February 20, 2026, marked a significant shift in the financial landscape for American importers and exporters. The U.S. Supreme Court issued a landmark 6–3 ruling in Learning Resources, Inc. v. Trump, fundamentally altering how the executive branch can utilize trade penalties. The Court held that the International Emergency Economic Powers Act (IEEPA) does not grant the President authority to impose tariffs.
This decision immediately invalidated the sweeping tariffs active since early 2025 on goods from Canada, Mexico, China, and several other major trading partners. If you are currently preparing a business for sale, this ruling directly impacts your bottom line and your future exit strategy. Understanding the immediate financial recovery options and the long-term regulatory changes is essential for maximizing your company’s value.
The Supreme Court Decides the Limits of Presidential Power
The ruling centered on whether the term "regulate" in the IEEPA statute includes the power to tax or impose duties. Since early 2025, the administration had used IEEPA to levy a 25% duty on most Canadian and Mexican imports and 10–20% on Chinese goods. The government cited national emergencies regarding trade deficits and drug trafficking as the legal basis for these actions.
Chief Justice Roberts, writing for the majority, clarified that the power to tax belongs exclusively to Congress under Article I of the Constitution. The Court emphasized that while the President can control or govern importation through regulation, he cannot unilaterally impose taxes without clear authorization from the legislative branch. This distinction is critical for businesses that have seen their margins eroded by high import costs over the last year.
The Strategic Shift to Section 122 Tariffs
The administration responded to the ruling within hours. President Trump signed an executive order terminating IEEPA tariffs but immediately invoked Section 122 of the Trade Act of 1974. This move established "replacement tariffs" to maintain trade pressure while attempting to stay within legal bounds.
These new tariffs began at 10% on February 24, 2026, and quickly escalated to the statutory maximum of 15%. However, Section 122 carries a strict 150-day limit. Unless Congress grants an extension, these tariffs will expire by mid-summer. For business owners looking to sell my business, this creates a window of relative cost certainty followed by a potential "tariff cliff" or further legal challenges.
Current legal challenges to these replacement tariffs are already in motion. Over 24 states filed a new lawsuit in March 2026, arguing that the specific economic conditions required for Section 122, primarily balance-of-payments emergencies, do not exist. This ongoing volatility means you must factor tariff-related risks into your operational planning and financial disclosures.
The $175 Billion Refund Question
The most immediate financial opportunity lies in the recovery of tariffs already paid. Between the start of the IEEPA tariffs in 2025 and the Supreme Court ruling in early 2026, the government collected an estimated $175–$179 billion. The Supreme Court did not provide a specific mechanism for returning these funds, leaving a massive pool of capital in legal limbo.
You must take proactive steps to secure your right to these refunds. More than 2,000 companies have already filed complaints with the U.S. Court of International Trade (CIT). The CIT has indicated that it cannot grant relief to parties that have not officially filed a claim. If your company has paid IEEPA tariffs, these potential refunds represent a significant accounts receivable item that must be documented during the sale process.
Treating Tariff Refunds as a Core Business Asset
When you engage in a business valuation, every dollar of potential recovery matters. A pending refund claim is not merely a legal footnote; it is a tangible asset. In the context of M&A, these claims can significantly boost your valuation if they are properly identified and validated during due diligence.
Buyers look for "clean" balance sheets and predictable cash flows. By demonstrating a clear path to recovering past tariff payments, you present a more robust financial picture. You should work with your accounting team to quantify the exact amount paid under the invalidated IEEPA orders. This data allows you to present a "pro-forma" view of your earnings that excludes the artificial weight of illegal tariffs.
Our team at Voyage Acquisitions specializes in identifying these types of hidden value drivers. You can learn more about how we assess company worth on our business valuations page.
Navigating the Risk Profile for a Business Sale
The Supreme Court ruling reduces the immediate tariff burden, but it does not eliminate trade risk. The reduction from 25% (under IEEPA) to 15% (under Section 122) improves near-term profitability. However, the 150-day expiration of the current tariffs introduces a new layer of uncertainty.
Potential buyers will scrutinize your supply chain more than ever. They want to know if you can sustain your margins if the administration finds other legal avenues, such as Section 301 investigations, to reimpose higher rates. Preparing a business for sale in this environment requires a detailed trade impact analysis. You must be able to explain how your sourcing strategy mitigates the risk of future executive or legislative trade actions.
How an M&A Advisor Protects Your Transaction
The complexity of trade law requires a sophisticated approach to deal structuring. This is where an m&a advisor from Voyage Acquisitions becomes indispensable. We help you navigate the language of your purchase agreement to ensure you aren't leaving money on the table or assuming unnecessary risk.
Specific areas of the deal structure that require attention include:
- Representations and Warranties: You'll need to make accurate statements regarding your compliance with trade laws while ensuring the buyer understands the status of pending refund claims.
- Indemnification Provisions: Sellers and buyers must agree on who holds the liability, or the benefit, if future rulings change the refund landscape.
- Material Adverse Change (MAC) Clauses: We help define what constitutes a "material change" in the context of trade policy, protecting you from a buyer backing out of a deal due to standard market fluctuations in tariffs.
- Escrow and Holdbacks: If a refund is expected but not yet received, we can structure the deal to ensure you receive your fair share of those funds once they are disbursed by the government.
Our advisors act as your guide through these turbulent waters, ensuring your exit is both profitable and secure. You can explore our approach to these complex deals on our sell-side advisory page.
Action Steps for Business Owners
The SCOTUS ruling is a victory for the business community, but the work is just beginning. To protect your interests and prepare for a successful exit, you should take the following actions:
- Audit Your Records: Identify every dollar paid in IEEPA tariffs since early 2025.
- File Your Claims: Consult with trade counsel to file a claim with the CIT to preserve your right to a refund.
- Update Projections: Recalculate your 2026 and 2027 forecasts based on the 15% Section 122 rates and the potential for their expiration.
- Engage Experts Early: Bring in an advisor who understands how trade volatility impacts business transitions.
The Bottom Line
The Supreme Court has checked executive overreach, but the tariff landscape remains a moving target. For business owners, the ruling provides a unique opportunity to recover lost capital and improve valuation ahead of a sale. However, the temporary nature of the replacement tariffs means that the window for a clean, high-value exit may be subject to shifting political and legal winds.
At Voyage Acquisitions, we help you navigate these complexities with a steady hand. Whether you are just starting to think about an exit or are ready to go to market, we provide the strategic guidance necessary to turn regulatory challenges into financial opportunities.
To discuss how these tariff changes impact your specific business valuation, please contact us for a confidential consultation.
This post is for informational purposes only and does not constitute legal or financial advice. Based in part on analysis originally published by Jackson Walker LLP.