When the Supreme Court struck down President Donald Trump’s broad reciprocal tariffs, the administration did not abandon its tariff strategy. It changed its legal foundation, and the story of that change, from an emergency-powers tariff to a temporary statutory surcharge and then to a new round of targeted duties, is still unfolding in courtrooms and customs offices across the country. The latest chapter arrived on 28 October 2026, when Nongshim USA, the American subsidiary of South Korea’s instant-noodle maker, sued the United States government in the Court of International Trade seeking a refund, with interest, of tariffs it paid under the invalidated emergency-powers regime. Its case is one of about 7,000 similar lawsuits, and together they illustrate a durable truth about the tariff wars: a Supreme Court ruling can kill a legal theory without immediately returning the money.
The starting point is the ruling itself. On 20 February 2026, the Supreme Court held by six votes to three in Learning Resources v. Trump that the International Emergency Economic Powers Act, known as IEEPA, does not authorise the president to impose tariffs. Chief Justice John Roberts, writing for the majority, reasoned that IEEPA contains no reference to tariffs or duties, and that the president was claiming extraordinary authority to impose tariffs unilaterally without limits on amount, duration or scope, a breadth that required clear authorisation from Congress. Two Trump appointees, Justices Neil Gorsuch and Amy Coney Barrett, joined the three liberal justices and the Chief Justice in the majority, while Justices Thomas, Alito and Kavanaugh dissented. The ruling invalidated the so-called Liberation Day tariffs, ranging from 10 percent to 50 percent, and duties targeting China, Mexico and Canada that had been justified on fentanyl-trafficking grounds. It did not touch tariffs imposed under other statutes, including sector-specific duties on steel, aluminium and automobiles under Section 232 of the Trade Expansion Act of 1962, which rested on a different legal foundation and were not part of the challenge.
The financial scale of what was struck down was enormous. Customs and Border Protection had tallied about 166 billion dollars in IEEPA duties collected before the ruling, according to figures compiled in March, and other estimates put the total revenue generated through January 2026 at roughly 269 billion dollars, with potential refund claims estimated by the Yale Budget Lab at between 142 billion and 175 billion dollars. Those figures explain why the aftermath has been so protracted: returning money on that scale, importer by importer and shipment by shipment, is an administrative undertaking unlike anything the customs system has attempted, and the Supreme Court’s ruling, crucially, did not itself order refunds. It decided that the tariffs were unlawful. How, and how quickly, importers get their money back was left to the customs process and to litigation.
Trump Section 122 tariff fallback: 10 percent to 15 percent for 150 days
Within hours of the ruling, Trump announced the fallback. He said he would sign an executive order imposing a 10 percent tariff on imports from all nations under Section 122 of the Trade Act of 1974, a provision no president had ever used for broad tariff purposes since its enactment more than fifty years earlier. The next day, he raised the rate to 15 percent, the statutory maximum. Section 122 authorises the president to impose temporary tariffs of up to 15 percent for a maximum of 150 days to address what the law describes as large and serious balance-of-payments deficits, situations in which imports significantly exceed exports. Unlike several other trade laws, it does not require a formal investigation before tariffs are imposed, which allowed rapid action, and unlike IEEPA, it explicitly mentions temporary import surcharges, giving the administration a textual hook the Supreme Court had found missing in the emergency-powers statute.
The Section 122 surcharge took effect on 24 February 2026 and was set to expire on 24 July 2026 unless Congress voted to extend it. That 150-day clock was both the statute’s strength and its weakness. It gave the administration an immediate bridge, preserving tariff pressure on trading partners while it prepared longer-term measures, but it guaranteed a second deadline. Legal scholars also questioned whether the statute’s precondition was met, since the United States’ trade deficit, while large, is not obviously the kind of balance-of-payments crisis the provision was written for, and some argued that the surcharge could itself face legal challenge. In practice, however, no challenge reached the Supreme Court within the 150-day window, so exporters could reasonably expect the 15 percent rate to hold for that period, and the administration used the time to launch the investigations that would form the next phase of its strategy.
That next phase was Section 301. At the same press conference at which he announced the Section 122 tariff, Trump announced the launch of new investigations under Section 301 of the Trade Act of 1974 and other authorities, and he explicitly raised the possibility that those investigations could ultimately result in tariffs higher than those that had prevailed under the invalidated IEEPA regime. When the Section 122 surcharge expired on 24 July, it was replaced by Section 301 tariffs of 10 percent or 12.5 percent on imports from about sixty economies, with product exemptions. The Penn Wharton Budget Model calculates that customs duties as a share of import value rose from 2.3 percent in January 2025 to 7.1 percent in August 2026, the first full month under the Section 301 regime, or 10.1 percent had imports followed their historical pattern instead of shifting towards exempt goods and trade qualifying under the United States-Mexico-Canada Agreement. The Congressional Budget Office puts the current effective rate at about 10 percent, five percentage points below its November 2025 estimate. The average tariff rate fell after the court ruling, in other words, but it did not return to where it started.
The distinction between the statutes matters for businesses trying to plan. Section 232 tariffs, which require a finding that imports threaten national security, apply to specific sectors such as steel, aluminium, copper, lumber and automobiles and parts, and they were never affected by the Supreme Court ruling. Section 301 tariffs, which require an investigation into unfair trade practices by a particular country, apply country by country and can be tailored, but they take time to prepare and are vulnerable to challenge on the findings of each investigation. Section 122 was fast and broad but temporary. The administration’s post-ruling strategy, therefore, was not a single replacement tariff but a sequence: a fast, broad, temporary bridge, followed by slower, narrower, more durable duties, with the threat of higher Section 301 rates at the end of the process used as leverage in negotiations with trading partners. Analysts at Global Trade Alert described the resulting uncertainty over which countries and sectors would be targeted, at what rates and on what timeline, as a deliberate feature of the administration’s approach rather than an incidental consequence.
Nongshim tariff refund lawsuit and the 7,000 refund cases
While the forward-looking tariff regime was being rebuilt, the backward-looking question of refunds was becoming a legal industry of its own. Customs halted collection of IEEPA tariffs on 24 February, days after the ruling, and in April opened a refund window. By 2 October, Customs had certified about 126 billion dollars for refund, with interest, out of the roughly 166 billion dollars collected. That headline figure, however, conceals a procedural trap that is now driving litigation. Customs usually finalises, or liquidates, tariff entries about ten months after imported goods are cleared. Entries that had already been finalised more than 80 days earlier could not be claimed through the refund portal without a court order for reliquidation, a recalculation of the duty owed. Customs estimates that about 11.4 billion dollars of duties sit in finalised entries that can be refunded only under such a court order.
Nongshim’s lawsuit is about that trap. Nongshim USA filed its complaint with the Court of International Trade on 28 October against the United States government, Customs and Border Protection and CBP Commissioner Rodney Scott. It seeks the return of all tariffs paid under IEEPA, along with statutory interest, and a reliquidation of entries whose duty amounts had already been finalised. The company is the first major South Korean food maker to bring such a challenge, and its claimed amount was not stated in the complaint, but industry estimates, applying the Korean reciprocal tariff rate of 10 to 15 percent to goods shipped by the Korean parent to its American subsidiary during the reciprocal-tariff period from April 2025 to February 2026, put the refund at more than 4 billion won, roughly a quarter of the American subsidiary’s net profit of 16.7 billion won last year. The government must file its official response by 28 December, and no court order for reliquidation has yet been issued in Nongshim’s case, according to court records.
The significance of the case extends well beyond instant noodles. About 7,000 companies have filed lawsuits on the same grounds, and the pattern they follow is instructive: the Supreme Court has already decided the tariffs were unlawful, so these suits are less about contesting legality than about securing eligibility for refunds. Customs began processing refunds for finalised entries on 6 October, but only for plaintiffs holding court-ordered reliquidation, which means that an importer that does not sue may never recover money on its oldest shipments, even though the duty was unlawful. Other major Korean food exporters, including Samyang and CJ CheilJedang, are watching the Nongshim case closely, as are importers across every sector that paid IEEPA duties, from wine to electronics to apparel. A small wine importer that was the lead plaintiff in the original Supreme Court challenge has already described how a 10 or 15 percent tariff on a single shipment translates, at scale, into a cash outlay a small business cannot afford, and the refund litigation is, for such firms, the difference between survival and failure.
The refund fight also reveals a tension in the administration’s position. Having lost the legal argument for IEEPA tariffs, the administration has challenged efforts to expand refund eligibility beyond the original plaintiffs and specific categories of claims, arguing, in effect, for a narrow reading of who benefits from the ruling. Importers reply that a tariff declared unlawful cannot lawfully be retained simply because the paperwork has been finalised, and that the reliquidation procedure exists precisely to correct duties that were wrongly assessed. The Court of International Trade will need to balance those arguments across thousands of cases, and its decisions on reliquidation, interest and the scope of refund eligibility will determine how much of the 166 billion dollars actually returns to the businesses that paid it, and how much remains with the Treasury despite the ruling.
What the tariff fallback means for importers and prices
For American consumers and businesses, the net effect of the fallback sequence is mixed and still evolving. On one hand, the effective tariff rate is lower than it was under the IEEPA regime, and the shift to Section 301 tariffs with product exemptions has reduced the burden on some goods, including certain food and consumer products. On the other hand, tariffs remain far higher than they were before 2025, and the uncertainty about future Section 301 rates, which could exceed the old IEEPA rates for some countries, makes long-term planning difficult. A Federal Reserve research note published in April 2026 estimated that tariff changes implemented between February and November 2025 had raised core goods prices by 3.1 percent through February 2026, contributing about 0.8 percent to the level of overall core prices. Those price effects do not disappear when the legal basis for a tariff changes; they persist as long as a tariff of similar magnitude remains in place under a new statute.
For trading partners, the fallback has changed the negotiating dynamic without ending it. Countries that had negotiated deals or exemptions under the IEEPA regime have had to renegotiate under Section 122 and then Section 301, and the administration’s explicit threat of higher Section 301 tariffs at the end of the 150-day period preserved its leverage even after losing in court. South Korea, whose exporters are now prominent among the refund litigants, is a case in point: its companies paid reciprocal tariffs, are now suing for refunds, and simultaneously face a new tariff regime whose rates and exemptions differ from the old one. The result is a trade relationship that is legally more complex, administratively more burdensome and politically more fraught than it was before the Supreme Court intervened.
The durable lesson of the tariff fallback is about the resilience of executive trade policy. The Supreme Court’s ruling was a major defeat for the administration’s legal theory, and it was celebrated as such by importers and free-trade advocates. But the presidency retains a toolkit of trade statutes, each with its own procedures, limits and vulnerabilities, and a determined administration can move from one tool to another faster than courts can adjudicate each move. Congress, which holds the constitutional power over tariffs, could end the sequence by legislating clearly, either by authorising a tariff regime or by prohibiting one, but it has not done so, leaving the field to executive action and judicial review. Until Congress acts, the tariff story will continue to unfold in the pattern established in 2026: a court ruling, a statutory pivot, a new deadline, and a new round of litigation, with businesses and consumers bearing the costs of uncertainty in the meantime. The Nongshim lawsuit, modest in its own amount but representative of thousands like it, is a reminder that the last chapter of any tariff is not its imposition, but its refund.
Sources
USN reviewed reporting from multiple outlets for this story. Read more from Global Trade Alert [LINK: https://globaltradealert.org/reports/The-Supreme-Court-Rules-Uncertainty-By-Design-Remains], Moneycontrol [LINK: https://www.moneycontrol.com/news/business/economy/what-is-section-122-a-rarely-used-trade-law-at-the-centre-of-trump-s-new-tariff-battle-plan-13837996.html] and Aju Press [LINK: https://www.ajupress.com//view/20261102145719645].