Planet Money - The Supreme Court struck down a bunch of Trump's tariffs. Now what?

Episode Date: February 21, 2026

Live event info and tickets here.The Supreme Court has spoken. Those big, sweeping tariffs that President Trump imposed early last year? They’re illegal. On today’s show: Why were those tariffs struck down? Will anyone get refunds? And …what about this new 10 percent tariff the President just announced today? Plus — a growing market for tariff refunds.Further Listening: - Worst. Tariffs. Ever.  - Tariffs: What are they good for?  - What "Made in China" actually means - The 145% tariff already did its damage  - Are Trump's tariffs legal? - Days of our Tariffs  - Trump's backup options for tariffs  - What would it mean to actually refund the tariffs? Pre-order the Planet Money book and get a free gift. / Subscribe to Planet Money+Listen free: Apple Podcasts, Spotify, the NPR app or anywhere you get podcasts.Facebook / Instagram / TikTok / Our weekly Newsletter.This episode was hosted by Jeff Guo, Mary Childs, and Sarah Gonzalez. It was produced by Sam Yellowhorse Kesler and Willa Rubin. It was edited by Marianne McCune. It was fact-checked by Sierra Juarez. Alex Goldmark is Planet Money’s executive producer. Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

This message comes from the BBC with its new podcast, The Interface. Every Thursday, three leading tech journalists explore how tech is rewiring your week and your world. Listen to The Interface on BBC.com or wherever you get your podcasts. This is Planet Money from NPR. Okay, Kara, how do you feel? You saw? Yes, I saw the news and I... I never thought this day would come.

Honestly, it's like, was the Supreme Court ever going to rule on it? Like, you know, we're going to be in this kind of like purgatory forever. But it has come. So I'm so happy. This is Cara Dyer. She is a small business owner in the U.S. And the big news, the U.S. Supreme Court has said that President Trump's giant sweeping tariffs that he imposed early last year are illegal. Dunzo.

This is huge news. We were talking about his tariffs. on products from all over the world, almost every single country, a different percentage tariff on each of them. And those percentages, they've gone up and down and up and down for more than a year. But from early on, there were lawsuits against President Trump, states and companies and individuals saying that these tariffs, they are not legal. And now a lot of businesses and people like Cara, they're thinking maybe they could get some of the money they spent on those tariffs back. Okay, wait, so what do you do now? Well, I've kept meticulous records, and I will be asking for, yeah, yeah, I did.

Just every little fee in tariff? Yes, yes, absolutely, absolutely. So, like, okay, now they've ruled that it's illegal. Now we need to take some action and get those refunds back into the hands of businesses. So far, the U.S. has collected more than a hundred. billion dollars under these now illegal tariffs. That's a lot of refunds. Yeah.

Give back. Right. Yes. How do you know what to do, how to go about it? I don't. Yeah, but now it's when they would have to like start and figure out a process to get those refunds going. So I'm also hopeful that they'll, you know, that that will happen.

That they will give you very clear guidance on how to get your back, Cara? Might entail a little digging on your part. Yes. Yes. Hello and welcome to Planet Money. I'm Jeff Guo. And I'm Sarah Gonzalez. And I'm Mary Childs.

About a year ago, the Trump administration tried to use a law that was not designed for tariffs to impose the biggest, most disruptive tariffs we've seen in about a century. This morning, the Supreme Court came back and said, No, you can't use that law to impose tariffs. Today on the show, why are the tariffs illegal? And what does this mean for businesses, for Cara, for the rest of us? Are any of us going to get refunds? Yeah, and also, what does this mean for the Trump administration's whole tariff policy?

And what's up with this new 10% tariff he just announced today? Also, a market for tariff refunds is already booming. This message comes from NPR sponsor, SAP Concur. Global Head of Sales Ryan Demray shares why they design expense management solutions that make employees' lives easier. You can reduce your cognitive load on the pressure that you're feeling about your job. It allows you to expand into more of the purpose. And that's where great ideas happen.

And you're able to make those sort of jumps in your organization. Visit concur.com to learn more. All right. First things first, what did the Supreme Court actually say today? For that, we called up Georgetown Law Professor Kathleen Cawson, who is an expert on the law of tariffs. We had her on the show back when Trump's big new tariff. were first getting challenged in the courts. She was the one who had explained to us at Planet Money that basically Trump created these

big new tariffs under a law that no president had ever used before to create tariffs. That law is called AEPA. It stands for the International Emergency Economic Powers Act. And back when we first talked to her, here's what Kathleen told us. We trade lawyers don't think of Aipa as a trade law. That this is not something that I teach in my trade class. It's there. but it's not on the short list for how we think about imposition of tariffs in the U.S. economy.

And today, the Supreme Court told us what they think about AEPA and how Trump has been using it. Actually, the justices had a lot of thoughts about AEPA. There are multiple opinions. The whole thing is 170 pages. We knew it was going to be long, but 170 pages really is something. Yeah, so this decision, it kind of landed on your desk with a thump. It's a real thumb. I was going to show you I had printed it, but I printed it double-sided and two pages per sheet just to save the paper. Kathleen says the takeaway from all those 170 pages really boils down to just a few key parts,

where the court is trying to just interpret the literal words of the law. Yeah, you see, in Aipa, it doesn't literally say the president can impose tariffs. It says something much more vague. It says the president may, quote, regulate dot, dot, dot, dot. importation, like the importation of goods. It was simply a question of, does the statute Aipa allow the president to impose a tariff on the basis of those words? Today we got the answer.

The Chief Justice says, those words cannot bear such weight. Ooh. Those words cannot bear such weight. That's the key phrase. Was that like a mic drop moment? I can imagine the Chief Justice doing the mic drop. I don't think he did today. I wasn't in the room, but I'd be surprised.

if he did the bike drop, but he could have. He could have. Basically, those are the most important words the Supreme Court said today. It said those words in Aipa regulate dot dot dot importation. They do not mean that the president can create giant sweeping across-the-board tariffs on countries around the world. That is not what the law means, the court said. Kathleen says it is very, very clear. No ambiguity here.

These particular tariffs, she says, are illegal over and out. So let me ask you the obvious question, which is, Are any of us going to get our money back? You got a long road to hoe there, my friend, if that's what you're going for. Oh, no. Look, the Supreme Court today has said nothing about refunds. We don't have any guidance on how or if that's going to happen. So it sounds like what you're saying is I really got to talk to a customs lawyer.

Always good advice. And as it happens, we do happen to have a customs lawyer on speed dial. We sure do. Maureen Thoris. And let's just say today is kind of like her day. Oh, yeah. I've spent 25 years doing nothing but nerding out on this stuff. And now I know way more than anybody ever wanted to know.

Maureen is an international trade lawyer. She's a partner at Wiley Rain, who specializes in customs law. And we wanted to ask Marine, yeah, sure, how are companies going to try to get refunds for all the tariffs they paid on the goods they've imported to, you know, sell to us? And more importantly, though, what? What about regular customers like me and Sarah? Yeah, we've been paying tariffs indirectly, directly on all kinds of things for over a year. Blueberries, dresses, toys. Those lamps I got off Timu.

There you go. So, like, what, are we going to get that money back? And as you can imagine, we are not the only ones bombarding Marine with questions on this day. I feel like the snakes just keep popping out of the peanut brittle can that is my inbox today. And what are the questions that people are asking you? Well, okay, what happens next? Can I get a refund? When can I get a refund? How do I get a refund? Marine says if you were to vastly oversimplify this very complicated world of customs law, there are basically, let's say, three ways that companies could, in theory, get refunds on the tariffs they paid.

The tariffs that are now deemed illegal. So option number one, turns out customs actually already has a process to get refunds on your tariffs. Because, you know, the U.S. has had lots of tariffs over the years. And there have always been people who have maybe overcalculated how much they owe in tariffs. So companies can go to Customs and say... Like, hi, excuse me. Can I get a refund on my tariffs? I kind of overpaid. Thanks.

But there is a whole process to it and also a limited time window. Up until Day 300, you can file what's called a post-sumary correction, where you essentially say, hey, customs, I messed up my original entry. Here's the new corrected documents. Please accept my correction. You can do an oopsie take backsees. An oopsie take backseat. Yes.

Okay, but what if you miss the deadline to do your tariff take backsees oopsies? Maureen says with these tariffs, the answer is not totally clear. But you could always go to court. That's option two. You could just sue the U.S. government. You could file a lawsuit that says, hey, I paid these tariffs. The Supreme Court just said that these tariffs are illegal. so please give me my money back.

In fact, a lot of companies like Costco and Toyota and Goodyear, they started filing these tariff refund lawsuits even before the Supreme Court made its decision. And now there's one more possibility that Maureen talked about, and this is one that it seems like a lot of people are hoping for, which is that maybe the Trump administration is going to create some kind of official, easy process for everyone to get their AIPA tariff refunds, though that might take a while. Now, people might not want to wait, but everyone's sort of speculating and trying to figure out, like, try to read tea leaves about all of this.

So what about us, right? Like, can regular people get a refund on the tariffs we paid on, you know, that lamp I bought? And Marine says, well, it depends. Did you actually pay the tariff directly to customs? Or was it just, like, priced into your purchase? If you were like, I think as a taxpayer and consumer that I have been paid, paying more for kitty litter since last year because kitty litter companies across the globe are raising their prices because of tariffs, then probably not. Okay, but say one of us, like, hypothetically

bought a fancy dress from the UK for their little sister's wedding and then was surprised with a big tariff bill once that dress arrived at customs. Can I go to the customs window and ask for that refund? Hypothetically, right? Right. Hypothetically. Morin says that's actually really unclear. Because this customs refund window we've been talking about, it's not available to everybody. And it was actually never designed to deal with this specific kind of big tariff. But she says you could always file a lawsuit to get your money back. Yeah. I think we at Planet Money are definitely going to have to sue.

Like just to see what the process is, what happens, right? This is the Planet Money way. Yeah, what could be more fun than a lawsuit, Sarah? All right. So I'll look into that. Yes, you're going to go look into how we're going to sue the federal government. Happy to. Okay. Meanwhile, a lot of companies didn't want to wait for the Supreme Court decision or to figure out if they were going to get a refund. So they found a way to get pre-refunded, if you will. Our co-host, Mary Childs, actually talked today to someone who has been getting companies these pre-refunds, these refunds in advance, which is a whole brand new baby market.

Yes, the market for tariff refunds. And there are hundreds of millions of dollars of deals that have already been done in this little baby market, this person told me. Okay. So since the Aipa tariffs started, companies have been paying the tariffs, all while knowing that they might get this big pile of money back should the tariffs be ruled illegal, right? Right. So no one could know if the Supreme Court would decide whether they were legal or illegal. So it was this annoying uncertainty for companies. Like maybe, maybe they would get refunds in the future. Yeah, but companies don't want maybe money in the future, right? They want for sure money today. So they wanted to get rid of this annoying, complicated risk, even if it cost them a little. And whenever anyone anywhere in the world utters those words...

Certainly, it's a call to action for us. Us, Wall Street and hedge funds. This is Wes Harrell. He's the head of a trading group at Seaport Global. He's a broker. And he says this new baby market was born around November. Suddenly, Wes and his colleagues start getting calls. We start to get phone calls from importers, and we're also making outgoings to importers and basically anyone that we believe has paid a tariff since Liberation Day.

These importers, these companies are like, okay, we have these potential tariff refund claims. Does anyone want to basically buy this potential refund or part of it, meaning like give me. me the company, a fraction of the refund that I might get, and then you, the buyer, can get the full refund if it ever comes. And do you know who has cash and who might want to buy this kind of stuff? Hedge funds. Hedge funds. Hedge funds. There are hedge funds, Wes's clients, that focus on bankrupt companies or near-bankrupt companies who are looking for ways to make bets on litigation or anything weird or risky in an odd way or overly complicated things that might make money.

And Wes's job is to call those people up and say, hey, I have this weird, risky in an odd way, overly complicated thing that might make money. At what price would you be interested in buying it? So here's how it has been working before this Supreme Court decision. Let's say I'm a dress company and that I have paid $20,000 in tariffs from importing. dresses. That is potentially $20,000 that I might get refunded. I would go to Wes and say, I don't want to deal with this uncertainty, with this risk. Can you sell it? I don't need to get the full $20,000 back. I just want something. Like 20% of my potential refund. Give me just

4K of it. And I'm obviously a hedge fund. Wes calls me and I'm like, listen, yeah, I would love to buy that potential future money, but the Supreme Court might say it's legal and I will get nothing. So I'm only willing to pay like 20%. And I might get 16 grand in profit. It's not bad. Weirdly, the seller and the buyer were very aligned when this baby market was popping up. The market was oddly well-defined from a very early stage in this. And one industry in particular, West says, was really into it. We found that there was a decent amount of interest in the retail, apparel, and footwear sectors, which I suppose makes sense. the best rationale I can give is I think that they were acutely impacted by these new tariffs.

Yeah. And they were looking for the ability to raise cash immediately. Raise cash so they could go do normal corporate things with the cash they just got selling the tariff refund they may or may not have gotten in the future. Now, after today's Supreme Court ruling, the probability of refurb. has gone way up, and these claims are now way more valuable. Wes says the prices have jumped. It's not at 20% anymore. Price now is 40 is sort of where we're seeing bid shakeout. Like hedge funds are buying the potential refund for 40% of what it will total if it happens.

Things are very much in flux. This decision was only just recently made. We're still trying to shake out where offerings are coming in. We're getting incomes from a number of different importers as we speak. That's still a discount of 60%. Because of what a mess it's going to be to try to get this refund and how long it will take. That's what the hedge funds are buying. All that complexity, the uncertainty, the headache for the potential payoff. There really is no modern parallel for the magnitude of this unwind.

And I just don't see the administration turning around in short order and immediately issuing refunds. Brett Kavanaugh summed it up as mess. Yes, exactly. That's a great quote from today. After the break, today President Trump added new tariffs and we'll tell you how. So this big Supreme Court decision, it didn't get rid of all of Trump's tariffs, just the big sweeping ones he tried to create using IEPA. But there are other laws that give the president the power to create tariffs. Kathleen Cawson, our trade law professor, ran through a whole list of them with us last time she was on the show. Most of these statutes go by their three digits.

So if you want to sound cool in trade world, you have to start talking in three digits, right? Section 301, Section 201, the list goes on. So these laws, they were mostly created during the Cold War to give the President economic powers to, you know, deal with all that Cold War stuff. But for decades through the 90s and 2000s, they weren't really used that much. Because we had become a member of the World Trade Organization, we were committed to lowering tariffs, we were not interested in raising tariffs. And so it's only since Trump won, then they experienced this renaissance. After Trump was elected for his first term, he started using some of these three-digit laws,

mostly Section 301 and Section 232, to create new tariffs. The Supreme Court's latest decision doesn't touch any of the tariffs created under those three-digit laws. For instance, right now we have a bunch of specific tariffs on some Chinese machinery and minerals and also footwear. Those tariffs were created under the state. Section 301 law. Those tariffs are still in place. But if you are a president who loves sweeping tariffs, most of these three-digit laws have a major limitation. Most of them only let you create specific targeted tariffs. For instance, Section 232 is all about protecting national security. And the process itself takes a while. There's got to be a report, just a lot of

administrative work. The appeal of creating tariffs using AIPA was that the process would be much faster. So if the Supreme Court would let the president use Aipa like he wanted to use it, he could create a bunch of tariffs with just the stroke of his pen. And now it seems like there really isn't any law that would give him that kind of power. Or is there? At this press conference on Friday, Trump announced a new across the board 10% tariff under a different law with a different three-digit number. He said section 122. Yes. So what? What is going on there? That's the big news of the day.

Kathleen says, yeah, welcome to Section 122. It allows the president to impose a tariff of up to 15% for a limited period of time to address a balance of payments deficit. She says this is another one of those economic laws written during the Cold War. And unlike some of the other three-digit laws, Kathleen says, Section 122, in theory, lets the president create. a lot of tariffs really fast. Has a president ever used Section 122 to make tariffs? No, no president has before. Never.

That has never been done before. But Kathleen says a lot of trade law professors have been expecting Trump to turn to this Section 122 law at some point. And there is a big caveat here, which is that tariffs created under Section 122, they are supposed to expire after 150 days. And the statute says that Congress can extend that period, so it does. throw it back to Congress. But I would quickly say that I think has not been used, so we don't have any test case yet.

Like, what if after the 150 days are up, the president just does it again, makes another 10% tariff that lasts another 150 days? Kathleen says, yeah, there's going to be lawsuits to come over the new 10% tariff. It sounds like law professors have already kind of had hypothetical fights about this hypothetical use of this law. That's what we do best, Jeff. Now, for Cara Dyer, the business owner from earlier, who, by the way, sells toys, all of this tariff whiplash is so exhausting to think about. Yeah.

And the last time we talked to Kara, which was in the midst of the sort of roller coaster of tariffs on China last summer, she was on the fence about whether or not she was going to be able to afford to put in large orders of toys because she didn't know if she'd be able to afford the tariffs on those orders. And she was hopeful that maybe China or the Chinese manufacturers she worked with would help chip in. I remember at one point you were like, maybe China will like share in the cost of the tariffs. Does that not happen? No. Yeah. Not at all. Not at all. They were willing to do things that were like probably not legal, like, you know, put us in a big container with lots of other items and not reported.

or say that our inventory wasn't worth as much as it was. Those were the kinds of things that were sort of offered to us. And we didn't really take them up on that. Tempting, though, right? Yeah, tempting, but super risky, right? So it was like the factories in China that would say, like, we'll just say that there's only $200 in that container, not $500. Yeah.

But I didn't feel comfortable with it. So we never did anything like that. Wow. Kara ended up switching suppliers. But beyond that, Kara changed up her whole business, actually. She didn't order any large shipments because tariffs were so high and unpredictable that she thought they'd put her out of business. We did pull back. We didn't place any other large orders this past year.

And instead, we focused on developing new products and testing them out. Kara instead decided to have like a testing year to just develop. new products and not necessarily import them. So she designed this little Red Riding Hood storybook, she calls them. Her company is called Storytime Toys. Kids can read a fairy tale and then play in that fairy tale world that they build or like these little sets. Red Riding Hood can go through the woods and get to her grandmother's house and the wolf can put the grandmother inside a little, you know, a little Ammar to hide her. And so there's lots of fun things about that set. And when Kara tested out this set during her testing year, it did pretty well with customers.

So before the Supreme Court decision, Cara had actually decided to finally put in an order for a big container full of these storybooks. It's her first big container since the tariffs first went into effect. That was 12,000 products. So we probably would have had to pay about $15,000 in tariff on that. And now it's just gone. Gone. Yes. Yes. I mean, that's such a huge relief and cost savings.

Except it may not actually be the end of tariffs, though. And she knows this. I've just sort of been following along with the news and what the administration has been saying in response to this. Like, oh, well, we'll find another way. So I just don't know. I don't know if it's the end of tariffs or not. I just, today, I want to feel hopeful about it. Of course, the roller coaster is not over. Trump already announced today that new 10% tariff. And Kara, she's just pretty frustrated that she's had to reimagine her whole business because of tariffs. Rethink our strategy, rethink our finances.

Definitely, I feel angry about that. Especially when it really felt like just while it was going on, you didn't see any reason for it. Were we getting a better deal from China? You know, because we did this? So, in all, Kara says she only paid about $20,000 in tariffs because she scaled back on orders. So not a ton, but that $20,000 for a small business is, that's pretty significant. And she does plan to try to apply for a refund. But I don't know.

I mean, if I have to hire a lawyer, I'll have to weigh the cost of that compared to how much I would potentially get back. But, I mean, if they're illegal tariffs, we need that. have money back so that we can invest it in growing our business and operating our business. Hey, do you want to see Planet Money in person on our book tour? It's in April. We're going coast-to-coast. Details at Planet Moneybook.com. This episode was produced by Sam, Yellow Horse Kessler, and Willa Rubin. It was edited by Marianne McKeown. It was fact-checked by Sierra Wades. Alex Goldmark is our executive producer. Thank you to Eliza, Ronald Tannen for some great reporting at Bloomberg on the tariff rebate trading and to Martha Gimble at the Yale Budget Lab. I'm Mary Chimel.

I'm Sarah Gonzalez. And I'm Jeff Guo. This is NPR. Thanks for listening.