Last Updated February 20, 2026
The Supreme Court’s decision to strike down sweeping tariffs imposed under the International Emergency Economic Powers Act (IEEPA) has created a mix of relief and uncertainty for U.S. small businesses.
Key Takeaways
- The Supreme Court struck down IEEPA-based tariffs, ruling that the executive branch exceeded its authority, potentially opening the door for refunds of tens of billions of dollars in refunds.
- Small businesses that were affected by prior tariffs may see improvements in predictability, but risk remains from new tariffs under other statutes.
- In response, Trump fired back with an executive order imposing a 10% global tariff as a replacement, while continuing to pursue his trade policies through other channels. The new duties would last up to 150 days under the law he cited.
- The ruling highlights the ongoing tension between strategic trade policy and operational impacts on small businesses that depend on predictable costs for inventory, pricing, and cash flow.
- Lawmakers are considering proposals like the RELIEF Act to automate refunds, but recovery could take months, leaving short-term uncertainty for business finances.
On Feb. 20, 2026, the U.S. Supreme Court ruled that President Trump does not have authority under the International Emergency Economic Powers Act to impose sweeping global tariffs. The court majority decided that tariffs function as taxes and that the Constitution assigns the power to levy taxes and duties to Congress, invalidating a significant portion of tariffs that had been enacted under IEEPA authority.
The Court did not eliminate all tariffs currently in place. Duties imposed under other laws, including Section 232 of the Trade Expansion Act of 1962, remain intact. That means tariffs on products such as steel and aluminum are still in effect.
Within hours of the ruling, the administration announced a temporary 10% global tariff under Section 122 of the Trade Act of 1974. According to reporting from Reuters, the temporary tariff can remain in place for up to 150 days while policymakers evaluate next steps.
How the Decision Affects Small Businesses
Today’s ruling addresses one of the main concerns small importers have faced over the past year: how quickly and broadly tariffs could be imposed under emergency powers.
By limiting the use of the International Emergency Economic Powers Act for wide ranging tariffs, the Supreme Court reduced the chances that large duties can be put in place without Congress. For small businesses that were already locked into supplier contracts or fixed customer pricing when those tariffs were introduced, this clarification reduces the risk of sudden cost increases tied to executive action alone.
The decision also changes how small businesses might think about trade policy risk. Over the past year, many companies adjusted purchasing schedules, postponed growth plans, or looked for new suppliers because they feared additional emergency tariffs.
In responding to the ruling, the U.S. Chamber of Commerce said that clearer limits on tariff authority could help bring more stability to trade planning. For small importers that rely on steady costs to manage margins and cash flow, this stability can affect decisions around hiring, borrowing, and inventory.
At the same time, the ruling does not remove tariffs entirely. Certain industry specific duties remain in place under other trade laws, and a temporary replacement tariff has already been announced. That means small businesses are not operating in an entirely tariff-free environment. However, they may now face less risk of sudden, large scale emergency tariffs. The full impact will depend on what policymakers do next, but the decision shifts more responsibility for major tariff changes back to Congress.
Immediate Financial Impacts
One of the biggest outstanding questions is whether businesses will be refunded for tariffs already paid under IEEPA. Reports suggest that up to $175 billion in tariff revenue collected since early 2025 could be subject to repayment if courts ultimately determine those duties were unlawful. That level of potential reimbursement could meaningfully affect both federal revenues and the balance sheets of U.S. importers.
Because the Supreme Court ruled that the statutory authority was lacking, affected businesses may have a legal basis to seek repayment. However, the Court did not establish a formal refund mechanism. Any recovery process will likely unfold through lower court litigation or administrative action. Lawmakers have already introduced proposals to streamline repayment, including the RELIEF Act, which would direct Customs and Border Protection to issue refunds without requiring individual lawsuits.
If refunds are issued, they could improve liquidity for businesses that absorbed tariff costs or built them into prior pricing decisions. At the same time, the process may take months to resolve, leaving short term uncertainty in place. Until clearer guidance emerges, many small businesses will need to continue planning conservatively around cash flow and potential reimbursement timelines.
Supply Chain and Pricing Implications
Over the past year, many small businesses adjusted their supply chains to reduce exposure to tariffs. Some shifted to domestic suppliers. Others diversified across multiple countries to manage risk.
If certain tariffs are no longer valid and repayments begin, some businesses may revisit sourcing decisions made to avoid those costs. However, supply chains are complex and cannot always be reversed easily. Contracts, shipping timelines, and currency fluctuations all play a role in supplier selection.
Pricing strategies may also shift. If import costs decline and past outlays are repaid, businesses may have room to stabilize prices or rebuild margins. On the other hand, if foreign competitors regain cost advantages quickly, some domestic sellers could face renewed competitive pressure.
The introduction of a temporary 10% under Section 122 adds another layer of uncertainty. Even if IEEPA based tariffs are invalidated, small businesses now must account for a new trade measure that could evolve in the coming months.
Industry Sectors Most Likely to Feel the Effects
Retailers and e-commerce businesses that import finished goods are among the most sensitive to tariff changes. Manufacturers that rely on imported components may also see cost adjustments.
Construction firms that depend on imported materials continue to face duties under Section 232. Technology companies that source electronic components from overseas suppliers may see partial relief depending on how the tariff categories are revised.
Agricultural exporters could be indirectly affected as well. If the ruling eases trade tensions, retaliatory tariffs from other countries may soften over time. That outcome remains uncertain and will depend on future negotiations. The overall impact will vary by industry and by how quickly policymakers respond to the Court’s decision.
What Small Business Advocates and Experts Are Saying
In a statement following the ruling, Karen Kerrigan, President and CEO of the Small Business & Entrepreneurship Council, said the decision could ease the uncertainty that has weighed on smaller firms.
“Tariff policy and the impact of tariffs have cast a shadow over small business competitiveness and confidence,” Kerrigan said. “While the impact of tariffs has been more acute for small businesses in certain sectors, tariff policy in general has been a driver fueling uncertainty for most small businesses. Uncertainty negatively impacts investment, hiring, and business growth.” She added that small business owners “can breathe a sigh of relief” following the Court’s clarification of tariff authority.
Economists note that tariffs can serve strategic purposes, including protecting domestic industries and strengthening negotiating leverage in trade disputes. At the same time, they acknowledge that smaller companies typically have less flexibility to absorb sudden cost increases or policy swings. Trade experts also caution that the ruling does not eliminate the possibility of new tariffs under different statutes. As a result, small business owners may still need to plan for future shifts in trade policy, even as today’s decision narrows one avenue for sweeping emergency measures.
How Small Businesses Can Adapt
In the near term, small business owners may review supplier agreements and reassess pricing models to reflect updated tariff rates. Monitoring developments in lower courts will also be important for companies seeking potential refunds.
Some businesses may use this period to diversify supply chains further to reduce dependence on any single country. Others may focus on strengthening cash reserves to buffer against future policy changes.
Careful financial planning and monitoring will remain essential. Updating forecasts, stress testing cash flow scenarios, and maintaining flexibility in purchasing decisions can help businesses respond to evolving trade conditions.
Looking Ahead
The Supreme Court’s ruling marks a significant development in the ongoing debate over trade authority and tariff policy. By limiting the executive branch’s use of IEEPA to impose broad tariffs, the Court has clarified a key legal question.
For small businesses, the effects will unfold over time. Some may see cost relief. Others may experience only marginal changes if sector specific tariffs remain in place.
Trade policy remains fluid, especially with the introduction of a temporary replacement tariff. As agencies implement the ruling and lawmakers consider next steps, small business owners will need to stay informed and adaptable.
In an environment where margins are tight and planning horizons are short, legal clarity can provide a more stable foundation. Whether that stability translates into lasting cost relief will depend on how the next phase of trade policy develops.
Michael McCareins is the Content Marketing Associate at altLINE, where he is dedicated to creating and managing optimal content for readers. Following a brief career in media relations, Michael has discovered a passion for content marketing through developing unique, informative content to help audiences better understand ideas and topics such as invoice factoring and A/R financing.
