Supreme Court Strikes Down IEEPA Tariffs: What Comes Next for U.S. Manufacturers and Distributors

On February 20, 2026, the U.S. Supreme Court issued a major decision on presidential tariff authority in Learning Resources, Inc. v. Trump and the consolidated companion case Trump v. V.O.S. Selections, Inc. The Court held that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs.

‍

The decision eliminates the legal basis the administration used for several broad tariff actions since 2025, while leaving other statutory authorities intact. For manufacturers, distributors, and logistics operators, the immediate impact is policy volatility, shifts in landed cost, and renewed pressure on planning, inventory, and capacity decisions.

‍

This article outlines the Court’s holding, identifies which tariff actions are ending, examines the alternative authorities now in use, and analyzes the operational implications for industrial operations.

‍

‍

What The Supreme Court Decided

The Supreme Court’s holding was direct: IEEPA does not authorize the President to impose tariffs.

‍

The Court concluded that tariffs fall within Congress’s constitutional power to “lay and collect Taxes, Duties, Imposts and Excises,” and that IEEPA’s language allowing the President to “regulate” importation does not constitute a clear delegation of tariff authority. The opinion emphasizes that IEEPA contains no reference to tariffs or duties and notes that no prior President had relied on the statute to impose them.

‍

Although the two cases were resolved through different procedural paths, the central holding is clear. The Court affirmed the Federal Circuit’s judgment in the V.O.S. Selections matter and vacated and remanded the Learning Resources case on jurisdictional grounds, but its conclusion that IEEPA does not authorize tariffs is definitive.

‍

‍

Which Tariffs are Ending and When

Following the decision, U.S. Customs and Border Protection issued formal guidance stating that additional duties imposed under IEEPA tied to specific presidential actions will no longer be in effect and will no longer be collected for qualifying entries on or after 12:00 a.m. Eastern time on February 24, 2026.

‍

CBP’s guidance identifies the affected executive actions, including those addressing:

• Illicit drugs across the northern border (Executive Order 14193)
• The southern border (Executive Order 14194)
• The synthetic opioid supply chain in China (Executive Order 14195)
• Tariffs tied to countries importing Venezuelan oil (Executive Order 14245)
• A reciprocal tariff tied to large and persistent U.S. goods trade deficits (Executive Order 14257)
• Tariff actions directed at Brazil and Russia (Executive Order 14323 & 14329)

‍

Importantly, the guidance specifies that this change applies only to IEEPA-based duties. Duties imposed under other authorities, including Section 232 and Section 301, remain in effect.

‍

‍

Refunds on Previously Collected IEEPA Duties

In the wake of the Supreme Court’s decision, litigation seeking refunds of previously collected IEEPA duties has begun. The logistics company FedEx has filed a lawsuit in the U.S. Court of International Trade seeking a full refund of tariffs it paid under measures that were ruled unlawful. More than 1,400 companies in total including Toyota, Goodyear, Costco, BYD, and Alcoa have initiated similar legal actions, arguing that the duties were never legally authorized.

‍

The Supreme Court did not decide that refunds must be issued, and there is no automatic refund process. Companies may need to pursue recovery through the Court of International Trade or related legal avenues.

‍

Additionally, legislative efforts are underway in Congress to require full refunds with interest for tariff revenue collected under IEEPA, though these proposals remain in early stages and face political debate.

‍

‍

Alternative Authorities Now in Motion

Within hours of the Supreme Court ruling, President Trump announced a new set of tariffs under Section 122 of the Trade Act of 1974. Section 122 permits the President to impose temporary import surcharges of up to 15 percent to address “fundamental international payments problems,” subject to a statutory limit of 150 days unless Congress extends the authority.

‍

The Section 122 tariffs took effect on February 24, 2026, and are scheduled to expire on July 24, 2026, unless extended by legislation. Unlike the invalidated IEEPA duties, Section 122 requires broad and uniform application and is focused on balance-of-payments concerns.

‍

Section 232 and Section 301 remain available and are unaffected by the Court’s ruling. These authorities operate through separate investigative and rulemaking processes and can shift the mix of affected materials, components, and countries over time.

‍

‍

Implications for Manufacturers and Distributors

‍

Landed cost volatility and contract friction

When tariff codes change, landed cost calculations and pricing assumptions change with them. That creates friction in:

• Supplier negotiations and renegotiations
• Customer pricing and surcharge structures
• Quoted lead times that include customs clearance assumptions
• Import compliance processes that depend on tariff classification and entry timing

‍

In many cases, pricing agreements lag tariff changes. Manufacturers and distributors may be locked into customer contracts negotiated before duty rates shifted, creating short-term margin compression until pricing can be adjusted or surcharges implemented.

‍

Tariff-driven sourcing changes also introduce operational variability. Shifting suppliers or countries of origin can mean different packaging formats, pallet configurations, labeling standards, quality tolerances, and lead times. Those differences often require additional handling, inspection, and coordination inside the facility, increasing workload variability even if total volume remains unchanged.

‍

The February 24 entry threshold creates a hard dividing line for duty liability, often compressing shipment timing as companies adjust to avoid or capture duty exposure.

‍

Planning whiplash in inbound flows

• Unexpected inbound spikes
• Short-notice schedule changes
• More frequent expediting and partial shipments
• Congestion at receiving, putaway, and inspection

‍

Inventory and working capital pressure

A temporary, across-the-board tariff under Section 122 can create an incentive to pull forward purchases before deadlines and then pause later. That structure can compress purchasing cycles and increase inventory swings, especially for imported inputs with long lead times.

‍

Capacity constraints move inside the four walls

When inbound volatility rises, the impact does not stay in sourcing or policy discussions. It shows up on the floor.

• Receiving docks back up.
• Putaway falls behind.
• Quality inspection queues grow.
• Lines stop due to shortages of staged components.
• Finished goods miss shipment windows due to labor bottlenecks in pick, pack, and load.

‍

‍

A Labor Model Built for Volatility

The operational challenge created by tariff volatility is workload variability. While many facilities attempt to absorb that variability through overstaffing or extended overtime, those approaches embed risk into the cost structure and strain the core team over time.

‍

Veryable’s on-demand labor marketplace is designed to manage workload variability at the shift level. When volume increases, operations post specific shifts — called “Ops” on the platform — tied directly to defined tasks. Workers in the marketplace, referred to as Operators, can view and accept those Ops based on their skills and availability.

‍

As Operators complete Ops, managers rate performance. Workers who are rated highly become part of the facility’s Labor Pool. Over time, this builds a flexible layer of trained workers familiar with the layout, equipment, safety standards, and performance expectations of the operation.

‍

As volumes fluctuate day to day, additional Ops can be posted with just hours of lead time. When things slow down, fewer Ops are posted. Because labor is deployed shift by shift, cost aligns directly with workload.

‍

‍

The Operational Imperative

Trade policy will continue to evolve. Whether driven by Section 122, Section 301, or Section 232, tariff decisions will keep influencing sourcing patterns, shipment timing, and operational workload.

‍

The question is no longer whether policy volatility will occur. It is whether the operation is built to respond to it. Fixed labor models convert variability into margin pressure and execution risk. Operations that align labor capacity with actual workload maintain control over throughput, service levels, and cost per unit.

‍

Veryable’s on-demand labor marketplace enables that alignment. In a trade environment defined by variability rather than stability, the ability to scale capacity shift by shift is not a temporary tactic. It is an operational capability that positions facilities to execute with confidence as conditions change.