From IEEPA to 122: Tech Braces for ‘Tariff Whiplash’ as $175B Refund Hunt Begins

Even as the dust settles, the White House is already doubling down with fresh Section 301 investigations into 'digital discrimination’

In a decisive 6-3 split on February 20, 2026, the Supreme Court stripped the executive branch of its tariff-leveling powers under IEEPA. The justices clarified that while the Act permits the 'regulation' of international commerce during emergencies, they argued it does not provide a backdoor for trade taxes, a Constitutional power that the President cannot legally seize from Congress.

The tech industry's brief celebration of a Supreme Court victory was cut short this weekend as the White House executed a rapid "legal reboot" of its trade policy. The White House is already doubling down with fresh Section 301 investigations into "digital discrimination. By Friday afternoon, the 6-3 decision had effectively invalidated the use of the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs.

The 1977 Act serves as a high-stakes federal tool, authorizing the President to regulate international commerce during declared national emergencies. Historically acting as the nation’s "economic emergency brake," the Act provides the executive branch with the necessary levers to neutralize extraordinary foreign threats—such as terrorism, cyber warfare, or international aggression—without a formal declaration of war from Congress.

Section 301 of the Trade Act of 1974 provides the administration with a precise legal offensive, authorizing the U.S. Trade Representative (USTR) to investigate and penalize foreign practices that stifle American commerce. By targeting actions deemed 'unreasonable' or 'discriminatory, ' the government retaliates with targeted tariffs—effectively shifting the trade war from broad hardware taxes to a specific defense of U.S. digital services and intellectual property.

The SCOTUS decision effectively turned the Treasury into a $175 billion debt collector for hardware manufacturers. This action forced the White House to charge a temporary 15% surcharge under Section 122. By law, these measures are temporary and expire after 150 days unless Congress explicitly votes to extend them. It goes into effect today, February 24.

According to Ambito: "U.S. firms and a coalition of blue-state governors are gearing up for a protracted legal battle over restitution, despite warnings from the White House that the claims process could remain stalled in court for years."

The Winners and Losers

While countries like India and China may see a slight reduction from their previous localized rates, traditional allies (including the UK and Singapore) will see their effective tariff burden rise to meet the new 15% floor.

As reported by Ambito: "USMCA keeps most Canada and Mexico trade tariff-free, but autos and steel are back on the table. A decisive 6-3 SCOTUS vote cleared the way for additional duties on these specific high-value imports."

Short-Term Outlook

For Silicon Valley, the short-term future is one of extreme "tariff whiplash." CFOs are currently navigating two contradictory workstreams:

1- The Refund Hunt: Legal teams are filing in the U.S. Court of International Trade to claw back billions in IEEPA duties paid over the last year.

2- The New Compliance: Logistics teams are frantically updating customs entries to reflect the new Section 122 surcharges and bracing for the outcome of the fast-tracked 301 probes.

The message from the White House is clear: The legal authority may have changed, but the tariff wall remains.