Scotus Tariff Ruling Could Trigger Billions In Refunds. W…
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The Supreme Court ruling has created a potential mess for mergers and acquisitions. getty
The U.S. Supreme Court’s February 20, 2026 decision invalidating tariffs imposed under the International Emergency Economic Powers Act (IEEPA) may end up doing more than reshaping trade policy. It may also create a very practical—and potentially expensive—question in mergers and acquisitions:
Who’s Eligible For The Tariff Refund?
That question is now front and center for importers, buyers, sellers and deal lawyers.
The Supreme Court held that the enabling legislation used by the government under IEEPA, “contains no reference to tariffs or duties,” and that no prior president had interpreted the law to grant tariff authority. The court invalidated the tariffs and said the government did not have the authority to impose them.
The ruling did not directly lay out a refund process. But it clearly raises the possibility of substantial repayments to importers that paid those duties.
Since tariff refunds may take a long time, perhaps even years, it’s a relevant question for thousands of businesses that get sold between the time they pay the tariff and when they get a refund.
And that’s where it can get complicated.
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Mergers And Acquisition Question Hides In Trade Case
In a normal transaction, parties often rely on standard tax covenants and general post-closing cooperation language. Ted Rosen, an M&A expert at law firm Akerman LLP, says that “generally pre-closing taxes are dealt with in a purchase agreement so the issue should be covered.” But tariffs may or may not be taxes, it’s a disputable point, so standard language may not be enough and could lead to a dispute.
Tariff refunds tied to invalidated duties are unusual. They may involve litigation, administrative protests, timing uncertainty and meaningful dollar amounts. Since a refund could relate to a period before the deal closed the cash may not be received until long after the buyer has taken control.
According to an update on a report written by Ejim Achi, Laura Rabinowitz and Jeffrey Ekeberg of law firm Greenberg Traurig, without a specific provision in the purchase agreement, there’s room for conflict.
The report explains that each side may have a good argument to claim the refund. A can argue that tariffs paid before the sale reduced pre-closing earnings and lowered the price so it should have the benefit of the refund. A buyer may argue it owns the claim because it’s paid to the company they own and they bear the burden of processing the refund.
Both arguments can sound reasonable. That is exactly why the deal documents crafted after the supreme court ruling should answer the question explicitly.
What Sophisticated Buyers And Sellers Should Spell Out
The Greenberg, Traurig report points out that for deals involving importers, the purchase agreement should address tariff refund rights directly.
At a minimum, parties should decide:
- Who is entitled to the refund arising from pre-closing payments
- Who controls the claim process (including litigation or protests)
- What level of effort is required to pursue the refund (commercially reasonable efforts, reasonable best efforts, etc.)
- How long the obligated party must continue pursuing it
- How costs are handled, including whether legal and administrative costs can be netted from any recovery
- Who gets to make strategic decisions, especially if the refund pursuit could affect broader customs positions or relationships
Standard contract language about taxes may not be applicable. Even if tariff refunds get treated similarly to tax refunds in some agreements, the mechanics here may be different enough that a standalone covenant in the purchase and sale agreement is a cleaner solution.
Refund Rights Depend On Filings Deadlines
The timing risk is real.
Refund rights may depend on filings made within strict deadlines, including protests with U.S. Customs and Border Protection and actions in the Court of International Trade. If a deal is signed or closed while those deadlines are running, one side could lose value simply because no one took responsibility for acting.
The issue can become a post-closing dispute very quickly—especially if the refund amount is large.
For private equity buyers, strategic acquirers and sellers in industries with significant import exposure, this is no longer a theoretical drafting issue. It is a live diligence and deal-structure issue.
The issue could be with us for a while. Laura Rabinowitz of Greenberg Traurig says, “the refund process has yet to be announced in any way,” and “it may take many months for guidance to be issued” although she is expecting an “organized process for refunds” to be created eventually but it may affect M&A for years to come.
Getting a refund may require the combined efforts of the buyer and the seller because they each may have unique knowledge of a company’s operations. An agreement to cooperate on the issue after closing may prove important and valuable.
A Practical Checklist For Importers And Deal Teams
Importers that may be entitled to refunds should not wait for a fully developed government process before organizing their records.
To be ready, Greenberg Traurig recommends:
- Pulling data from CBP’s Automated Commercial Environment (ACE) portal for entries made under IEEPA tariff codes, including entry numbers, dates and duty amounts paid.
- Filing protective protests with CBP within the 180-day protest period for entries that have already liquidated.
- Evaluating whether to file an action in the CIT covering entries where IEEPA duties were paid. Rabinowitz of Greenberg Traurig calls that filing a “belts and suspenders protective measure.”
For companies in or near an M&A process, add one more step:
- Map the refund exposure into the deal model and purchase agreement, including a clear allocation of rights and responsibilities.
In some transactions, the parties may even want an escrow or post-closing true-up mechanism if the potential refund is large enough to influence valuation.
This Case Is A Perfect Example Of M&A Drafting Events
When government policy shifts suddenly—especially when courts later unwind it—the legal issue is only half the story. The other half is who captures the economic value.
In this case, that value may come in the form of tariff refunds paid after a company changes hands.
And unless the purchase agreement says otherwise, the answer to “who gets the refund?” may be decided by a dispute no one planned for.
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