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Supreme Court Tariff Ruling: Refund Opportunities, Transfer Pricing Risk, and the New Tariff Reality

The U.S. Supreme Court’s recent decision invalidating a significant portion of Trump-era tariffs has reopened the door for companies to seek refunds of previously paid duties. While the ruling creates potential cash recovery opportunities, it also introduces substantial uncertainty, operational complexity, and tax risk—particularly around transfer pricing and prior tariff mitigation strategies. Importantly, it does not signal the end of tariffs as a planning consideration.

Below, we outline three key areas companies should be focused on now.

#1 Area of Focus: What Happened—and Why Refunds Will Be Uncertain and Messy

On Friday, February 20, 2026, the Supreme Court nullified a large swath of tariffs imposed in recent years, potentially clearing the way for refund claims that could total well over $170 billion across affected companies. However, the Court did not address whether—or how—the federal government should return tariffs already collected.

As one justice noted in dissent, the refund process is likely to be “a mess.” At this stage:

• Refunds are not automatic
• The administrative process remains unclear
• Timing and eligibility are highly uncertain
• Litigation and agency rulemaking may be required

Companies should be cautious about assuming recoverability or recognizing refunds in financial statements until there is greater clarity on process and probability of collection.

This ruling creates opportunity—but not certainty. Any refund strategy must be approached deliberately and defensively.

#2 Area of Focus: Transfer Pricing and Documentation Risks Take Center Stage

If refunds are received, the most significant risk lies in how the proceeds are allocated internally. While the importer of record paid the tariff, that entity may not have borne the economic cost. Tariff costs may have been:

• Embedded in intercompany pricing
• Passed to foreign affiliates
• Absorbed through margin adjustments
• Passed on to customers or suppliers

Determining who is entitled to the refund raises immediate transfer pricing questions and potential audit exposure. Reallocating refunds may be viewed as a new intercompany transaction that must be arm’s length, properly characterized, and supported by contemporaneous documentation.

Further, U.S. and foreign tax authorities may take conflicting views on where the income belongs, increasing the risk of double taxation.

Compounding the challenge, many companies lack robust historical documentation tying tariff costs to specific entities or risk bearers.

Refund dollars are not “free money.” Allocation decisions must align with transfer pricing principles and be defensible under audit.

#3 Area of Focus: Unwinding Prior Tariff Mitigation Strategies—And the New Normal

In response to tariffs, many companies previously:

• Adjusted transfer pricing margins
• Shifted profits across jurisdictions
• Reconsidered supply chains
• Relocated assets, including intellectual property

Unwinding or revisiting these strategies is complex and risky. Changes made to mitigate tariffs were often carefully documented to demonstrate business purpose and compliance with tax and customs rules. Reversing course may create inconsistencies across tax, customs, and financial reporting; trigger scrutiny from one or more tax authorities and require redocumentation and remodeling.

At the same time, tariffs are not going away. Following the Court’s decision, new global tariffs and additional investigations have already been announced. Companies are operating in a “new normal” where tariff volatility is a recurring planning constraint rather than a temporary disruption.

Companies must balance refund planning with the reality that tariffs—and tariff mitigation—remain a long-term strategic issue.

How Centri Can Help

The Supreme Court decision presents a potential upside, but it also introduces meaningful tax, transfer pricing, and operational complexity. Companies that act thoughtfully—grounded in documentation, economic substance, and consistency—will be best positioned to navigate refunds and ongoing tariff uncertainty.

At Centri, our team of Tax Advisory experts have the knowledge and expertise to help your business navigate the new requirements. Contact us to learn more.

Rich Petillo

Partner | Tax Advisory Practice Leader | CPA

Rich is a Partner at Centri Business Consulting and a leader of the firm’s Tax Advisory Practice. With over 15 years of public accounting experience, Rich specializes in ASC 740, Accounting for Income Taxes, advising both public and private companies on complex tax provision matters. He joined Centri in November 2025 and has extensive experience in annual and quarterly income tax accounting, valuation allowance assessments, uncertain tax position analyses, and global effective tax rate management.. . View Rich Petillo's Full Bio