February 24, 2026
By: Kellie A. Caggiano, B.C.S.
On February 20, 2026, the U.S. Supreme Court issued a landmark 6–3 decision in Learning Resources, Inc. v. Trump, holding that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs. The majority stated that IEEPA’s authority to “regulate importation” falls short of permitting taxation – an exclusive congressional power under Article I of the U.S. Constitution.
This decision invalidates the “reciprocal” tariffs imposed on April 2, 2025, and the IEEPA-based duties connected to the fentanyl emergency declarations involving Canada, China, and Mexico. Estimates indicate that U.S. Customs and Border Protection collected roughly $133.5 billion through IEEPA-specific tariffs as of December 2025, with totals likely surpassing $175 billion at the time of the ruling.
For contractors, suppliers, developers, and lenders, this is not just a constitutional ruling – it is a time for contractual reset.
Contract Scenarios Triggered for Review
Key contract scenarios triggered for review include:
- GMP adjustments tied to tariff escalation,
- Supplier price increases invoking tariff clauses, and
- Owner-funded allowances for tariff costs.
If refunds are obtained, the question becomes who retains the benefit. Absent clear refund-credit provisions, disputes may arise. Clauses providing that “if tariffs are later repealed and refunded to Seller, Buyer shall receive a credit or refund” now control the outcome of these cases.
Impact on Pending Claims and Disputes
This ruling also affects pending claims and disputes. Three categories of active claims will shift immediately:
- Change orders based on tariff increases – Opponents may contend the legal basis for those increases was unstable. Documentation of CBP Form 7501 duties will be critical.
- Change-in-law and force majeure – The court reaffirmed the major questions doctrine, requiring explicit congressional authorization for major economic actions. This will both support and challenge pending claims.
- Commercial Impracticability (UCC) – Cost escalation claims will face renewed scrutiny now that the tariffs have been deemed unlawful.
What the Construction Industry Should Do Going Forward
Based upon this decision, contracts should now include clauses covering:
- Allocation of tariff risk – Defining qualifying statutes, rates, and conditions.
- Refund ownership – Specifying which party receives refunds or credits and under what timeline.
- Documentation – Requiring parties to maintain CBP Form 7501 "Entry Summary," Harmonized Tariff Schedule records, and entry details for refund validation.
The Bigger Picture
Tariffs will remain part of the policy landscape, but the legal foundation has shifted. Every contract, claim, and procurement decision made since 2025 should be reevaluated in this new legal and commercial environment.
Questions?
Contact GrayRobinson Shareholder Kellie A. Caggiano, B.C.S., or a member of the Construction Team.