Key Takeaways
• On February 20, 2026, the Supreme Court ruled 6 to 3 that the International Emergency Economic Powers Act does not authorize the President to impose tariffs.
• The ruling invalidated the IEEPA based tariffs, covering the across the board reciprocal duties and the drug trafficking duties on goods from certain countries.
• Tariffs imposed under other statutes were not affected. Section 232 and Section 301 duties stayed in place.
• The fentanyl related duties were never drawback eligible, so their invalidation had no drawback effect.
• The reciprocal duties had been drawback eligible, but that eligibility became moot once the duties were void.
• Section 301 duties, and drawback eligible goods under Section 232, remain claimable at up to 99%.
• A company pursuing a refund of IEEPA duties through the Court of International Trade cannot also claim drawback on those same duties.
• The ruling destabilized the tariff base, not drawback itself. Drawback predates IEEPA and continues regardless of which statute the duties came from.
On February 20, 2026, the U.S. Supreme Court ruled 6-3 that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose tariffs. Writing for the majority, Chief Justice John Roberts held that two words in the statute — “regulate” and “importation,” separated by 16 others in Section 1702(a)(1)(B) — “cannot bear such weight.”
The ruling invalidates the tariffs imposed under IEEPA, including the reciprocal tariffs and the fentanyl-related tariffs on goods from certain countries. Tariffs imposed under other statutes remain in effect. Here is what importers and businesses with duty drawback programs need to know.
What the Ruling Covers
The ruling is sweeping in its rebuke of IEEPA but targeted in what it invalidates. Two types of tariffs are directly affected:
- Reciprocal tariffs — the across-the-board minimum 10% import duties on virtually all U.S. trading partners, announced on “Liberation Day”
- Drug trafficking tariffs — the 25% tariffs on imports from certain countries justified under a fentanyl emergency declaration
Critically, tariffs imposed under other statutes — Section 232 (national security) and Section 301 (unfair trade practices) — are not affected by this ruling and remain in place.
One important practical note: don’t expect an immediate halt at the ports. For the next few days, or possibly up to a week, we believe it will be business as usual until Customs and Border Protection (CBP) issues guidelines.
The Duty Drawback Picture
Duty drawback remains a vital tool — a quiet but reliable revenue stream — regardless of today’s ruling. That said, the landscape has shifted and it is worth understanding exactly what has changed.
- Fentanyl tariffs were never drawback eligible, so their invalidation has no drawback impact.
- Reciprocal tariffs were drawback eligible — but since they’re now void, that eligibility is moot.
- Section 301 and certain goods under Section 232 tariffs remain in place and are fully claimable through drawback.
- Avoid double-dipping: if a client files for a refund through the Court of International Trade (CIT), they cannot also claim drawback on the same duties. Strategy matters here.
This ruling creates a temporary destabilization of the tariff base — not of drawback itself. Duty drawback has been a recovery tool long before IEEPA entered the picture, and it will continue to be.
Should You Still Invest in a Drawback Program?
Yes — and here is why the case for drawback remains strong even as one chapter of increased tariff rates closes:
- Remaining tariffs (Section 301, 232) are still fully claimable at up to 99% recovery.
- President Trump has already signaled he will pursue tariffs under alternative authorities. On February 20 he announced a 10% global tariff on top of all remaining tariffs through Section 122 of the 1974 Trade Act. He also committed to additional and more permanent tariffs through other methods, meaning new tariff liabilities are coming.
One Key Piece of Advice: Skip the Protest Route
For businesses seeking refunds on IEEPA tariffs already paid, we recommend you speak with your trade attorney about whether to file a protest or a post-summary correction (PSC).
CITTA is advising our clients to file directly with the Court of International Trade (CIT) instead of filing a protest or PSC. The reason is simple: a protest can sit for two to three years before resolution. CIT offers a faster, more efficient path — and given the volume of cases already filed, speed matters.
Looking Ahead
This ruling is significant, but it doesn’t mean the end of the Trump Administration’s tariff-based trade policy. In fact, the administration has already signaled it will invoke alternative legal authorities quickly — Section 122 of the 1974 Trade Act, as well as expanded Section 301 and 232 actions — and new tariff structures are already being announced.
In an environment this fluid, a duty drawback program remains a critical recovery tool. Further guidance from CBP and the Court of International Trade on refund processes is expected in the days ahead.
For additional updates, write to info@cittabrokerage.com with the subject line, “Subscribe.”
Frequently Asked Questions
A temporary Section 122 surcharge took effect on February 24, 2026 and expired on July 24, 2026 at the 150 day statutory limit. New Section 301 duties of 10% or 12.5% on goods from 60 economies took effect the same day, following USTR determinations in its forced labor investigations.
No, though it briefly looked that way. A validation update in mid August rejected drawback on several of the new Chapter 99 classifications. CBP issued a correction within days, restored the validations and updated its error dictionary. Any claim rejected during that window should be reviewed rather than written off.
Recovery is not guaranteed. Invalidating a tariff is not the same as ordering refunds, and any refund process would take time and face a substantial backlog. Companies that want to preserve a claim should take advice on the filing route rather than assume CBP will act on its own.
It can, because the same duty cannot be recovered twice. Where a refund lands on duties that also supported a drawback claim, the two have to be reconciled. Identifying which entries sit in both buckets now keeps that a bookkeeping exercise rather than an exposure.
Waiting costs eligibility. The five year window runs from the date of importation regardless of which court is deciding what, so every month of delay drops an older month of imports out of reach. The statutes under which duties are imposed keep changing. The drawback provisions have not.
