While this represents the current landscape at the time of writing, we are actively monitoring developments as this story develops. This was last updated on May 14.

The US Supreme Court ruled on February 20 that President Donald Trump lacks the emergency authority to impose many of his administration’s tariffs under the International Emergency Economic Powers Act (IEEPA), including the so-called “Liberation Day” duties and levies on Canada, Mexico, and China.

In response, the administration has quickly moved to restore tariff rates to roughly where they stood before the Court struck down the “reciprocal” duties.

Where did tariffs stand prior to the decision?

The Trump administration’s trade policies upended the retail and advertising landscapes. As of November, nearly half of all US imports were subject to duties, according to a New York Times analysis of Census Bureau trade data. Roughly 25% of all US imports were specifically subject to IEEPA-based tariffs—the law at the center of the Court’s decision.

How have tariffs impacted consumers?

Since “Liberation Day,” consumers have faced effective tariff rates not seen in decades.

Immediately following the IEEPA ruling, the effective rate fell to 9.1%—still the highest level since 1946 (excluding 2025), according to the Yale Budget Lab. Had the IEEPA tariffs remained in effect, it would have climbed to 16.9%, the highest since 1932.

After the Trump administration imposed the Section 122 tariffs on February 24, the rate rose to 13.7%. If those duties expire after 150 days, it would return to 9.1%.

Under the Yale Budget Lab’s assumptions—including that the Federal Reserve “looks through” the tariffs and allows the burden to pass through prices rather than offsetting it with tighter monetary policy—the remaining tariffs would raise the overall price level by 0.5% to 0.6% if the Section 122 duties expire as scheduled. That translates into a loss of roughly $600 to $800 per average household.

If the Section 122 tariffs are made permanent, the price impact would increase to 0.8% to 1.0%, or about $1,000 to $1,300 per household. Had the IEEPA tariffs remained in place, the short-run price impact would have reached 1.2%, costing the average household an estimated $1,751 annually, or $1,292 after accounting for consumer substitution.

Federal Reserve research reinforces this pattern. A February 2026 New York Fed analysis found that nearly 90% of the tariffs’ economic burden falls on US firms and consumers rather than foreign producers. In effect, tariffs function primarily as a domestic tax on businesses and households.

The effective rate could rise more if the administration turns to other statutory authorities to impose additional duties.

What is the temporary tariff under Section 122?

In the aftermath of the Court’s decision, President Trump signed a proclamation implementing a temporary 10% global import duty under Section 122 of the Trade Act of 1974, which allows the president to levy surcharges of up to 15% for as long as 150 days to address “fundamental international payment problems,” including balance-of-payments deficits. The duty took effect on February 24 and is set to remain in place for 150 days.

In a subsequent social media post on February 21, the president said he would raise the global tariff to 15%—the maximum permitted under Section 122—and that the higher rate would take effect immediately, replacing many of the duties invalidated by the Supreme Court. However, as of March 12, that higher rate had not taken effect.

The current proclamation carves out numerous exemptions, including:

• Certain agricultural goods
• Pharmaceuticals and ingredients
• Certain electronics
• Passenger vehicles and many auto parts
• Informational materials, such as books
• USMCA-compliant goods from Canada and Mexico

Low-value shipments affected by the de minimis suspension are also subject to the new duties.

But the administration’s latest move already faces a significant legal challenge.

On May 7, 2026, a divided three-judge panel of the US Court of International Trade ruled that the Section 122 tariffs were unlawful. The court found that the administration relied on trade deficits and current account deficits rather than the specific “balance-of-payments deficits” required under the statute.

However, the practical effect of the ruling is limited for now, as the court’s injunction applies only to three plaintiffs, leaving every other importer subject to the tariffs.

The Trump administration subsequently appealed the decision to the US Court of Appeals for the Federal Circuit. The appellate court subsequently issued an administrative stay temporarily preserving the tariffs while it considers whether to grant a longer-term stay pending appeal.

Are other tariffs coming?

Yes, even if the Section 122 tariffs ultimately expire or are struck down, importers may still face new duties.

The Office of the US Trade Representative and the Commerce Department are conducting trade-related studies that could pave the way for additional tariffs. Those duties could be imposed under Section 232 of the Trade Expansion Act of 1962 or Section 301 of the Trade Act of 1974. Bessent said he expects those authorities to restore tariff rates to the levels in place before the Supreme Court struck down the reciprocal tariffs by August.

In mid-March, the administration launched Section 301 investigations targeting excess industrial capacity and inadequate forced-labor enforcement abroad — moves that could lead to higher tariffs on dozens of countries, including China, the European Union, India, Japan, Mexico, South Korea, and Vietnam.

The forced-labor probe spans roughly 60 economies — including the EU, China, Canada, Mexico, India, Taiwan, and the UK — and follows a separate overcapacity investigation covering more than a dozen trading partners. Officials have indicated that any resulting duties would replace the temporary 10% Section 122 tariffs and restore tariff revenues to pre-ruling levels.

Although Section 301 investigations typically take months, US Trade Representative Jamieson Greer said the administration aims to complete the probes by mid-July, before the stopgap tariffs expire, as the White House works to rebuild its tariff framework on firmer legal footing.

Will consumers and/or businesses receive refunds from the IEEPA tariffs?

While refunds are moving forward, key limitations and uncertainties remain.

Two months after the Supreme Court struck down the IEEPA tariffs, US Customs and Border Protection (CBP) began accepting refund applications on April 20 through its new Consolidated Administration and Processing of Entries (CAPE) system. Importers of record—those that originally paid the tariffs—or their customs brokers are eligible to file.

The government has now started issuing at least some refunds. V.O.S. Selections, a wine and spirits importer that successfully challenged the tariffs, confirmed this week that it had received a partial refund. Basic Fun!, the toy company behind brands including Tonka trucks, also said it recently received roughly $400,000 back—a fraction of the approximately $7.4 million it paid in IEEPA tariffs.

CBP has indicated that approved refunds could be issued within 60 to 90 days, though timelines may extend if claims require additional review or face legal or administrative delays. The process is also rolling out in phases, meaning not all tariff payments are eligible for submission yet, and it remains unclear when full eligibility will open.

The scale is significant: roughly $160 billion in tariffs, plus interest, could ultimately be refunded. Federal officials have estimated that refunds may need to be distributed to roughly 330,000 importers. Interest on those refunds is reportedly accruing at approximately $650 million per month, potentially turning what was once a major source of tariff revenue into a growing federal liability.

CAPE is designed to streamline the process by consolidating claims rather than handling them entry by entry, though complexities remain—particularly for disputed or fully liquidated entries.

Customs officials said in a recent court filing that they had already taken steps toward sending billions of dollars in additional approved refunds to the Treasury Department for payment. At the same time, the Trump administration has acknowledged that it is still working to expand the system used to process refund requests.

Uncertainty persists on multiple fronts. The administration has signaled that alternative legal authorities could reduce the total value of refunds, and litigation from major companies is ongoing. At the same time, consumer lawsuits are emerging that seek to compel businesses to pass refunds back to customers who absorbed higher prices.

The legal uncertainty intensified further after a federal trade court ruled that the Trump administration’s Section 122 tariffs were also unlawful. Although the administration quickly appealed and the tariffs remain in effect pending further litigation, an adverse ruling could ultimately expose the government to billions of dollars in additional refund obligations.

Even if refunds are broadly distributed, the economic impact will likely be muted. Payments will primarily go to businesses as importers of record, and while some companies may pass value back through lower prices or credits, few have committed to direct consumer refunds.

What happens now?

The administration appears committed to using alternative statutory tools—particularly Section 122—to maintain elevated tariff levels. That step alone pushed the effective tariff rate back toward pre-ruling levels. Even if the Section 122 duties expire after 150 days, ongoing uncertainty will likely keep retailers cautious in their inventory planning, pricing strategies, capital allocation, and advertising budgets.

Had the administration not imposed Section 122 tariffs, we would have expected the Supreme Court’s decision to create a modest but measurable tailwind for retail sales. Lower import costs would have reduced pricing pressure in import-heavy categories, lifting nominal retail sales relative to our Q1 2026 baseline, with the biggest gains accruing to import-heavy discretionary categories.

Specifically, we expected:

• Immediate cost relief for retailers: ​​Lower landed costs would have driven disinflation in import-heavy categories such as apparel, furniture, toys, and consumer electronics. While retailers absorbed a meaningful share of the tariff burden, many passed through some of their costs. A June New York Fed survey found that roughly three-quarters of affected firms passed along at least some tariff-related increases, and up to half fully passed them through. A Harvard Business School analysis similarly found that import prices rose 5.4% in the first six months after tariffs were imposed, compared with 3.0% for domestic goods.
• Refunds channeled into discounts and ad spend: If refunds are eventually issued, some portion could flow back to consumers via targeted promotions, temporarily boosting traffic and sales, while some could support margins or incremental ad spend. However, given ongoing legal uncertainty, companies would likely prioritize balance sheet flexibility over aggressive discounting. Promotion-driven categories like apparel would be most likely to pass savings through.

To demonstrate the impact of the Court’s decision, we modeled two retail spending scenarios for 2026 and beyond:

• Base case: Had the Court kept tariffs in place, we would have expected US retail sales to grow 3.4% this year to $7.767 trillion.