The U.S. Supreme Court made an important ruling on February 20: the Trump administration's use of "emergency powers" to impose tariffs was illegal.

Specifically, the court found that Trump's invocation of the International Emergency Economic Powers Act (IEEPA), a law originally used to respond to national security crises such as war and terrorism, to impose tariffs on imported goods exceeded the scope of the law's authority.

As soon as this verdict came out, the market's focus immediately changed, no longer asking "whether the tariffs are still there", but focusing on three new issues:

Should the customs duties previously collected be refunded?

What should I do if the law is changed and re-levied?

Are trade agreements based on these tariffs counted in the past?

In this regard, Trump announced that the new "global import tariff" rate would be increased from 10% to 15%. At the same time, the impact of the U.S. Supreme Court's ruling is also emerging.

To put it simply, the Supreme Court suspended the old "emergency tariffs", but Trump immediately changed his legal tool and planned to continue to push global tariffs - the policy direction has not changed, but a "legal coat".

Not all tariffs have been overturned, but "change the law and re-impose"

The U.S. Supreme Court recently ruled that the tariffs imposed by the Trump administration under the International Emergency Economic Powers Act (IEEPA) — such as the "reciprocal tariffs" imposed on nearly all trading partners in 2025 — are illegal.

The reason is simple: IEEPA does not authorize the president to use the "state of emergency" as an excuse to impose universal taxation. Chief Justice Roberts made it clear: "IEEPA cannot be used to collect tariffs. ”

This means that the legal foundation of the global tariff system built by IEEPA has collapsed.

But don't worry, many tariffs are actually not affected. HSBC pointed out that the following types of tariffs that have existed for a long time are still in effect:

Section 232 tariffs: on the grounds of "national security" (such as taxation on steel and aluminum);

Section 301 tariffs: "unfair trade practices" against countries such as China;

Clause 201 tariffs: For example, the 2018 guarantee tariff on solar panels.

Therefore, this ruling is not a "complete abolition of tariffs", but "only the part of the IEEPA is cut".

Are customs duties refundable? It could take years to go on in a lawsuit

Although the Supreme Court ruled that IEEPA tariffs are "illegal", the most worrying question for enterprises and the market is: whether the hundreds of billions of dollars in tariffs collected in the past can be refunded? How to refund?

According to HSBC's estimates, by the end of 2025, the tariffs collected by IEEPA will exceed $133 billion; If the court ultimately finds that these tariffs "should not have been collected in the first place", it may be refunded up to about $175 billion (including interest, etc.).

The court did not make it clear "how to refund", and Justice Kavanaugh directly pointed out the problem in his dissenting: "The United States may have to refund billions, or even hundreds of billions of dollars, to importers." But he also criticized that the Supreme Court only ruled that it was "illegal" this time, but did not explain how the government should handle refunds - which is tantamount to throwing the problem to lower courts and executive departments.

Trump said lightly at the press conference: "The verdict does not mention refunds at all." He also hinted: "This kind of problem is likely to be litigated for more than two years", meaning - don't expect to get your money back in the short term.

Businesses are already taking action, but refunds are far away. According to Bloomberg: Nearly 1,000 companies have filed lawsuits in the U.S. Court of International Trade (CIT) to "occupy a seat" in advance to qualify for refunds; CIT did have a precedent in the past: even if the tariff has been cleared, a refund can be ordered through a "reliquidation" procedure.

But the key question is:

Which companies can refund?

How much to refund?

When will it be refunded?

These will have to wait for the lengthy judicial and administrative process to be decided, which is likely to drag on into a legal tug-of-war that will last for many years.

The impact on the market mainly depends on four lines: fiscal, interest rates, US dollars, and risk appetite

Fiscal: It may have to "spit out" hundreds of billions, but the government wants to stabilize revenue

U.S. tariff revenues will soar to $264 billion (nearly 1% of GDP) in 2025, much higher than $79 billion in 2024; About $175 billion of this comes from IEEPA tariffs ruled "illegal" and may face refund disputes in the future.

However, Finance Minister Besant has said that the government will switch to other laws to continue to collect taxes, and it is expected that tariff revenue in 2026 will be "basically not less". Meaning: the money is received, but the name has been changed.

Interest rates: Deficit pressures can drive up long-term interest rates, but the short-term impact is limited

If large-scale tax rebates are really needed, coupled with the uncertainty of future tariff revenues, the pressure on the federal deficit will be greater; This could push up long-term Treasury yields (i.e., "yield curve steepening").

But at the moment, the refund is not certain + the new tariff plan is about to be introduced, and the two are hedged, so interest rates may not fluctuate much in the short term.

USD: Policy uncertainty increases, making it harder for the dollar to strengthen

Although the court ruling is not unexpected, it exposes the "arbitrary" nature and legal risks of U.S. trade policy; Investors will feel that US policy is becoming more and more unpredictable, and confidence in the dollar is weakening.

Therefore, the dollar is likely to continue to weaken, especially against the backdrop of the relative stability of other central banks.

Risk assets (stocks, corporate bonds, etc.): It's a small positive!

On the surface, it is negative (policy change), but in fact, it reduces the uncertainty of "repeated tariff switching"; Because IEEPA is too flexible, the president will add and stop when he says, and it is difficult for enterprises to plan; Now use more standardized trade terms (such as Articles 301 and 122), although taxes may also be increased, but the rules are clearer and the operation is more transparent.

Therefore, for risk assets such as the stock market, the overall impact is neutral and positive - the business environment is more predictable.