Post-Ruling Trade Strategy for Manufacturers

2/26/2026 - By Cristine Torrefranca, CPA

Overview: A landmark 6-3 Supreme Court decision on February 20, 2026, has struck down tariffs previously enacted under the International Emergency Economic Powers Act (IEEPA), ruling that the President lacks the statutory authority to impose duties under this act. This shift creates a significant cost-recovery opportunity for manufacturers but introduces a new 10% global tariff under Section 122.

Highlights:

  • Effective Date: IEEPA tariff collections ceased at 12:00 a.m. ET on February 24, 2026.
  • Refund Potential: Multi-billion dollar refunds are expected, though the process will be governed by the U.S. Court of International Trade (CIT).
  • New Costs: A 10% global tariff under Section 122 is now in effect, with potential increases to 15% looming.
  • Action Items: Immediate focus is required on ACE account management, internal controls, and electronic refund enrollment.

The manufacturing landscape has been significantly reshaped by the U.S. Supreme Court’s decision to strike down tariffs enacted under the International Emergency Economic Powers Act (IEEPA). The Court determined that because the act contains no specific reference to duties or taxation, the executive branch exceeded its authority.

For manufacturing company leaders, this ruling represents a critical pivot point. While it eliminates certain punitive costs, it also triggers a complex administrative process for duty recovery and the introduction of new trade barriers.

The Transition: From IEEPA to Section 122

As of February 24, 2026, importers are no longer required to pay the IEEPA-related tariffs that targeted goods from Canada, Mexico, China, Brazil, and India. This includes the high-profile fentanyl-related and reciprocal tariffs enacted in April 2025.

However, the relief is not absolute. To replace the struck-down duties, the administration has implemented a 10% global tariff under Section 122. This is intended as a temporary 150-day measure but is expected to increase to 15% shortly. It is also important to note that Section 232 (steel and aluminum) and Section 301 tariffs remain in full effect.

Positioning for Refund Recovery

The Supreme Court ruling does not trigger automatic refunds. The government, likely via the U.S. Court of International Trade (CIT), must still establish a formal process. Manufacturers must be proactive to ensure they are at the front of the line when the recovery window opens.

  1. Leverage ACE Reporting: The Automated Commercial Environment (ACE) portal is the definitive record for import activity. Management should ensure that ACE reports are downloaded and archived monthly. Having a designated internal lead to managing this portal is essential for verifying the support for every entry and duty paid since April 2025.
  2. Strengthen Internal Controls: With billions of dollars in potential refunds at stake, government scrutiny will be at an all-time high. Manufacturers must implement robust internal controls to document historical IEEPA payments accurately. These records are vital not only for the refund claim but also to protect the organization against potential fraud or compliance audits during the recovery phase.
  3. Facilitate Electronic Disbursements: U.S. Customs and Border Protection (CBP) has transitioned to electronic refund disbursements via ACH. Leadership should confirm the organization’s enrollment status immediately to ensure that approved refunds are deposited directly and without the delays associated with paper checks.

 

Strategic Action Plan for Manufacturing Leadership

To mitigate the impact of the new Section 122 tariffs and maximize recovery from the IEEPA strike-down, company leaders should execute the following:

  • Historical Audit: Identify all IEEPA-specific duties paid over the last year to quantify the potential refund.
  • Liquidation Monitoring: CBP is shortening liquidation periods. Corrections generally must be filed within 300 days of entry or 15 days prior to liquidation.
  • Legal Coordination: Consult with trade counsel to determine if a formal protest or participation in CIT litigation is necessary to preserve the right to a refund.
  • Supply Chain Re-evaluation: Considering the new 10% global tariff and potential increases, reassess sourcing strategies. Evaluate the cost-benefit of domestic suppliers versus international partners now subject to Section 122.

The ruling offers a rare opportunity for manufacturers to reclaim significant capital, but success depends on the quality of documentation and the speed of the corporate response.

Contact Our Manufacturing Team

Navigating the complexities of tariff refunds and new compliance requirements requires a rigorous audit trial. Our manufacturing team are ready to help you review your internal controls, audit your ACE reports, and ensure your organization is positioned for maximum recovery. 

 

About the Author | Cristine Torrefranca, CPA

Cristine is a senior member of the team who provides audit and assurance services. She began her career in public accounting over 15 years ago, focusing on serving clients in the manufacturing, distribution, and construction industries. Her primary areas of experience include managing audit engagements for privately held companies. Prior to joining Saltmarsh, Cristine was a director at a national firm where she led engagement teams and worked closely with a diverse client base.

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