On Friday, Feb. 20, 2026, the U.S. Supreme Court issued a landmark decision striking down the Trump Administration’s additional tariffs imposed under the International Emergency Economic Powers Act (IEEPA), and ruled that the President exceeded the authority granted under IEEPA. To date, the federal government collected over $100 billion(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window) in excess IEEPA-imposed tariffs.

This ruling opened the door for companies to obtain refunds for the additional IEEPA tariffs that they paid, and on March 5 the U.S. Court of International Trade (CIT) ordered(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window) Customs and Border Protection (CBP) to issue said refunds. While the process to apply for (and receive) these refunds is still being finalized, and there is no immediate need for companies to calculate their IEEPA tariffs, companies may want to know, sooner rather than later, the potential value of their tariff claim.

What this decision said about refunds

The Supreme Court’s majority’s opinion ruling that the tariffs were unconstitutional did not address the obvious impact of its decision; that is, how should companies obtain refunds. In fact, the word “refund” appears nowhere in the majority’s opinion. Justice Kavanaugh, in a dissenting opinion, however, stated(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window)(Opens a new window):

[t]he Court’s [majority] decision is likely to generate serious practical consequences in the near term. One issue will be refunds. Refunds of billions of dollars would have significant consequences for the U. S. Treasury. The Court says nothing today about whether, and if so how, the Government should go about returning the billions of dollars that it has collected from importers. But that process is likely to be a “mess,” as was acknowledged at oral argument.

Some legal scholars had surmised that if the Court found that the IEEPA-imposed tariffs were unconstitutional, then the Court might direct a lower federal court to devise a refund process or request the Administration to prepare one. Alas, the Court did no such thing.

CBP signals potential refund process via ACE

CBP in March outlined a potential administrative process to refund IEEPA tariffs, specifically by modifying its Automated Commercial Environment (ACE) system to enable the processing of IEEPA tariff refunds.

The new ACE functionality, referred to as the Consolidated Administration and Processing of Entries (CAPE), is slated to include four integrated components:

• Claim Portal: Importers would enter IEEPA tariff-related data, which CBP would then validate. At this time, CBP has not specified the precise data elements that will be required.
• Mass Processing: CBP would recalculate tariffs as if the IEEPA tariffs had not been imposed.
• Review and Liquidation/Reliquidation: CBP would calculate the refund amount, representing the difference between the tariffs paid and the amount that would have been due absent the IEEPA tariffs.
• Refund: CBP would process the resulting refunds.

To date, CBP has not announced when CAPE will become operational. Moreover, because this process is being developed administratively by a government agency, it remains possible that the Administration could introduce an alternative refund mechanism at any time.

We will provide further updates when CAPE becomes operational and when the CBP advises the precise IEEPA tariff information that it will require companies to submit to CAPE to claim their tariff refund.

What should companies do now?

In the absence of any special Court directive on the refund process and/or final confirmation of instructions from CBP, the preexisting tariff dispute rules will continue to apply. Accordingly, companies that want refunds will likely need to dispute the tariffs that they paid with CBP. The CIT, a federal court, has jurisdiction to resolve tariff disputes, and, to that end, to date, thousands of companies have proactively filed complaints with that court seeking refunds. The CIT will be buried under an avalanche of complaints seeking refunds. Justice Kavanaugh may be right that the refund process will be a “mess,” but that is no reason for companies to pass on their rights to seek refunds.

How will refunds be calculated?

Importers seeking refunds will be required to substantiate their claims.  Specifically, we anticipate that importers will need to prepare analyses that compare:

(a) the tariffs actually paid

(b) the Tariffs that would have been paid in the absence of the tariff increase under IEEPA

(While the current outlined CBP process would not require this full calculation – only reporting of the tariffs actually paid, and then  CBP would calculate the refund amount due – companies may still want to complete this full analysis to understand the potential value of their refund claim, and “gut check” the veracity of CBP’s calculation.) 

These analyses will likely need to be prepared on an item-by-item basis based on the date of each import – and thus, in short order, can become highly detailed and complex.

Importers that use freight forwarders to manage their imports may need to obtain the relevant underlying import supporting documents from those companies.  Other companies’ accounting and enterprise resource planning (ERP) systems may not maintain the required data with the requisite granularity. Regardless, importers will likely need forensic accounting support and trade compliance expertise to assemble, reconcile, and validate refund calculations capable of withstanding detailed scrutiny.

Selling tariff refund claims

A hot topic over past weeks has been the potential for importers to sell their tariff refund claims to hedge funds, rather than wait for refunds to come through. The importer would sell the claim at a discount, and the hedge fund would take over pursuing the claim – and receive the full amount if and when it becomes available.

This approach may be useful for companies that need cash now, and cannot wait for the official refund process to be established and executed. But for companies that have plenty, it might make more sense to wait the additional time to receive the full amount – especially if tariff costs were passed on to customers, and their own refunds may need to be covered. Each company should carefully consider their unique circumstances and needs in making this call. 

Prepare for what comes next

The Supreme Court’s invalidation of the 2025 IEEPA tariffs is one of the most significant trade developments of the year – and a major potential financial opportunity. CohnReznick stands ready to help you with the practical work required to assess exposure, quantify potential recoveries, and prepare the required financial analyses.