Finders Keepers? Tariff Refunds After Learning Resources and the New M&A Imperative

What You Need to Know:

• The Supreme Court's invalidation of IEEPA tariffs may trigger refunds exceeding $170 billion, but standard tax provisions in acquisition agreements may not clearly govern who is entitled to these recoveries, creating a significant risk of post-closing disputes between buyers and sellers.

• Transacting parties should address tariff refund rights explicitly in their definitive agreements, including allocation of proceeds, control over the claims process, effort and duration standards, and cost-sharing arrangements.

• Strict deadlines apply: Importers have 180 days from liquidation to protest with CBP to preserve their refund rights; thus, deals closing during the next six months, and likely well beyond that period, require clear assignment of responsibility to avoid forfeiting valuable claims.

Introduction

The U.S. Supreme Court's February 20, 2026, decision in Learning Resources, Inc. v. Trump has restructured international trade and, in doing so, introduced new and important considerations for M&A transactions involving import-reliant businesses. The Court, by holding that the International Emergency Economic Powers Act ("IEEPA") "does not authorize the President to impose tariffs," invalidated the administration's most aggressive tariffs and potentially triggered an unprecedented wave of duty recoveries.  

For M&A practitioners and businesses, the implications are immediate. The central contention of this piece is straightforward: absent explicit contractual provisions governing tariff refund entitlements, buyers and sellers face a substantial risk of post-closing conflict over sums that could prove material.

The Ruling and Its Immediate Effects

The Court's 6-3 majority opinion focused on the statutory interpretation of IEEPA. The administration had argued that the President's delegated power to "regulate...importation" under IEEPA carried with it the power to impose tariffs on imports. The Court disagreed, holding that "two words separated by 16 others" could not "bear the weight" of conferring upon the President the "independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time." 

With the invalidation of these tariffs, the question of refunds has moved to the forefront. Industry observers have projected that total refundable amounts could exceed $170 billion. While the Supreme Court was silent on the specific mechanics of how refunds would be administered, Judge Eaton, the Chief Judge of the Court of International Trade ("CIT"), issued an edict to the U.S. Customs and Border Protection ("CBP") last week that demanded a prompt plan to administratively address the process for IEEPA tariff refunds. Subsequently, the Director of CBP affirmed that it is working on establishing a portal system through ACE to allow importers to obtain their refunds. According to CBP, this process will be in place within the next forty-five (45) days. Although there remains a lack of guidance and specifics, the U.S. Chamber of Commerce and other national trade organizations applauded the about-face by CBP.

Why This Matters for M&A Transactions

For businesses, the potential for substantial tariff refunds creates a new dimension of transactional complexity. Conventional purchase agreements typically contain provisions addressing the allocation of taxes attributable to pre-closing periods. However, tariff refunds stemming from judicially nullified imposts present a new, unique reality—they may not constitute "taxes" for purposes of certain purchase agreements, the recovery process may involve administrative challenges or court proceedings, and the amounts involved could meaningfully affect transaction value.  

To illustrate, imagine a private equity firm acquiring a mid-market consumer goods company that imports components from Southeast Asia. In 2025, the target paid $8 million in IEEPA-based tariffs that compressed its EBITDA and, consequently, were reflected in a lower valuation at closing. Two years later, refunds began to be issued. The $8 million, plus accrued interest, now sits in limbo. The former owners contend that they bore the economic burden of those duties and that the depressed purchase price already accounted for that cost, meaning any refunds belong to them. The buyer counters that it purchased the company's assets and liabilities, including any contingent claims, and that it invested the time and resources to navigate the administrative refund process. Neither position is unreasonable, yet neither is clearly correct absent express contractual language.

This not-so-hypothetical ambiguity represents a new diligence and deal-structure negotiation point that should be front of mind for any transaction involving a target with substantial exposure to now-invalidated IEEPA duties.  

Key Provisions to Address in Purchase Agreements

Given the uncertainty, sophisticated parties should confront tariff refund allocation head-on in their agreements. As the baseline, purchase agreements should clearly allocate the following:

Rights to Refund Proceeds: The agreement should state which party holds the right to recover amounts refunded for duties paid before closing. Including a specific tariff refund clause eliminates the need to rely on standard tax language that may not clearly govern these recoveries. Sellers wishing to preserve refund rights should insist on language that explicitly captures tariff-related recoveries within the scope of amounts payable to them post-closing. 

Administration of the Recovery Process: Equally important is clarity regarding which party bears responsibility for pursuing refunds. For entries already liquidated, importers must lodge a formal protest with CBP within 180 days. If unsuccessful, they then have an additional 180-day window to initiate litigation before the CIT. A transaction that closes while these windows are open creates the risk that valuable claims lapse through inattention or miscommunication. Disputes over responsibility can escalate rapidly when meaningful dollars are involved. 

Standards Governing the Pursuit of Claims: Parties should define the degree of diligence expected from whichever side assumes responsibility for the refund process. The administrative pathway for refunds remains undefined. Practitioners anticipate that formal guidance could take considerable time to materialize. Cooperation covenants extending several years may prove necessary.

Expense Allocation and Payment Mechanics: The agreement should specify how legal fees, customs broker charges, and other costs incurred in pursuing refunds will be borne, and whether such expenses may be deducted from recovered amounts before distribution. Given the complexity of potential CBP protests and CIT litigation, these outlays could be considerable. Where expected refunds are substantial, consideration should be given to escrow arrangements or purchase price adjustment mechanisms that account for the ultimate resolution of refund claims. Factoring potential recoveries into financial projections and addressing them expressly in deal documentation is essential for parties contemplating a transaction. 

Tactical Approaches for Buyers and Sellers

Buyers would be well served to engage customs specialists and tax advisors at the outset of diligence to quantify potential IEEPA-related recoveries. That intelligence can inform bidding strategy, either by factoring the potential upside of a refund into the offered purchase price or by holding the issue as a negotiation point to offset the seller's positions on other contested deal terms. 

Sellers, for their part, should scrutinize post-closing covenant language to confirm that their entitlement to tariff recoveries is adequately protected. For targets with substantial import activity during the period when IEEPA tariffs were in effect, prospective refunds may dwarf ordinary tax recovery expectations. The failure to contract around this point introduces meaningful economic exposure, which can harm future interests. 

Independent of transaction documentation, companies with potential refund entitlements should act promptly to secure their claims. Prudent steps include downloading historical entry data from customs portals, filing protective challenges on finalized shipments before deadlines expire, and compiling a comprehensive document file, including receipts, country-of-origin certifications, supplier invoices, and shipment records.

Looking Ahead

The Learning Resources decision has created a new and potentially advantageous or risky deal point within M&A transactions. Buyers and sellers who fail to anticipate refund issues during negotiations risk contentious disputes over money that was never squarely addressed in the purchase agreement. Because the mechanics for processing these recoveries remain unsettled, and may remain so for an extended period of time, former counterparties will likely need to work together long after closing, even as their commercial incentives begin to diverge.

It bears noting that the end of IEEPA-based tariffs does not mean the end of tariffs. The Trump administration has implemented substitute duties under alternative statutes. Companies navigating international supply chains now face the dual challenge of managing ongoing duty obligations while pursuing recoveries from invalidated levies. 

For businesses and negotiators, the message is clear: tariff refund rights deserve the same care and specificity typically afforded to other high-stakes post-closing obligations. Given that recoverable amounts across the market may run well into the hundreds of billions of dollars, treating this issue as an afterthought is a risk no sophisticated party should accept.

For additional coverage on the tariff ruling, please see below:

• The Supreme Court Invalidates Trump's Tariffs, But What's Next?

• Importers Continue to Eye IEEPA Tariff Refunds – What Should You Know?