Key Takeaways: Navigating Refunds and Transfer Pricing After Invalidation of IEEPA Tariffs

The US Supreme Court’s February 20, 2026 ruling that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose tariffs has upended a principal source of recent US tariff policy and left importers, tax teams, and supply chain managers wondering what comes next. The legal holding invalidated tariffs that were imposed under IEEPA authority, but it did not address refunds of the unlawful tariffs (with interest) or unwind the broader policy framework. Other statutory tariff authorities remain available, and the administration has already moved to preserve leverage through these alternate mechanisms.

For businesses, the ruling creates two parallel issues. First, refunds and the mechanics of recovering IEEPA duties are unresolved and will require active procedural steps (and, in some cases, litigation) before importers receive funds. Second, the timing mismatch between customs valuation on importation and tax/transfer-pricing reporting means that tariff-driven economics already reflected in 2025 filings may be reversed later, which could lead to accounting, transfer-pricing, and §1059A consequences that require coordinated trade and tax responses.

The following key takeaways address what businesses can do now, even as litigation, administrative guidance, and new tariff actions continue to evolve.

DETERMINE WHAT IS OFF THE TABLE AND WHAT REMAINS IN PLAY

While the Supreme Court declared the IEEPA-based tariffs unlawful, the decision did not invalidate the underlying national emergency declarations and did not address other tariff authorities. The administration has already issued replacement tariffs under Section 122 of the Trade Act of 1974 and instituted additional trade remedies investigations pursuant to Section 301 of the Trade Act of 1974.

It has also signaled the use of alternative authorities and further trade investigations. Expect continued litigation over Section 122 and other replacement measures even as courts and US Customs and Border Protection (CBP) begin to process refund-related claims.

PRESERVE REFUND RIGHTS BEFORE DEADLINES EXPIRE

There is no automatic, immediate cash return. Importers must map entry liquidation status, file protests where appropriate, and prepare for litigation or administrative remedies for liquidated entries outside the protest window. The Court of International Trade has ordered CBP to develop a process for issuing refunds for certain import entries, but government challenges and procedural nuance mean refund timing and outcomes are still uncertain.

PREPARE FOR HEIGHTENED SCRUTINY OF REFUND CLAIMS

Because the IEEPA tariffs produced large federal receipts, CBP and other agencies will closely vet refund claims and underlying entry data before releasing funds. Refunds, if granted, will include interest and may attract additional enforcement review or downstream civil claims.

Preparing complete, audit-ready import documentation will materially improve prospects for administrative relief or successful litigation. Importers must also ensure they are enrolled in CBP’s electronic refund program to receive refunds.

ALIGN CUSTOMS AND TRANSFER PRICING POSITIONS NOW

Customs valuation (determined on the entry date) and transfer-pricing valuation (determined on the tax return due date) use different but similar methods to value the importation of tangible goods. Companies should reconcile these approaches and align documentation so that customs-related reconciliations, transfer-pricing adjustments, and any §1059A ceiling issues are addressed consistently and defensibly.

EVALUATE THE DOWNSTREAM EFFECTS ON 2025 REPORTING

If distributors or related-party entities absorbed tariffs in 2025 and later obtain refunds, the timing and magnitude of those refunds will affect operating margins, GAAP presentation, and arm’s-length benchmarking. Companies should document their 2025 transfer-pricing positions and analyze how later refunds will be treated for transfer-pricing purposes.

Further, a refund that reduces the customs duty burden in 2026 can trigger a downward transfer-pricing adjustment that conflicts with the customs value ceiling set by §1059A. Taxpayers should analyze potential §1059A exposure now and consider operational or pricing responses that minimize cross-border valuation mismatches.

EMBED TARIFF VOLATILITY INTO BUSINESS PLANNING

This ruling eliminates one path for broad-based tariffs but does not remove political pressure to use tariffs as leverage. We have already seen and can continue to expect alternative tariff authorities, new Section 301 or Section 232 investigations, and short-term replacement duties. Companies should update contractual allocation clauses, build tariff scenarios into procurement and pricing models, and treat trade policy as a standing business risk.

LOOKING FORWARD

The Supreme Court’s ruling ends one legal pathway for the president to immediately impose or modify tariffs, though importers are now in a period of operational and procedural complexity. Companies should preserve rights through protests and documentation, coordinate tax and customs strategy to avoid adverse downstream effects, and plan for the continuing reality that tariffs will remain a shifting part of the US trade toolkit. Staying proactive, rather than assuming stability, will be the most reliable defense in a landscape where policy shifts fast and refunds lag.