On Feb. 20, the Supreme Court invalidated a key component of President Donald Trump’s tariff agenda. Within hours, the administration introduced a new tariff policy.
This sequence highlights a central challenge for American businesses. The court’s 6-3 decision that Trump exceeded his authority under the International Emergency Economic Powers Act (IEEPA) was definitive. However, for small businesses, the economic consequences remain unresolved.
Under IEEPA, the administration collected more than $130 billion in tariff revenue after what Trump branded “Liberation Day” last April. Federal data and estimates from the Penn Wharton Budget Model put collections at roughly $133.5 billion as of December, representing about half of total customs duties in 2025. At one point, receipts were running at about $500 million per day.
The court clarified that the authority to impose taxes, including tariffs, resides with Congress rather than the president. Chief Justice John Roberts noted that no previous president had interpreted IEEPA as unrestricted authority for global levies. However, the ruling did not specify the disposition of the billions already collected.
Large corporations responded promptly. FedEx filed a lawsuit in the U.S. Court of International Trade seeking a full refund of tariffs paid under IEEPA, citing financial harm from the levies. The company had previously projected a $1 billion impact in 2026 due to tariffs and related policy changes. Retailers such as Costco and Revlon are also pursuing refunds. Industry groups, including the U.S. Chamber of Commerce and the National Retail Federation, are advocating for a structured repayment process.
In his dissent, Justice Brett Kavanaugh acknowledged the potential for significant disruption. He noted that the court did not address “whether, and if so how,” the government should return billions of dollars collected from importers.
Resolving these payments may take several years. Importers typically have 180 days after goods are liquidated to contest duties with Customs and Border Protection. Legal and contractual disputes regarding ultimate liability are expected to be complex and costly.
Simultaneously, the administration has not withdrawn from its tariff strategy. Within one day of the ruling, Trump announced plans to impose a 10% global tariff under Section 122 of the Trade Act of 1974, later indicating the rate could increase to 15%. Section 122 authorizes the president to impose temporary tariffs of up to 15% if the United States experiences “large and serious balance-of-payments deficits” or threats to the stability of the dollar.
Economists note, however, that under the floating exchange rate system in place in the United States since the early 1970s, balance-of-payments accounts are structured so that they offset each other. In theory, trade deficits are counterbalanced by capital inflows, maintaining overall equilibrium.
This dynamic raises questions about the administration’s definition of an economic emergency under a statute enacted in a different era of global finance.
Other tariff authorities remain in effect. Sector-specific duties imposed under Section 232 of the Trade Expansion Act of 1962 continue to apply to steel, aluminum and vehicles. The Commerce Department has initiated Section 232 investigations into pharmaceuticals, semiconductors, critical minerals and aircraft, increasing the likelihood of additional targeted tariffs.
For small businesses, the ongoing legal debate results in daily operational challenges.
Richard Trent of Main Street Alliance, which represents more than 30,000 small businesses, described members facing rate changes “jumping overnight” with no planning horizon. Rick Muskat of Deer Stags Concepts said tariffs led to layoffs and the freezing of growth plans. Andrea Englisis of Athenee Importers & Distributors said tariff payments came from funds intended for salaries.
Some business owners suggest that refunds could enable rehiring or reverse price increases. Others caution that consumer demand, already diminished by inflation and layoffs, may not recover solely from returned duties.
Farmers tell a similar story. John Boyd Jr. of the National Black Farmers Association said higher costs for fertilizer, diesel and machinery parts strained operations and disrupted export relationships. The National Farmers Union welcomed the court’s clarity but urged policymakers not to pursue similar tariffs under different statutes.
Consumers have already borne a significant portion of the costs. The Yale Budget Lab estimated that between 31% and 63% of tariff costs were passed through in higher prices. Yale currently estimates the average U.S. tariff rate at 9.1%, which is below its peak under IEEPA but remains the highest since World War II.
The result is a trade environment defined less by a single policy than by continuous change. Tariffs have been imposed, suspended, increased and reintroduced in rapid succession. Court decisions alter the legal framework. New authorities replace old ones.
For businesses deciding whether to hire, expand or shift supply chains, the question is no longer simply whether tariffs are good or bad. It is whether the rules will remain stable long enough to plan around them.
While the Supreme Court has addressed one constitutional question, broader economic uncertainty persists. Until this uncertainty diminishes, both large and small companies remain in a state of uncertainty.
