IEEPA Tariffs: Everything Importers Should Know About the International Emergency Economic Powers Act

Table of Contents

• What Are IEEPA Tariffs?
• How IEEPA Tariffs Work in Practice
• Is a Trade Dispute a True National Emergency?
• Economic Impact and Who Pays
• What Happens Next?
• Frequently Asked Questions

The International Emergency Economic Powers Act (IEEPA) tariffs are a new class of United States (U.S.) import duties imposed by President Trump after declaring several national emergencies in 2025. They sit at the intersection of trade, national security, and executive power and are now the subject of high‑stakes litigation that could reshape how far presidents can go in using emergency authorities to tax imports.

What Are IEEPA Tariffs?

While often discussed in the context of trade, IEEPA is a 1977 law that was designed as a powerful financial measure for emergencies. Its intended purpose is to allow a president to respond to an “unusual and extraordinary threat” from abroad that targets U.S. national security, foreign policy, or the economy. Think of it less as a trade negotiation tool and more as an emergency lever to protect the country from hostile foreign actors.

The law's main powers are financial. It allows the president to freeze the assets (like bank accounts) of foreign countries, companies, or individuals and block them from doing business with Americans. This is a common way the U.S. government works to cut off funding for terrorist organizations or put pressure on regimes engaging in human rights abuses. This enforcement is carried out by the Office of Foreign Assets Control (OFAC) within the U.S. Treasury Department.

What makes today’s IEEPA tariffs unusual is that they leverage a sanctions‑style authority to impose broad, across‑the‑board import duties rather than targeted asset freezes. Beginning in early 2025, President Trump declared national emergencies tied to:

• Illicit drugs and fentanyl flows across the northern and southern borders
• The synthetic opioid supply chain in China
• Large and persistent U.S. goods trade deficits and “unfair” foreign trade practices

These emergencies were followed by executive orders that layered new IEEPA‑based duties on imports from Mexico, Canada, China, and many other countries.

This is the first time IEEPA has been used to impose such broad, generalized tariffs on imports rather than narrow sanctions, making these measures historically unprecedented.

How IEEPA Tariffs Work in Practice

From an importer’s perspective, IEEPA tariffs function like any other additional duty: they are assessed at the time of entry and are paid to the U.S. Customs and Border Protection (CBP) along with ordinary customs duties. Key operational features include:

• Scope and Coverage: The tariffs apply to a wide range of goods and countries, depending on the particular executive order and any “stacked” measures in effect for that product and origin.
• Rates: Many IEEPA tariffs are set at 10–25%, but some targeted items (for example, certain de minimis shipments or fentanyl‑linked products) face much higher effective rates under specific orders.
• Stacking: A single import can be hit with multiple IEEPA duties at once, according to stacking rules issued in follow‑on executive orders, resulting in an “effective IEEPA tariff rate” that is the cumulative burden of all applicable emergency measures.
• Administration: CBP collects the duties, assigns special Chapter 99 tariff numbers for IEEPA measures, and tracks them separately from other trade remedies such as Section 232 (national security) or Section 301 (unfair trade) tariffs.

Because the first IEEPA tariffs took effect in February 2025, a large share of entries subject to these duties are still within normal refund and litigation timeframes, which is part of what makes the current court challenges so consequential.

Is a Trade Dispute a True National Emergency?

Is an economic disagreement, like a trade imbalance, the same as the "unusual and extraordinary threat" IEEPA was designed to combat? The answer depends entirely on who you ask, and it has created a significant divide over presidential power.

Throughout 2025, importers and several states challenged the IEEPA tariff orders at the U.S. Court of International Trade (CIT). According to a recent CBP declaration in consolidated CIT litigation, importers have paid approximately $129 billion in IEEPA tariff duties and estimated deposits across over 34 million entries as of December 10, 2025.

The CIT, and later the Court of Appeals for the Federal Circuit, held that IEEPA does not provide the president with the necessary authority to impose these kinds of broad tariffs. However, the Court of Appeals issued an order administratively staying the CIT injunction while it considered an appeal — as of the date of this publication, IEEPA tariffs remain in effect.

Critics of IEEPA tariffs believe the U.S. Constitution gives Congress — not the President — the primary power to set taxes and regulate commerce. From this perspective, using an emergency law to bypass Congress on a trade issue weakens the fundamental system of checks and balances. It is argued that while a trade dispute might be serious, it doesn’t rise to the level of a true national emergency.

Proponents argue that the nature of global threats has changed. It is contended that in the 21st century, an aggressive economic policy from another nation can be just as damaging to U.S. security as military action. In this view, IEEPA is a necessary tool that allows a President to respond swiftly to protect American jobs and industries without getting bogged down in slow-moving politics.

Economic Impact and Who Pays

IEEPA tariffs raise the landed cost of affected imports, and the burden generally falls on U.S. businesses and consumers rather than foreign exporters. Some of the key impacts include:

• Higher Costs for Importers: Companies pay the extra IEEPA duties at entry, which can be significant in sectors heavily reliant on imports from Mexico, Canada, China, and other targeted countries.
• Supply Chain Disruption: Many firms have scrambled to re‑source products, reprice contracts, or restructure supply chains to reduce exposure to IEEPA‑hit items.
• Uncertainty and Planning Challenges: Because the legal status of the tariffs is unsettled, importers face difficulty in long‑term pricing, budgeting, and contract negotiations, not knowing whether duties will be permanently baked into cost structures or potentially refunded.

What Happens Next?

It has now been more than two months since the Supreme Court heard arguments on the Trump administration’s IEEPA tariffs, and a ruling is expected soon.

With a potential U.S. Supreme Court decision overturning President Trump’s IEEPA tariffs on the horizon, companies should be ready to move quickly. In practical terms, that means:

• Building a complete record of IEEPA tariffs paid so they can substantiate refund claims.
• Reviewing key customer and supplier contracts to understand who ultimately benefits from any refunds and whether pricing or rebate clauses are triggered.
• Understanding existing customs refunds and reliquidation mechanisms, while recognizing that the Court or the government may design a special, one‑off process for IEEPA refunds.
• Exploring tariff‑mitigation strategies, such as bonded warehouses and foreign‑trade zones, to manage current and future duty exposure.
• Planning for the likelihood that “replacement” tariffs could follow, potentially under Section 232 or new legislation, even if IEEPA‑based duties are struck down.

Additionally, the CIT recently ruled that liquidation of entries subject to International Emergency Economic Powers Act (IEEPA) tariffs does not bar reliquidation and refunds if those tariffs are deemed unlawful by the Supreme Court.

Frequently Asked Questions

Are IEEPA tariff refunds actually happening?

Manufacturing and distribution companies want to know whether refunds are guaranteed and when they will begin.

• The government stopped collecting IEEPA tariffs on February 24, 2026, after the Supreme Court ruled them unlawful.
• Refunds are expected, but the process is not yet fully automated.
• CBP is building a new refund system (CAPE) to manage the volume.

Will refunds be issued automatically, or do companies need to apply?

This is one of the biggest concerns for distributors. Refunds will NOT be automatic. Importers must take action in CBP’s ACE system. Companies must be properly registered for electronic refunds.

What is the CAPE module in ACE for IEEPA tariff refunds?

The CBP Automated Payment Expediter (CAPE) module within the Automated Commercial Environment (ACE) is CBP's forthcoming portal for processing IEEPA tariff refunds, expected to launch around April 2026. Manufacturers and distributors will submit affected entry data, verify payments, and receive automated electronic disbursements — streamlining refunds totaling $175B – $179B nationwide. Audits apply; preserve five years of records like invoices and broker filings. Expect 45+ days for system rollout.

How does the Supreme Court’s IEEPA ruling affect manufacturers and distributors?

The February 20, 2026, Supreme Court Ruling declared IEEPA tariffs unlawful, potentially unlocking refunds for manufacturers on 2025–2026 entries. Manufacturers must review contracts, landed costs, and supply chains now as fixed-price deals may need repricing.

Are distributors eligible for IEEPA tariff refunds?

Yes, distributors as importers of record can claim refunds on IEEPA duties paid February 2025–February 2026 via the U.S. Customs and Border Protection’s (CBP’s) upcoming CAPE module in ACE (expected to launch around April 2026). Distributors should gather entry summaries and ACH details now; protests will be due within 180 days of liquidation.

Can businesses recover IEEPA tariffs on raw materials?

Yes. Raw materials, components, and assemblies under IEEPA (e.g., fentanyl/trafficking measures) qualify if entered before February 24, 2026. File protests on liquidated entries; unliquidated ones auto-adjust.

What replaces IEEPA tariffs for distributors after the ruling?

Section 122 of the Trade Act imposes a temporary 15% global tariff (max 150 days, USMCA-exempt), far narrower than IEEPA’s scope. Monitor for Section 201/301 extensions; update pricing models immediately.

What are Section 122 tariffs?

Section 122 tariffs, enacted under the Trade Act of 1974, impose a temporary 15% global tariff (up to 150 days, USMCA-exempt) as a replacement after the Supreme Court struck down IEEPA tariffs in February 2026. Manufacturers and distributors should review supply chains for landed cost impacts, as these stack with Section 301/232 where applicable, though far narrower than IEEPA's prior scope.

What are Section 301 and 232 tariffs?

Section 301 tariffs target unfair trade practices (e.g., China's IP theft, tech transfers), imposing 7.5–25% duties on $300B+ goods since 2018 and are still active post-IEEPA ruling. Section 232 tariffs protect national security with 25% on steel/aluminum and derivatives, expanded to automobiles in 2019. Unlike invalidated IEEPA tariffs, these remain fully enforceable; manufacturers/distributors must track stacking with Section 122 and maintain compliance records for CBP audits/FCA risks.

How do IEEPA tariff refunds impact supply chain compliance for manufacturers?

Refunds require robust recordkeeping to pass CBP audits; manufacturers must track entry data, stacking rules, and broker communications. Non-automatic process heightens qui tam risks if discrepancies emerge.

What are qui tam risks for IEEPA tariff compliance in manufacturing?

Post-ruling, whistleblowers target inaccurate declarations on now-invalid duties; FCA claims could arise from refund disputes or prior underpayments. Forensics-led audits can help mitigate DOJ/CBP scrutiny. 

Are IEEPA tariffs gone forever for U.S. importers?

The Supreme Court limited presidential IEEPA power, but Congress could authorize similar duties. Section 122 fills the gap short-term; Section 232/301 remains unaffected (e.g., steel/auto). Businesses should anticipate and plan for continued volatility.

What documentation do manufacturers need for IEEPA tariff refund claims?

Entry summaries (CBP Form 7501), commercial invoices, proof of IEEPA payments (Chapter 99 HTSUS), ACH registration, and broker correspondence. Organize by EIN for multi-broker operations; retain five years per regulations.

Can distributors negotiate supplier rebates after IEEPA refunds?

Yes, if suppliers (importers of record) receive refunds on goods purchases at inflated prices. Pass-through clauses must be reviewed carefully.

What are foreign trade zones (FTZs) for manufacturers and distributors facing IEEPA tariffs?

Foreign Trade Zones (FTZs) are secure U.S. sites legally outside customs territory, letting manufacturers and distributors store, process, or assemble imports while deferring IEEPA/Section 122 duties until goods enter U.S. commerce. Key benefits include weekly entry merchandise processing fee (MPF) savings, property tax exemptions on zone inventory, and unlimited storage — ideal for managing post-ruling refund delays or new tariff exposure.

Should manufacturers use bonded warehouses for IEEPA tariff exposure?

Bonded warehouses defer duties (up to five years) on unrefunded entries or Section 122— ideal for storage while awaiting CAPE refunds. There are no weekly entry savings like FTZs, but bonded warehouses offer a simpler setup.

What is the deadline for IEEPA tariff protests from manufacturers?

180 days post-liquidation for protests; unliquidated entries auto-refund via CAPE. Companies affected should file now as CBP backlogs loom.

How do IEEPA refunds affect pricing for manufacturing contracts?

IEEPA tariff refunds can significantly impact manufacturing contracts, especially fixed-price or cost-plus agreements from 2025–2026. Manufacturers may need to reassess landed costs, issue supplier rebates, or renegotiate terms to pass through savings from CBP refunds. Review pass-through clauses and update pricing models to exclude refunded IEEPA duties while factoring in Section 122/301/232 replacements, non-compliance risks, qui tam exposure, or contract disputes.