What the Supreme Court ruling on tariffs means for businesses

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What is the Supreme Court ruling on tariffs?

Over the past year, the executive branch has implemented a broad tariff policy, raising questions about how far its authority extends when shaping trade policy. On February 20, 2026, the Supreme Court issued a decision limiting the executive branch's ability to impose broad, open-ended tariffs under the International Emergency Economic Powers Act, or IEEPA—the primary authority used to justify most of the tariff increases imposed in 2025. At issue was whether emergency powers could be used to support sweeping tariff actions without direct congressional approval.

The Supreme Court's ruling narrows how some tariffs can be applied, but it doesn't eliminate them. Businesses and consumers should expect tariffs to remain a key part of US trade policy—although applied in more targeted and potentially less predictable ways moving forward.

Who is impacted

Tariff collections totaled an estimated $195 billion in 2025—over 250% more than 2024 levels. Because importers are responsible for paying tariffs, a majority of these costs has been absorbed by US businesses, not foreign exporters. For many companies—particularly those that rely on imported goods, raw materials or global supply chains—this has translated into higher input costs, margin pressure and more complex pricing decisions.

Businesses have passed a majority of these costs to consumers through higher prices, especially in sectors like retail, manufacturing and consumer goods. As a result, tariffs have functioned much like an indirect tax, affecting not just business profitability but also household purchasing power. The Tax Foundation estimates that tariffs could cost approximately $1,300 per household in 2026.

How will the ruling affect tariffs?

While the Supreme Court's holding limits the president's use of sweeping tariffs under one act, the executive branch still retains the ability to impose them. Immediately after the ruling, the president imposed new levies under Section 122 of the Trade Act of 1974.

However, the use of a different statutory authority is more limited. Section 122 allows the president to increase tariffs up to 15% uniformly across all countries—but only for 150 days. While Congress could act to extend the president's tariff authority, the 2026 midterm elections may reduce the likelihood of near-term action.

Existing laws provide alternative pathways

With the Supreme Court's ruling, the White House can't use the IEEPA to impose widespread, open-ended tariffs with trading partners. However, the administration may still raise tariffs under other trade and tariff acts, such as:

• Sections of the Trade Expansion Act of 1962
• The Trade Act of 1974
• The Tariff Act of 1930

For example, Section 232 of the Trade Expansion Act authorizes tariffs on imports that are considered threats to national security, and Section 301 of the Trade Act permits tariffs when foreign trade practices are found to be a burden or restriction on US commerce.

New legislation could also significantly expand tariff powers. The Sanctioning Russia Act, a popular Senate bill, is intended to impose severe penalties on Russia for invading Ukraine. It includes provisions that may allow the White House to levy tariffs of up to 500% on any country importing Russian crude or refined products. Approximately 40 countries currently import oil from Russia, including China, Germany and Japan.

Trade negotiations may shape outcomes

Regardless of the Supreme Court's ruling, the president can continue to implement his trade agenda through renegotiated deals with other countries—many of whom are willing to bargain. These commitments still stand after the court's decision, and the accompanying terms—including purchase commitments, regulatory oversight and investment pledges—will also continue.

The issue of refunds is evolving

One aspect the Supreme Court didn't address is the future of tariffs that have already been collected under the IEEPA. According to US Customs and Border Protection, or CBP, roughly $90 billion of these increased tariffs could be refunded, although a repayment process is just being developed.

In a recent court filing, CBP summarized an IEEPA tariff refund process that may be implemented as soon as this spring. Once implemented, tariff refunds would be processed via the Automated Commercial Environment portal administered by CBP. Companies seeking tariff refunds would submit claims through the portal. Because this process is still in development, it's essential for business owners to monitor the situation as more details unfold and keep good records of the paid tariffs in 2025.

What action is required and when

With a variety of mechanisms still available to adjust tariff rates, higher tariffs are likely to remain the new normal, leading to continued uncertainty for business owners. Tariffs may be implemented unevenly, change frequently and vary by country or industry, making long-term business planning more complex. Business owners are also subject to counter tariffs imposed by other nations.

Small business owners should build these increased costs into their business plans and consider large purchases, new hires and other investment decisions carefully. It'll also be important to review past import activity and understand where tariff-related costs are affecting margins. Businesses that rely on imports may want to adjust sourcing or inventory strategies to reduce risk. Those with significant tariff exposure in 2025 should also monitor whether any new legislation or class-action lawsuits create a path to recover any previously paid tariffs.

For consumers, the risk of sharp, tariff-driven price hikes may be lower following the ruling. However, it's unlikely that prices will meaningfully decline. Uncertainty surrounding trade policy is likely to persist and may continue to influence inflation, market conditions and overall economic stability. Individuals may want to review their personal spending plans, comparison shop for lower costs where possible and delay large purchases to preserve liquidity and protect their financial position in case the economy continues to soften.

Who to talk to now

As tariff policy continues to evolve, business owners may need to adjust their operations and personal financial plans—from pricing and sourcing decisions to liquidity, investments and long-term growth strategy.

A First Citizens Wealth consultant can work with our banking team to help business owners evaluate how shifting trade policies may affect performance, cash flow and overall financial position, as well as identify opportunities to strengthen resilience in a changing environment.