February 23, 2026
By Barrie Charapp Beaty
Charapp & Weiss, LLP
bbeaty@cwattorneys.com
On February 20, 2026 the Supreme Court ruled 6-3 that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs. The effect of this decision is broad, however, the practical impact on your dealership is limited. The 25% tariffs on imported vehicles and auto parts as well as the 50% tariffs on raw materials including steel and aluminum — the ones driving your and consumer cost increases — were imposed under Section 232, not the IEEPA, and remain fully in effect.
How We Got Here
Quickly after taking office, President Trump used the IEEPA, a 1977 emergency powers statute, to impose tariffs on imports at levels we haven’t witnessed since the 1930s. Legal challenges moved fast. The Supreme Court heard oral arguments in November and ruled today in Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections, Inc. that "IEEPA does not authorize the President to impose tariffs." Chief Justice Roberts, writing for the majority, stated: "Based on two words separated by 16 others in … IEEPA—'regulate' and 'importation'—the President asserts the independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time. Those words cannot bear such weight."
By the date of the ruling, the government had collected an estimated $160 billion under IEEPA tariff authority according to Tax Foundation.
What This Supreme Court Ruling Means for Auto Dealers
The tariffs that have been impacting your dealerships by increasing costs were not imposed under IEEPA. These tariffs were imposed under Section 232 of the Trade Expansion Act of 1962. Today's ruling does not touch those tariffs imposed under Section 232.
Here is what remains in place:
- Finished vehicles: 25% tariff on all non-U.S.-assembled vehicles (Section 232, effective April 3, 2025)
- Auto parts: 25% tariff on auto parts including imported engines, transmissions, powertrain components, and electrical systems (Section 232, effective May 3, 2025)
- Steel and aluminum: 50% tariff on imported steel and aluminum (Section 232, doubled from 25% in 2025)
According to the Center for Automotive Research, Section 232 tariffs have an impact of approximately $4,240 per vehicle on the Big Three Detroit automakers (Ford, GM, and Stellantis). The IEEPA tariffs struck down today accounted for roughly $250 per vehicle — about $902 million cumulatively for the Big Three. The bottom line is that your pricing conversations with customers, your inventory cost structure, and your margin compression have not been materially changed by today's decision.
The Refund Question: Why Dealers Won't See the Money
In the Supreme Court’s opinion, Justice Kavanaugh's dissented and flagged what may become the next major fight. He wrote: "The United States may be required to refund billions of dollars to importers who paid the IEEPA tariffs, even though some importers may have already passed on costs to consumers or others." He added that the majority "says nothing today about whether, and if so how, the government should go about returning the billions of dollars that it has collected from importers."
The Supreme Court remanded the refund question to the U.S. Court of International Trade. The U.S. Chamber of Commerce demanded “swift refunds of the impermissible tariffs.” Here is what dealers need to understand: if refunds are issued, they go to the importers of record, not to dealerships. Tariffs are paid at the point of importation by the entity that brings the goods into the country. For automobiles, that is the OEM or its designated importer. There is no legal mechanism requiring OEMs to pass refund proceeds down to their dealer networks. Whether any portion reaches you is entirely at the manufacturer's discretion.
Monitor this, but do not budget for it.
Looking Ahead
The Supreme Court’s ruling is a significant decision, but it does not end tariff uncertainty for auto dealers.
Within hours of the ruling, President Trump announced plans to impose a new global tariff. Treasury Secretary Scott Bessent stated that “this administration will invoke alternative legal authorities to replace the IEEPA tariffs,” making it clear the plans to leverage Section 232 and Section 301 authorities. The Tax Foundation notes that 12 Section 232 investigations are currently open across various product categories, meaning the administration has a pipeline of new tariff actions available without touching IEEPA again.
For dealerships, the action items remain the same as they were yesterday: manage your inventory exposure, understand where your vehicles and parts are assembled, stay close to your OEM on pricing guidance, and do not assume relief is coming. The legal authority changed on certain tariffs. Unfortunately for dealers, those affecting dealerships, did not.