Trump Tariff Plan: Supreme Court Ruling, Section 232, and $166B Refunds

President Trump’s tariff plan is in a very different place in mid-2026 than it was a year earlier. The Supreme Court struck down the signature reciprocal tariffs in February 2026, a replacement surcharge was partially blocked in May, and the administration is now relying on Section 232 national-security tariffs that remain fully in force while pursuing new Section 301 investigations as the next legal foundation. Roughly $166 billion in collected duties is being refunded, slowly and with a government appeal still pending.

What the Original Plan Looked Like

The centerpiece was Executive Order 14257, signed April 2, 2025, which declared the U.S. trade deficit a national emergency and imposed a baseline 10 percent tariff on all imports effective April 5, with higher country-specific “reciprocal” rates taking effect four days later.¹ The legal authority invoked was the International Emergency Economic Powers Act of 1977, a statute no president had previously used to impose tariffs.²

Before that order, the administration had already imposed 25 percent tariffs on most Canadian and Mexican imports, 10 percent on Canadian energy, and 10 percent on Chinese goods on February 1, 2025, framing them as responses to fentanyl and migration rather than trade.³ Rates on Chinese imports escalated to as high as 145 percent in April 2025 before negotiations brought them down.⁴

Through 2025 and into 2026, the administration signed framework agreements or trade deals with more than 20 partners. The European Union settled on a combined tariff of no more than 15 percent in August 2025, along with commitments to buy $750 billion in U.S. energy through 2028 and at least $40 billion in American AI chips.⁵ India followed in February 2026, with the reciprocal rate cut to 18 percent in exchange for lower Indian tariffs, over $500 billion in purchase commitments, and a pledge to stop buying Russian oil.⁶ Deals with the United Kingdom, Japan, South Korea, Taiwan, Indonesia, Bangladesh, Argentina, Ecuador, and several Southeast Asian nations rounded out the list.⁷

The Supreme Court Ruling That Changed Everything

On February 20, 2026, the Supreme Court ruled 6-3 in the consolidated cases Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections, Inc. that IEEPA does not authorize the president to impose tariffs.² Chief Justice John Roberts wrote for the majority, joined by Justices Sotomayor, Kagan, Gorsuch, Barrett, and Jackson. Justices Thomas, Kavanaugh, and Alito dissented.⁸

The Court’s reasoning started with the Constitution. Article I, Section 8 gives Congress alone the power to “lay and collect Taxes, Duties, Imposts and Excises,” and the government conceded the president has no inherent peacetime tariff authority. IEEPA’s authorization to “regulate” importation does not include the power to tax, the Court held, and the statute’s 99 listed verb-object combinations for controlling property during emergencies include none that involve raising revenue. Three justices also leaned on the major questions doctrine, holding that Congress would not hand over the “power of the purse” through ambiguous language.² The Court of International Trade had reached the same conclusion unanimously in May 2025, and the Federal Circuit upheld it in August.⁸

The ruling invalidated the April 2025 reciprocal tariffs and the February 2025 fentanyl-related tariffs on Canada, Mexico, and China, because all rested on IEEPA.

The Section 122 Replacement, Also Blocked

On the same day the Supreme Court ruled, Trump signed Proclamation 11012 invoking Section 122 of the Trade Act of 1974, a statute that had never before been used. It authorizes a temporary import surcharge of up to 15 percent for 150 days to address “fundamental international payments problems.”⁹ The proclamation imposed a 10 percent global surcharge effective February 24, 2026, set to expire July 24, 2026, unless Congress extended it. Trump announced the next day he would raise the rate to the 15 percent statutory maximum.¹⁰

Exemptions covered critical minerals, energy, certain agricultural goods, pharmaceuticals, electronics, vehicles and parts, aerospace products, goods already subject to Section 232 tariffs, and goods entering duty-free under USMCA or CAFTA-DR.⁹

On May 7, 2026, a three-judge panel of the Court of International Trade ruled in The State of Oregon, et al. v. United States and Burlap and Barrel, Inc., et al. v. United States that the administration had failed to demonstrate “fundamental international payments problems.” The president’s characterization of trade deficits did not satisfy the legal definition of balance-of-payments deficits that would trigger Section 122 authority.¹¹ The injunction was limited to the specific plaintiffs and the state of Washington, so the surcharge still applies to importers outside that group.¹² It is also scheduled to expire July 24, 2026, unless Congress extends it.⁹

The Tariffs Still in Force: Section 232

A separate and substantial body of tariffs sits outside the IEEPA ruling and outside the Section 122 case. These were imposed under Section 232 of the Trade Expansion Act of 1962, which authorizes tariffs for national-security reasons, and they remain fully in effect.

Steel, aluminum, and copper: 50 percent, with 25 to 50 percent on derivative products. Steel and aluminum tariffs were raised from 25 to 50 percent in mid-2025 and expanded to cover steel and aluminum content in finished goods.¹³
Automobiles and parts: 25 percent on imported cars, small trucks, engines, and parts, with reduced rates for certain allies, including 15 percent for Japan, South Korea, and the EU, and 10 percent for the UK on up to 100,000 vehicles.¹³
Medium and heavy-duty trucks: 25 percent on trucks and parts, 10 percent on buses, effective November 2025.¹⁴
Timber and lumber: 10 percent on softwood, with 30 to 50 percent on certain wood products including kitchen cabinets.¹³
Semiconductors: 25 percent on specified advanced computing chips, effective January 2026.¹⁴
Pharmaceuticals: 100 percent on certain patented pharmaceutical products and ingredients, set to take effect July 31, 2026.¹⁴

More Section 232 investigations are open for commercial aircraft and jet engines, polysilicon, drones, wind turbines, medical equipment, and robotics, meaning the list is likely to grow.¹³

Section 301 as the Next Legal Foundation

With IEEPA invalidated and Section 122 wobbling, the administration has shifted to Section 301 of the Trade Act of 1974, the same statute used for the first-term China tariffs. Two major investigations launched in March 2026 could produce new duties later this year.

The first examines 60 trading partners’ failure to prohibit or effectively enforce bans on importing goods produced with forced labor. On June 2, 2026, the USTR announced findings that all 60 engaged in “unreasonable or discriminatory” practices and proposed additional duties of 10 percent on countries that already have a forced-labor prohibition and 12.5 percent on those that do not. Public hearings were scheduled for July 7, 2026, with written comments due July 6.¹⁵

The second targets structural excess manufacturing capacity in 16 economies, including China, the EU, Mexico, Japan, South Korea, India, and several Southeast Asian nations. The USTR cited global manufacturing capacity utilization of roughly 75 to 76 percent, below the 80 percent threshold considered healthy. Sectors under scrutiny include steel, aluminum, automobiles, batteries, semiconductors, chemicals, electronics, and solar modules.¹⁶ Public hearings took place in May 2026.¹⁷

The $166 Billion Refund Process

The Supreme Court’s IEEPA ruling triggered an enormous refund obligation. About $166 billion in duties had been collected from more than 330,000 importers across over 53 million entry transactions before the ruling.¹⁸ In Atmus Filtration, Inc. v. United States, the Court of International Trade ordered Customs and Border Protection to begin processing refunds.¹⁹

CBP built the Consolidated Administration and Processing of Entries system to handle refunds in phases. As of June 2026, over $95 billion had been queued for refund and $23 billion approved and transmitted to the Treasury. Another $40 billion was expected by the end of June. CBP acknowledged in an April 2026 court filing that its system could process only about $127 billion of the total, leaving roughly $39 billion unresolved.¹⁸

The government appealed on June 3, 2026, arguing that the refund orders are impermissible universal injunctions that should not extend beyond the original plaintiffs. On this view, refunds for “finally liquidated” entries, estimated at over $30 billion, should go only to importers who have filed their own suits at the Court of International Trade. About 4,000 plaintiff companies had filed protective claims as of June 2026. The Court of International Trade ordered CBP’s head to appear at a June 2026 hearing on compliance.¹⁸ If you paid IEEPA-based tariffs, whether and when you see a refund depends on which bucket your entries fall into and how the Federal Circuit rules on the appeal.

What the Tariffs Have Done to Prices and Jobs

The average effective U.S. tariff rate rose from 2.6 percent at the start of 2025 to 13 percent by year-end, according to the Federal Reserve Bank of New York.²⁰ As of April 2026, the Yale Budget Lab calculated the effective rate at 11 percent, the highest since 1943.²¹

A Federal Reserve staff analysis published in April 2026 found that tariffs implemented through November 2025 raised core goods consumer prices by 3.1 percent and core overall consumer prices by 0.8 percent through February 2026, with pass-through to consumers “effectively complete” within roughly five to nine months.²² The New York Fed found nearly 90 percent of the tariffs’ economic burden fell on U.S. firms and consumers rather than foreign exporters.²⁰

Manufacturing employment, one of the stated goals of the plan, declined. The sector lost 108,000 jobs during the first year of the second Trump term, according to the Joint Economic Committee’s Democratic staff.²³ The Cato Institute reported net job losses in each of the last eight months of 2025, the third consecutive year of negative net annual manufacturing job growth.²⁴

The trade deficit, the problem the April 2025 order declared a national emergency, grew rather than shrank. The goods trade deficit hit a record high in 2025, with supply chains shifting from China to Vietnam and Mexico rather than imports falling overall, according to the Council on Foreign Relations.²⁵ The Tax Foundation reported the overall trade deficit fell by only $2.1 billion in 2025, carried by a services surplus, while the goods deficit grew by $25.5 billion.²⁶

The Penn Wharton Budget Model projected that the April 2025 plan, if maintained unchanged, would reduce long-run GDP by about 6 percent and wages by about 5 percent, costing a middle-income household roughly $22,000 over a lifetime, with economic losses more than twice as large as those from a revenue-equivalent corporate tax increase.²⁷

Deadlines to Watch

Several dates will shape what the tariff plan looks like by the end of 2026. The Section 122 surcharge expires July 24, 2026, unless Congress extends it, and it is already blocked for the Oregon and Burlap and Barrel plaintiffs plus Washington state.⁹ The 100 percent Section 232 tariff on certain patented pharmaceuticals takes effect July 31, 2026.¹⁴ The two Section 301 investigations are moving through comments and hearings and could yield new duties later in 2026 on a firmer legal footing than the emergency powers the Supreme Court rejected.¹⁵ And the Federal Circuit’s handling of the government’s refund appeal will determine whether most importers who paid IEEPA tariffs get their money back automatically or have to file their own suits to collect.¹⁸

1
Federal Register. Regulating Imports With a Reciprocal Tariff
2
Supreme Court of the United States. Learning Resources, Inc. v. Trump
3
White House. Fact Sheet: President Donald J. Trump Imposes Tariffs on Imports From Canada, Mexico, and China
4
New York Times. Trump Tariffs on Canada, Mexico, and China
5
European Commission. Joint Statement on Framework Agreement for Reciprocal, Fair and Balanced Trade
6
White House. Fact Sheet: The United States and India Announce Historic Trade Deal
7
Office of the United States Trade Representative. Presidential Tariff Actions
8
Tax Foundation. Supreme Court Trump Tariffs Ruling
9
White House. Imposing a Temporary Import Surcharge to Address Fundamental International Payments Problems
10
New York Times. Trump Tariffs
11
U.S. Court of International Trade. Slip Op. 26-47
12
NPR. Trade Court Strikes Down 10 Percent Tariffs
13
Council on Foreign Relations. Guide to Trump’s Section 232 Tariffs
14
Covington. Current and Forthcoming Section 232 Actions
15
Office of the United States Trade Representative. USTR Makes Findings and Proposes Action on 60 Section 301 Investigations
16
Federal Register. Initiation of Section 301 Investigations
17
Office of the United States Trade Representative. Section 301 – Structural Excess Capacity
18
New York Times. Trade Court, Customs Chief, Tariff Refunds
19
Skadden. Tariff Refund Mechanism Takes Shape
20
Federal Reserve Bank of New York. Who Is Paying for the 2025 U.S. Tariffs
21
Budget Lab at Yale. State of US Tariffs
22
Federal Reserve Board. Detecting Tariff Effects on Consumer Prices in Real Time – Part II
23
Joint Economic Committee. New Data: During Trump’s First Year the Manufacturing Industry Lost 108,000 Jobs
24
Cato Institute. Manufacturing Employment Data Confirms Concentrated Benefits, Dispersed Costs of Trump’s Tariffs
25
Council on Foreign Relations. Annual U.S. Goods Deficit Hits a Record
26
Tax Foundation. Trump Tariffs Trade War
27
Penn Wharton Budget Model. The Economic Effects of President Trump’s Tariffs