The U.S. Supreme Court has issued a 6–3 decision that significantly changes presidential tariff authority — with immediate consequences for importers, manufacturers, and supply chain leaders.
If you build hardware, source components, or manage a BOM, this affects your landed cost math right now. Here’s what you need to know.
1. The Ruling: IEEPA Does Not Authorize Tariffs
The Court ruled that the International Emergency Economic Powers Act (IEEPA) does not grant the President authority to impose tariffs.
- IEEPA allows the President to regulate or block imports and exports.
- It does not explicitly authorize duties or surcharges.
- Tariffs are taxes — and the Constitution grants taxing power to Congress.
- When Congress delegates tariff authority, it does so clearly and with limits. IEEPA does neither.
- No prior President had used IEEPA to impose tariffs.
Bottom line: IEEPA tariffs are not authorized under the law.
2. What Happens to the IEEPA Tariffs?
An executive order was issued ending the IEEPA tariffs, and agencies were directed to stop collection “as soon as practicable.”
What about refunds? That’s the open question. There are warnings that refund claims could trigger prolonged litigation, but the expectation is that Customs and Border Protection (CBP) will process refunds through standard administrative procedures.
Importers should:
- File Post-Summary Corrections (PSCs)
- Track protest deadlines
- Follow standard protest procedures unless CBP issues alternative guidance
3. A New Tool Steps In: Section 122
Almost immediately after IEEPA tariffs were halted, a new mechanism was invoked under Section 122 of the Trade Act of 1974.
Section 122 lets the President impose temporary measures to address large balance-of-payments deficits, imminent dollar depreciation, or international balance-of-payments disequilibrium. It allows a temporary import duty of up to 15% plus temporary quotas.
What’s different:
- It has never before been used for tariffs.
- The new tariff is effective February 24 and expires July 24, 2026.
- The rate was first announced at 10%, then raised to 15%.
- It can only stay in place for 150 days unless Congress extends it.
The date to circle: July 24.
4. Key Exemptions
The Section 122 proclamation carves out significant exemptions, including:
- Goods already subject to Section 232 tariffs (with anti-stacking provisions)
- USMCA-compliant goods from Canada and Mexico
- Certain pharmaceuticals and ingredients
- Specific electronics
- Certain vehicles and aerospace products
- Critical minerals and energy products
- Agricultural products
- Informational materials and donations
For some importers, Section 122 may mean higher tariffs than reciprocal rates; for others, lower. The only way to know your exposure is to run your actual BOM.
5. What Comes Next
This is unlikely to be the end of trade enforcement. Watch for new Section 301 investigations, expanded Section 232 frameworks, other authorities (Section 201, Section 338), and increased fraud scrutiny. The Cross-Agency Trade Fraud Task Force remains active, and investigations may accelerate.
6. What Importers Should Do Now
- Begin preparing refund claims
- File PSCs and protests where appropriate
- Review sourcing strategies for the next 150 days
- Confirm accounting treatment of duties
- Coordinate closely with trade compliance and supply chain teams
- Prepare for additional investigations and legal developments
Final Thought
The Supreme Court has reasserted constitutional boundaries on tariff authority. But while one tariff tool was removed, another immediately took its place. For importers and manufacturers, that means continued volatility, short-term policy shifts, and a compressed compliance timeline.
This is exactly the environment we built BOMsense for — so you can see tariff exposure across your entire BOM before you commit to a design or a source. If you want to know where you stand under Section 122, that’s the fastest place to start.
This article is provided for general information and is not legal or trade-compliance advice. Consult qualified counsel for your specific situation.