Supreme Court IEEPA Ruling and New U.S. Tariffs: Implications for Civil Aviation

The U.S. Supreme Court, on February 20, 2026, held that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose tariffs. The Court affirmed the decision of the Court of International Trade, which had been affirmed by the U.S. Court of Appeals for the Federal Circuit, and remanded the case to lower courts.

In response, President Donald Trump promptly issued new executive orders (EOs) imposing tariffs under alternative statutory authorities while exempting civil aircraft, engines and parts from these new tariffs. Though this remains a developing situation, a snapshot analysis is provided below.

Scope of the Decision. This decision affects certain tariffs imposed on Canada, Mexico and China, as well as the baseline and "reciprocal" tariffs imposed on many other countries (IEEPA Tariffs). It does not affect tariffs imposed on steel, aluminum and other products under different legal authorities.

Has the IEEPA Decision Taken Effect? On February 20, 2026, the president issued an EO terminating the IEEPA Tariffs. U.S. Customs and Border Protection (CBP) implemented this termination as of 12:00 a.m. ET on February 24, 2026, with the new tariffs taking effect at 12:01 a.m. ET.

What Are the New Tariffs? Within hours of the Supreme Court's decision, the president issued a new EO imposing a 10 percent tariff on goods from all countries, effective February 24, 2026, for a period of 150 days. The next morning, the president indicated that this rate would be increased to 15 percent, although that increase has not yet been implemented. A number of goods, including civil aviation products, were exempted from the new tariffs. These new tariffs were issued under Section 122 of the Trade Act of 1974 (Section 122 Tariffs). In addition, the president announced the U.S. would launch trade investigations under other authorities that could lead to additional future tariffs.

What Is the Exemption for Civil Aviation Under the Section 122 Tariffs? The EO implementing the Section 122 Tariffs expressly excludes "certain aerospace products." Consistent with previously negotiated framework agreements, Annex II to the order exempts civil aircraft, engines and parts that were eligible for duty-free treatment under the 1979 Agreement on Trade in Civil Aircraft. As of February 24, 2026:

• Civil aviation items from the European Union, United Kingdom, Switzerland and other countries remain duty-free but must now be entered under new tariff codes promulgated in the EO. This coding requirement applies to all countries, regardless of whether a framework agreement is in place.
• Brazilian- and Israeli-origin civil aircraft (previously subject to a 10 percent tariff) and Canadian-origin civil aviation items that do not qualify for the exemption under the United States-Mexico-Canada Agreement (USMCA) (previously subject to a 35 percent tariff) appear to now be eligible for duty-free entry into the U.S.
• This exemption also appears to remove tariffs on the value of improvements to civil aircraft, engines and parts performed in countries that were previously subject to the IEEPA Tariffs (e.g., engine overhauls, etc.).

Refunds of IEEPA Tariffs. In light of the Supreme Court's decision, IEEPA Tariffs paid by importers of record are, in principle, subject to reimbursement. Both the Federal Circuit and Supreme Court recognized that an adverse ruling for the government could allow recovery of IEEPA Tariffs. However, the mechanics for obtaining refunds remain unresolved.

• Prior to the Supreme Court's ruling, numerous companies had filed "tag-along" suits in the Court of International Trade in an attempt to preserve rights to refund of duties paid if the administration did not agree to provide refunds in the normal course. Companies have continued to file such suits following the decision, and there are reportedly now more than 1,000 such cases on file.
• Companies should preserve records of all entries subject to the IEEPA Tariffs, including entry summaries, duty payment documentation and internal allocation of tariff costs. There may be administrative mechanisms, such as post-summary corrections, protests and requests for extension of liquidation, that can be used to preserve legal rights while awaiting further guidance on refund procedures from CBP and the U.S. Departments of Justice and Treasury. It is understood that CBP is currently rejecting post-summary corrections for unliquidated entries related to the IEEPA tariffs.

Impact on Existing Framework Agreements. It is unclear what the immediate impact will be on framework agreements that the U.S. has negotiated with the EU and a number of other countries. For example, though the 10 percent Section 122 Tariffs are lower than the 15 percent IEEPA Tariffs, under the EU-U.S. framework agreement, the latter generally "capped" U.S. tariffs at 15 percent, whereas the Section 122 Tariffs would be in addition to the "normal" tariffs on those products under the relevant tariff codes. Further, though the Section 122 Tariffs exempt a number of other products in addition to civil aviation, those exemptions may not align with a particular framework agreement. As a result, the EU has paused its ratification of the EU-U.S. framework agreement.

WTO Large Civil Aircraft Dispute. The five-year suspension of the long-running WTO Large Civil Aircraft tariff dispute among the U.S., EU and U.K. is set to expire in July 2026. It is understood that the U.S. framework agreements with the EU and U.K., which reinstated the zero-for-zero tariff framework originally established under the 1979 Agreement on Trade in Civil Aircraft, effectively ended the dispute. Since the new Section 122 Tariffs maintain this zero-tariff environment, it is hoped that this remains the case. Note that U.S. tariffs in that dispute were imposed under Section 301 of the Trade Act of 1974.

Section 232 Investigation of Commercial Aircraft and Jet Engines. In May 2025, the U.S. Department of Commerce initiated a Section 232 investigation into imports of aircraft, engines and aviation parts. During the public comment period, the U.S. aerospace industry was overwhelmingly opposed to any tariffs. No report or findings have yet been made public. Given the zero-for-zero tariff treatment of civil aviation under the framework agreements and now under the Section 122 Tariffs, it appears unlikely that this investigation will result in new tariffs on civil aviation products from most countries.

Opportunities to Seek Refunds, Complete Transactions and Resolve Issues

• Companies that were not the importer of record will likely have no direct recourse to seek refunds from CBP, but they may have contractual or other claims against the importer of record. These companies should review past transactions in which duties or "tariff surcharges" were paid to suppliers for civil aviation items, as they may be entitled to reimbursement from those suppliers if and when the U.S. government authorizes refunds.
• Although the situation remains fluid, there may now be opportunities to proceed with import transactions that were difficult to complete while the IEEPA Tariffs were in effect. This includes transactions involving Brazilian- and Israeli origin-aircraft, as well as Canadian-origin aircraft, engines or parts that did not qualify under USMCA (or where there was ambiguity as to whether such goods qualified under USMCA).
• Ambiguities in the IEEPA Tariffs created issues with compliance for prior imports, and it may be possible to resolve these issues through prior disclosures or other administrative measures.

Expect further developments both with respect to the implication of the Supreme Court's decision and ongoing administration actions. Holland & Knight's Tariff Task Force is continuing to monitor these tariff developments closely.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.