Tariffs in dispute: the landscape following the invalidation of IEEPA and a new 10% duty

The ruling by the U.S. Supreme Court declaring unconstitutional the use of the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs does not close the trade front. The swift response from the White House has reopened the debate and underscores the need for the fruit sector to remain vigilant regarding potential reimbursements.

The U.S. Supreme Court declared unconstitutional the use of the IEEPA (International Emergency Economic Powers Act) to impose broad tariffs on various trading partners, including agricultural exporting countries such as Chile and Peru. This authority had been invoked by President Donald Trump at the beginning of his second term in January 2025, under the argument that the trade deficit and certain imbalances in trade relationships constituted a “national emergency.”

The Court’s 6–3 decision, issued on February 20, made clear that the authority to impose duties rests with Congress rather than the Executive Branch, leaving a degree of uncertainty for export sectors that operated under this framework for nearly a year. Notably, the ruling did not clarify what will happen to the amounts collected to date, nor did it close the broader tariff discussion.

According to international trade attorney Matías Araya, founding partner of Araya & Cía., the decision establishes that “the authority should not have collected tariffs under the emergency powers law (IEEPA), and therefore all amounts collected between April 2025 and February 20, 2026 are subject to reimbursement, as they were charged under a law that did not apply.”

The ruling by the U.S. Supreme Court declaring unconstitutional the use of the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs does not close the trade front. The swift response from the White House has reopened the debate and underscores the need for the fruit sector to remain vigilant regarding potential reimbursements.

The U.S. Supreme Court declared unconstitutional the use of the IEEPA (International Emergency Economic Powers Act) to impose broad tariffs on various trading partners, including agricultural exporting countries such as Chile and Peru. This authority had been invoked by President Donald Trump at the beginning of his second term in January 2025, under the argument that the trade deficit and certain imbalances in trade relationships constituted a “national emergency.”

The Court’s 6–3 decision, issued on February 20, made clear that the authority to impose duties rests with Congress rather than the Executive Branch, leaving a degree of uncertainty for export sectors that operated under this framework for nearly a year. Notably, the ruling did not clarify what will happen to the amounts collected to date, nor did it close the broader tariff discussion.

According to international trade attorney Matías Araya, founding partner of Araya & Cía., the decision establishes that “the authority should not have collected tariffs under the emergency powers law (IEEPA), and therefore all amounts collected between April 2025 and February 20, 2026 are subject to reimbursement, as they were charged under a law that did not apply.”

Section 122

Following the Court’s decision, President Trump condemned the ruling as “deeply disappointing,” asserting that the justices had been “influenced by foreign interests” and stating that countries that “have been taking advantage of the U.S. for years are celebrating.” The administration’s response was swift.

“After February 20, the Trump administration established new 10% tariffs based on Section 122 of the Trade Act of 1974. This statute authorizes the implementation of tariffs for up to six months and subsequently requires Congressional ratification to maintain them,” Araya explains.

In practice, this is an exceptional mechanism provided under U.S. trade law to act quickly in response to external imbalances affecting commerce, for a period of up to 150 days. Following the ruling, the Executive Branch activated this mechanism at 10%, although it had initially proposed raising the rate to 15%, which is the statutory maximum. Chilean government officials have confirmed through the press that no such increase has been implemented.

What Lies Ahead

This new development sustains an environment of regulatory volatility that could complicate agricultural planning, though not necessarily export agreements to the United States, according to Araya.

“It is very unlikely that the free consignment model will change. Under this structure, the cost of the tariff is fully borne by the exporter rather than the Importer of Record. Although the importer formally pays the duty, the amount is deducted from the exporter, who ultimately absorbs the cost. Therefore, unlike in most cases where the importer assumes the tariff cost and passes part of it on to U.S. consumers, in this case the foreign exporter bears the cost, and it is not transferred to the consumer.”

Financial Scope

Various analyses following the ruling have sought to quantify its financial implications. According to specialized outlets such as Law360, tariffs applied under the IEEPA over the past twelve months may have generated approximately US$325 billion in revenue for the U.S. Treasury. Other estimates, specifically related to the so-called “reciprocal duties” announced in April 2025, place that figure between US$175 billion and US$240 billion.

In both cases, these are aggregated national figures spanning multiple sectors and trading partners, not limited to agricultural trade. However, their magnitude highlights the substantial volume of resources potentially subject to reimbursement claims.

Interest in possible refunds has already begun to move into the courts. This week, FedEx filed a lawsuit before the U.S. Court of International Trade seeking reimbursement of tariffs imposed under the emergency framework, confirming that the matter may rapidly enter the litigation stage.

Reimbursements

If the Court of International Trade ultimately orders a reimbursement mechanism, “the right to reimbursement belongs to the exporters and arises from exports conducted under the free consignment model,” Araya clarifies.

“In this commercial structure, exporters covered the value of the tariffs, which their agents in the U.S. paid on their behalf and subsequently deducted from their fruit settlement statements. Therefore, exporters are the direct beneficiaries of any tariff reimbursement. This, without prejudice to the need for importers to sign the necessary powers of attorney or Authorizations of Record (AOR), as they are the parties formally making payment to U.S. Customs and Border Protection (CBP).”

02-26-2026
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