Trade Wars and Tariffs: Current State

The short version

• **IEEPA tariffs are over.** On 2026-02-20 the Supreme Court held that IEEPA “does not authorize the President to impose tariffs,” which invalidated both the 2025 “drug trafficking” tariffs on Canada, Mexico and China and the “reciprocal” tariffs (Supreme Court).
• **Other laws filled the gap.** A 10% Section 122 surcharge ran from 2026-02-24 until its 150-day limit on 2026-07-24, and Section 301 forced-labor tariffs of 10% or 12.5% on 60 economies took effect the same day (CRS).
• **Section 232 tariffs remain** on metals, autos, trucks, certain semiconductors, pharmaceuticals, lumber and more, and new investigations are open.
• **Refunds are flowing, unevenly.** CBP began processing IEEPA refund declarations on 2026-04-20, and the Treasury reported customs duties net of refunds at negative $3.5 billion for the third quarter of fiscal 2026 (Treasury Bulletin, September 2026).
• **Legal fights continue** over Section 122 (appeal pending) and the new Section 301 action (argued 2026-09-30).

Legal status as of 2026-10-11

IEEPA: decided

The Court decided 6-3 on 2026-02-20 in an opinion by Chief Justice Roberts, with separate concurrences and two dissents (SCOTUSblog). It affirmed the Federal Circuit in the V.O.S. Selections case and vacated and remanded the Learning Resources case with instructions to dismiss for lack of jurisdiction (opinion). The Court said it claimed “no special competence in matters of economics or foreign affairs.”

Refunds: phased and limited to importers of record

The Court of International Trade ordered CBP on 2026-03-04 to liquidate unliquidated entries without IEEPA duties and to reliquidate entries not yet final (Troutman). CBP’s CAPE system consolidates refunds including interest, and CBP says valid refunds are generally issued 60 to 90 days after a declaration is accepted (CBP). Phases opened on 2026-04-20, 2026-06-29 and 2026-10-06 (BLS Company), and BLS Company, citing Thompson Coburn, reports that the government has said it will appeal the order to refund everyone. Only the importer of record, or a party it designates, receives refunds, so firms that paid tariffs through a supplier or distributor should review their contracts (Snell & Wilmer).

Section 122: expired, appeal pending

A divided Court of International Trade held the surcharge unlawful on 2026-05-07, concluding the trade and current-account deficits are not the balance-of-payments deficits Congress meant in 1974. The Federal Circuit stayed the injunction on 2026-06-11, saying the majority opinion “may be incorrect” (Carter Ledyard). Refunds for Section 122 duties are not available through CAPE, so importers with material exposure should ask counsel about protests or litigation (Snell & Wilmer).

Section 301 forced-labor tariffs: argued, undecided

Importers and states challenge the new tariffs at the Court of International Trade, arguing the statute does not authorize tariffs of this breadth on this rationale. The government says USTR made the required findings. The court heard argument on 2026-09-30, and I found no decision as of 2026-10-11 (Carter Ledyard). Older China Section 301 tariffs continue after USTR received continuation requests (KPMG, 2026-10-06).

Section 232 and USMCA

The Supreme Court’s decision did not affect Section 232 or Section 301 tariffs (Troutman). The statutorily required joint review of the USMCA is ongoing (CRS), so rules for North American trade could still change.

A practical sourcing playbook for small manufacturers

This is an operations playbook, not legal or customs advice. For classification, valuation, origin and refund questions, use a licensed customs broker or trade attorney.

1. Build a tariff exposure map

Create a table with one row per purchased part: supplier, country of origin, country of export, HTS code, annual spend, duty rate and authority (MFN, Section 232, Section 301, antidumping or countervailing). Sort by spend times duty. Most firms find that a handful of parts and countries drive most of the exposure. Include imported components inside assemblies and metal content in derivative products.

2. Compare landed cost, not unit price

Landed cost per unit = unit price + freight + insurance + duty
                       + brokerage and fees + inventory carrying cost
                       + allowance for quality, delay and risk

Duty = customs value x duty rate (add each applicable rate; confirm stacking)
Carrying cost = unit price x annual carrying rate x (extra days on hand / 365)

Hypothetical arithmetic only, not a forecast: an overseas part at $10.00, with $0.70 freight and insurance, 12.5% duty ($1.25), $0.10 fees and 60 extra days of inventory at a 20% annual carrying rate ($0.33), lands at $12.38. A domestic part at $12.00 with $0.25 freight and 15 days of inventory ($0.10) lands at $12.35. The gap is small, so quality, lead time and risk can decide the choice. U.S. customs value generally excludes international freight and insurance, but confirm with your broker.

3. Qualify a second source

For every high-exposure or single-source part, identify at least one alternate supplier in a different country or region and run a first-article or sample order before you need it. Dual sourcing costs money, so apply it where exposure and lead time justify it. See Manufacturing Procurement & Supply Chain Services for support with RFQs and supplier scorecards.

4. Confirm HTS classification and origin

Duty depends on classification and origin. Check the HTS (USITC) and prior CBP rulings in CROSS (CBP CROSS), and consider asking your broker about a binding ruling for high-value or ambiguous parts. Misclassification can create penalties and back duties, so document your reasoning.

5. Look at duty drawback

CBP describes drawback as the refund of certain duties, internal revenue taxes and fees collected on imports when the merchandise is exported or destroyed (CBP drawback overview). If you import materials for products you export, ask a broker whether drawback applies and what records you need. Eligibility for newer tariff programs can differ, so verify before relying on it.

6. Evaluate a foreign-trade zone

Foreign-trade zones are U.S. sites treated differently for customs purposes and can defer or reduce duties in some operations. They carry compliance requirements and can be restricted for certain trade remedies, so evaluate with an operator and counsel (ITA FTZ Board).

7. Understand USMCA treatment

USMCA-compliant goods are exempt from the Section 301 forced-labor action (CRS), and some Section 232 tariffs have USMCA exceptions, but a good must actually qualify and you must keep the documentation (CBP USMCA page). Section 338 duties on certain Canadian goods have no USMCA exemption (CRS). The statutory USMCA review adds uncertainty.

8. Reclaim what you may be owed

If you were the importer of record for IEEPA-era entries, confirm you have an ACE account and ACH refund registration and ask your broker about CAPE (CBP). Review customer and supplier contracts for pass-through and refund-entitlement clauses so disputes don’t arise later (Snell & Wilmer).

9. Plan three scenarios

Model landed cost under (a) current rates, (b) higher rates if Section 301 or Section 232 actions expand, and (c) lower rates if courts or negotiations remove some measures. Set trigger points, such as a cost gap that would justify moving a part, and revisit monthly. The Knowledge Base has the planning formulas, and Statadventure builds landed-cost and exposure tools in Python and SQL.

Frequently asked questions

Are the IEEPA tariffs still in effect?

No. On 2026-02-20 the Supreme Court held in Learning Resources, Inc. v. Trump that IEEPA does not authorize the President to impose tariffs, affirming the Federal Circuit in the V.O.S. Selections case. The administration then used other laws: Section 122 (a 150-day, 10% surcharge that expired 2026-07-24), Section 301 and Section 232.

Which tariffs apply to imports right now?

As of CRS’s 2026-09-30 data, Section 232 duties apply to steel, aluminum, copper products, autos and parts, trucks and buses, certain semiconductors, patented pharmaceuticals, timber and lumber, polysilicon and drones, at rates that vary by product and country. A Section 301 forced-labor tariff of 10% or 12.5% applies to 60 economies, with exemptions. Older China Section 301 tariffs continue, and Brazil and select Canadian goods face separate actions. Check your own HTS codes and countries of origin.

Can I get a refund of IEEPA tariffs I paid?

Possibly. CBP’s CAPE process accepts refund declarations from the importer of record or its broker, in phases that began 2026-04-20, and CBP says valid refunds are generally issued 60 to 90 days after a declaration is accepted. Eligibility depends on entry status and who was the importer of record. Talk to your broker or trade counsel, and review contracts about who is entitled to refunds.

What is happening with the Section 122 tariffs?

They expired on 2026-07-24. The Court of International Trade held them unlawful on 2026-05-07, but relief was limited to the plaintiffs and the Federal Circuit stayed the injunction on 2026-06-11. The appeal remains pending, and CAPE does not cover Section 122 duties.

Do Section 232 and Section 301 tariffs face legal challenges?

Section 232 and the older China Section 301 tariffs were not affected by the Supreme Court’s IEEPA decision. The new Section 301 forced-labor tariffs are being challenged at the Court of International Trade, which heard argument on 2026-09-30; I did not find a decision as of 2026-10-11.

How do I calculate the real cost of an imported part?

Use landed cost: unit price plus freight, insurance, duty, fees and the carrying cost of extra inventory, compared across suppliers. The playbook below includes a formula and a clearly labeled hypothetical example.

Will tariffs bring manufacturing back to the U.S.?

Evidence is mixed. Some companies announced U.S. investment and cite tariffs or trade policy, while others paused or cancelled projects, and Kearney found tariffs shifted import sources more than they cut import dependence. See the company tracker for specific, sourced examples on both sides.