEEPA‑based tariffs put in place by President Donald Trump since he took office in January 2025 have been ruled invalid. In addition, IEEPA tariffs are no longer being collected from 24 February 2026.

These tariffs are listed below:

Tariff	Authority	Most recent rates
Mexico/Canada	IEEPA	Mexico: 25%/10% (potash)/USMCA goods were excluded Canada: 35%/10% (energy and potash)/ USMCA goods were excluded
China — Fentanyl	IEEPA	10%
Reciprocal tariffs	IEEPA	10% (baseline); some country-specific rates up to 41% for some trade partners; China reciprocal agreement held at 10% until 10 November 2026 under 4 November 2025 EO
Brazil (“free speech”)	IEEPA	40% on all nonexempted goods
Russian oil (India)	IEEPA	25% on all nonexempted goods of India
Secondary tariffs on countries that import Venezuelan oil	IEEPA	No country ever designated
Secondary tariffs on countries that sell or provide oil to Cuba	IEEPA	No country ever designated
Secondary tariffs on countries that directly or indirectly purchase, import or otherwise acquire goods or services from Iran	IEEPA	No country ever designated

The Supreme Court provided no guidance on the refund process, raising questions around how importers can recover paid tariffs. As it stands, refund eligibility is expected to be determined by the Court of International Trade (CIT). Hundreds of lawsuits are already sitting with the CIT in anticipation of this ruling, and importers filing new complaints may be positioned to benefit from any coordinated or expedited approach the court may adopt. It is hoped that this will prompt a faster decision on the issue of refunds.

2. Temporary tariffs under Section 122

In response to the ruling, the US administration invoked Section 122 of the US Trade Act and introduced a new 10% tariff on all imports from all countries, with the option to increase the rate to 15%. Section 122 measures are limited to 150 days and will expire on 24 July 2026, unless extended by US Congress. These duties apply on top of all other tariffs, taxes, fees and charges, except for Section 232 tariffs. Questions are being raised around its statutory applicability, as Section 122 requires a “balance‑of‑payments emergency” not a trade deficit. The balance of payments is the entire record of economic transactions between a country and the rest of the world, but the trade deficit is just one component. Given the weak statutory basis, strict time limits and potential litigation risks, the move is likely to be a stopgap rather than a durable solution.

3. Uncertain future for existing trade agreements

The ruling also raises questions about whether several recent bilateral agreements remain enforceable. While the administration insists the deals remain valid, many must still be implemented into law. Early signs of strain on previously negotiated deals are emerging. Japan has indicated it will not uphold agreements negotiated under the previous tariff framework, while attention is now focused on the upcoming meeting between Presidents Trump and Xi Jinping to assess whether the current tariff truce will hold. The temporary 10% rate provides only short‑term relief and does not resolve broader uncertainty. The European Parliament has convened an extraordinary meeting to assess the impact on its pending EU-US deal. It is also unclear how the ruling will affect ongoing negotiations with jurisdictions that have not yet finalized agreements with the US. Many trading partners are expected to pause implementation until there is clarity on how the administration will deploy sections 232 and 301 going forward.

4. Section 232 and Section 301 remain intact

The US administration still has full authority to rely on Section 232 of the Trade Expansion Act (national security) and Section 301 of the US Trade Act (unfair trade practices), both of which remain legally valid as tools to drive tariff policy and could be expanded.

Section 232 is viewed as the more durable enforcement tool due to its investigative requirements and long-standing judicial deference to national security findings. Although often applied narrowly, Section 232 actions can have significant industry‑level impacts. Section 301 also remains fully available where foreign practices are deemed unfair or discriminatory. Taken together, sections 232 and 301 now anchor the US administration’s current tariff toolkit and all existing duties imposed under these authorities remain in force.

5. USMCA negotiations ahead of renewal

As the United States-Mexico-Canada Agreement (USMCA) approaches its 1 July 2026 renewal deadline, it is a key reference point for the direction of US trade policy. When the USMCA replaced the North American Free Trade Agreement it was hailed as the most modern trade agreement that would be used as a template for future deals.

Most industry, academic and policy stakeholder groups support renewal, citing the USMCA’s contributions in strengthening competitiveness, manufacturing resilience and cross‑border integration of the North American market. Labor and consumer groups remain more cautious, raising concerns about uneven domestic protections and digital trade rules that may limit AI and data governance oversight.

The USMCA is likely to be renewed but changes are anticipated, and the US administration has recognized that it is in a strong negotiating position. For businesses, it continues to function as a key stabilizing mechanism — providing predictable legal structures, mitigating tariff exposure and supporting supply chain planning as US trade policy evolves.

What does this mean for business?

While the Supreme Court decision renders the IEEPA tariffs invalid, significant questions remain unanswered. Most critically, the Court’s decision does not clarify any mechanism for importers to recover IEEPA tariff payments. Businesses should consider joining the thousands of importers who have already initiated claims with the Court of International Trade seeking refunds. Filing such claims is important because statutory liquidation may otherwise bar recovery via administrative processes and the administration has signaled that litigation may be the exclusive avenue to securing refunds of unlawfully assessed IEEPA duties. Our customs team is available to discuss tailored strategies for recovering paid duties.

Additionally, tariffs under Sections 232 and Section 301 are now expected to play a central role in US trade strategy. Organizations should prepare for and closely review implementation dates of new rates and tariff measures, reassess supply chain exposure and reinforce compliance and contingency planning. Now is the time to review risk exposure, update contingency plans and seek targeted legal or trade advisory support to stay ahead of rapid policy developments.