Originally published April 2025, updated to reflect February 2026 U.S. Supreme Court decision.
In light of the recent U.S. Supreme Court decision in Learning Resources, Inc. v. Trump, in which the Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful, we have updated and expanded our Accounting Brief, Financial reporting implications of tariffs, to provide additional accounting and disclosure considerations.
As organizations navigate through this changing environment, it is important for members of finance, legal, compliance, operations, accounting and tax to work together to identify and assess the risks tariffs may present to an entity’s operations, financial condition and cash flows. This publication highlights some of the financial reporting considerations associated with the intricacies of evolving tariffs, including the potential for tariff refunds that may result from the Supreme Court’s recent decision.
Summary of the Supreme Court’s decision on 2025 tariffs and refund implications
The Supreme Court’s February 20, 2026, decision in Learning Resources, Inc. v. Trump has significant implications for the lawfulness of tariffs imposed in 2025 under IEEPA and for the potential refund of tariffs already paid. The key points are as follows:
What is settled
- The Supreme Court ruled that the tariffs imposed under IEEPA in 2025 were unlawful, determining that the act does not grant the president authority to levy duties. Rather, this core taxing power is reserved to Congress under Article I of the Constitution. As a result, the “emergency” tariffs imposed under IEEPA in early 2025—including reciprocal, baseline and trafficking or fentanyl tariffs—are now invalid and unenforceable going forward.
- The decision does not affect tariffs imposed under other statutes, such as Section 232, Section 301, Section 201, antidumping and countervailing duties, or most-favored-nation duties, all of which remain legally intact.
What remains unresolved
- The Supreme Court has not provided guidance on the process by which impacted entities can seek refunds of tariffs already paid under IEEPA. The case has been remanded to the U.S. Court of International Trade to address next steps, which may include developing a methodology for any potential refunds of tariffs paid.
- There is considerable uncertainty regarding the timing and amount of any financial statement impact for entities affected by the decision, as the resolution of refund claims and related accounting considerations are yet to be determined.
New global 10% tariff under Section 122 of the Trade Act of 1974
- In response to the Learning Resources ruling, on February 20, 2026, the U.S. president issued a proclamation imposing a 10% ad valorem tariff on many imports from nearly all trading partners, invoking Section 122 of the Trade Act of 1974 (Section 122) rather than IEEPA. This tariff took effect February 24, 2026, and is time-limited to 150 days unless Congress approves an extension.
Why capital markets remain uneasy
Since the Learning Resources ruling and the subsequent imposition of tariffs under Section 122, there has been significant uncertainty affecting the capital markets related to this matter. While the Supreme Court’s decision removed one source of tariff risk, tariff risk itself remains. As it relates to tariffs, markets are now focused on:
- How long the Section 122 regime lasts and whether it escalates
- Whether parties that previously paid tariffs under IEEPA will actually receive refunds and, if so, when and for what amount
- How aggressively the U.S. administration pursues alternative tariff authorities
- Whether U.S. trading partners that negotiated bilateral and sectoral trade arrangements reached in 2025 in the shadow of the now-invalidated tariffs will honor those trade arrangements or seek to renegotiate
- Whether uncertain tariff trajectories depress capital expenditures, cross-border transactions and supply chain investment decisions.
