New legislation

Overview:

• US Supreme Court invalidates Trump Tariffs
• EU-Mercosur free trade agreement faces ratification delay after European Parliament vote

US Supreme Court invalidates Trump Tariffs

On 20 February 2026, the US Supreme Court ruled (6–3) that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) are not lawful, as the statute does not provide authority for the unilateral imposition of tariffs. As a result, the “reciprocal” and fentanyl related tariffs introduced under IEEPA have been invalidated. The ruling is limited to tariffs only; IEEPA remains available for other trade restrictive measures (e.g. sanctions). It does also not affect any other duties, including duties imposed under Sections 232 and 301.

Key points to note

1. Refunds of IEEPA tariffs (uncertain)

• The Court did not rule on whether, or how, refunds of IEEPA tariffs already paid should be granted. This issue has been remanded to lower courts, including the US Court of International Trade.
• Refunds are not automatic, and the process, timing and eligibility criteria remain unclear.
  • As a precautionary step, it is recommended that all US import entry data from February 2025 (including tariff lines, declared values and entry dates) is consolidated and readily available, should a refund mechanism be confirmed. The liquidation of imports (the moment import declarations are considered to be final) should be monitored to understand when/if refunds are at risk and when action should be taken. 

2. Replacement tariffs and ongoing uncertainty

• IEEPA tariffs ended on February 24, 2026.
• Based on the Executive Order of 20 February 2026 under Section 122 of the Trade Act of 1974, the US administration announced that they will impose additional 10% import duties as of 24 February 2026, meaning that there is (for now) no duty-free gap between the SCOTUS ruling, and the Section 122 import duties will be imposed as of Tuesday 24 February 2026. We expect a supplemental Executive Order to be released shortly, increasing the temporary duties to 15%. 
• The import duties have been referenced as a short term fallback, allowing temporary tariffs (up to 15%) for a maximum of 150 days, subject to renewal after approval of Congress.
• There is an exemption list under Section 122 available, but it is not the same compared to earlier exemption lists under the IEEPA tariffs.
• Beyond Section 122, other tools (e.g., Section 232 or Section 301) may also be used, potentially resulting in renewed duties with different scope and exemptions. 
• The decision will create significant uncertainty regarding the legal validity of existing deals (non-exhaustive examples include the UK-US Economic Prosperity Deal (EPD) and EU – US Agreement on reciprocal, fair and balanced trade).

EU-Mercosur free-trade agreement faces ratification delay after European Parliament vote

On the 27th of February 2026 the European Commission has decided to provisionally enter into force the EU-Mercosur trade agreement without the European Parliament’s approval. The European Parliaments want the European Court of Justice ("ECJ") to review the legality of the trade agreement before giving its final vote. It could take up to two years before the ECJ rules on the trade agreement. If the ECJ rejects the trade agreement the EU, Brazil, Paraguay, Uruguay and Argentine would need to enter into renegotiation. 

Next steps

The Argentine and Uruguay parliaments have now ratified the trade agreement, and the expectation is that approval of Brazil and Paraguay will soon follow. The trade agreement becomes final once the European Parliament has given its final vote.