On Friday, February 20, 2026, the U.S. Supreme Court issued a 6-3 decision in which it held that the President is not authorized to impose tariffs under the International Emergency Economic Powers Act (IEEPA). In 2025, the Trump Administration relied on the IEEPA when it imposed reciprocal and country-specific tariffs that ranged from 15% to 40%, depending on the country and the type of goods being imported. Shortly after the Court issued its opinion, President Trump announced that he would immediately impose a global 10% tariff under section 122 of the 1974 Trade Act, which was later increased to 15%, and added that all existing tariffs would remain in place. Section 122 allows the President to impose duties to deal with “large and persistent” balance-of payments deficits, but limits such tariffs to a 150-day period unless Congress acts to extend them.

The Court did not order the Administration to issue refunds or address how a refund process might proceed, however Justice Kavanaugh noted in his dissent that the government may be required to issue refunds in a process that he said will likely be a “mess.” Additional guidance may result from further proceedings before the U.S. Court of International Trade, where suits for tariff refunds are already pending.

Clients in the development and construction industries should be aware that Friday’s decision does not affect the tariffs that are imposed on raw material inputs – steel, aluminum, copper, and softwood lumber and timber (and their derivatives) — as these tariffs are not imposed under the IEEPA. However, the decision does impact tariffs on finished goods, fixtures, furniture, appliances, and equipment.

It remains unclear whether, and how, developers, contractors, and property owners may be able to seek refunds for tariffs paid or passed through to them that have now been ruled invalid. Tariffs are paid, and if refunded, the refund will presumably go to the importer of record through customary channels. Contractors and developers are not typically the importer of record. However, on larger projects, the additional costs attributable to the now-invalidated tariffs can be significant, and we anticipate further political developments and litigation.