Key takeaways:

• • • Only IEEPA‑based tariffs are up for refund — Refunds will flow electronically to importers of record through ACE, the government’s digital import/export system, but only once CBP’s process is finalized.

    • Liquidation and protest timelines are now critical — An organization’s tax concepts that directly influence which entries are eligible and how long companies have to protect claims.

    • Tax functions must quickly coordinate with other corporate functions — In-house tax teams need to coordinate with their organization’s trade, procurement, and accounting functions to gather data, assert entitlement, and get the financial reporting right on any tariff refunds.

WASHINGTON, DC — When the United States Supreme Court issued its much-anticipated ruling on President Donald J. Trump’s authority to impose mass tariffs under the International Emergency Economic Powers Act (IEEPA) in February it set the stage for what it to come.

The Court ruled the president did not have authority under IEEPA to impose the tariffs that generated an estimated $163 billion of revenue in 2025. In response, the Court of International Trade (CIT) issued a ruling in requiring the U.S. Customs and Border Protection (CBP) to issue refunds on IEEPA duties for entries that have not gone final. That order, however, is currently suspended while CBP designs the refund process and the government considers an appeal.

AtĚýthe recent , tax experts discussed what this ruling means for corporate tax departments, outline what is and isn’t a consideration for refunds and the steps necessary to apply for refunds.

As panelists explained, the key issue for tax departments is that only IEEPA tariffs are in scope for refund — many other tariffs remain firmly in place. For example, on steel, aluminum, and copper; Section 301 tariffs on certain Chinese-origin goods; and new of 10% to 15% on most imports still apply and will continue to shape effective duty rates and supply chain costs.

So, which entities can actually get their money back?

Legally, CBP will send refunds only to the importer of record, and only electronically through the government’s digital import/export system, known as the Automated Commercial Environment (ACE) system. That means every potential claimant needs an with current bank information on file. And creating an account or updating it can be a lengthy process, especially inside a large organization.

If a business was not the importer of record but had tariffs contractually passed through to it — for example, by explicit tariff clauses, amended purchase orders, or separate line items on invoices — they may still have a commercial basis to recover their share from the importer. In practice, that means corporate tax teams should sit down with both the organization’s procurement experts and its largest suppliers to identify tariff‑sharing arrangements and understand what actions those importers are planning to take.

Why liquidation suddenly matters to tax leaders

As said, the Atmus ruling is limited to entries that are not final, which hinges on the . CBP typically has one year to review an entry and liquidate it (often around 314 days for formal entries) with some informal entries liquidating much sooner.

Once an entry liquidates, the 180‑day protest clock starts. Within that window, the importer of record can challenge CBP’s decision, and those protested entries may remain in play for IEEPA refunds. There is also a 90‑day window in which CBP can reliquidate on its own initiative, raising questions about whether final should be read as 90 days or 180 days — clearly, an issue that will matter a lot if your company is near those deadlines.

Data, controversy risk & financial reporting

The role of in-house tax departments in the process of getting refunds requires, for starters, giving departments access to entry‑level data showing which imports bore IEEPA tariffs between February 1, 2025, and February 28, 2026. If a business does not already have robust trade reporting, the first step is to confirm whether the business has made payments to CBP; and, if so, to work with the company’s supply chain or trade compliance teams to access ACE and run detailed entry reports for that period.

Summary entries and heavily aggregated data will be a challenge because CBP has indicated that refund claims will require a declaration in the ACE system that lists specific entries and associated IEEPA duties. Expect controversy pressure: As claims scale up, CBP resources and the courts could see backlogs. If that becomes the case, tax teams should be prepared for protests, documentation requests, and potential litigation over entitlement and timing.

On the financial reporting side, whether and when to recognize a refund depends on the strength of the legal claim and the status of the proceedings. If tariffs were listed as expenses as they were incurred, successful refunds may give rise to income recognition. In cases in which tariffs were capitalized into fixed assets, however, the accounting analysis becomes more nuanced and may implicate asset basis, depreciation, and potentially transfer pricing positions.

Coordination between an organization’s financial reporting, tax accounting, and transfer pricing specialists is critical in order that customs values, income tax treatment, and any refund‑related credits remain consistent.

Action items for corporate tax departments

Corporate tax teams do not need to become customs experts overnight, but they do need to lead a coordinated response. Practically, that means they should:

• • • confirm whether their company was an importer of record and, if so, ensure ACE access and banking information are in place now, not after CBP turns the refund system on.
    • map which entries included IEEPA tariffs, identify which are non‑liquidated or still within the 180‑day protest window, and file protests where appropriate to protect the company’s rights.
    • inventory all tariff‑sharing arrangements with suppliers, assess contractual entitlement to pass‑through refunds, and align with procurement and legal teams on a consistent recovery approach.
    • work with accounting to determine the financial statement treatment of potential refunds, including whether and when to recognize contingent assets or income and any knock‑on effects for transfer pricing and valuation.

If tax departments wait for complete certainty from the courts before acting, many entries may go final and fall out of scope. The opportunity for tariff refunds will favor companies that are data‑ready, cross‑functionally aligned, and willing to move under time pressure.

You can find out more about the changing tariff situation here

Key takeaways:

• • • The US achieved conventional military dominance, but it hasn’t solved the core problem — The navy that was destroyed was never the one controlling the Strait of Hormuz. The asymmetric force that is, the IRGCN, retained 80% of its small-boat fleet and may be able to replenish losses from civilian infrastructure faster than the US can eliminate them.

    • All three pathways to a quick resolution are blocked — The regime has hardened rather than collapsed, the diplomatic positions are nowhere near overlapping, and the US military posture is escalating, including possible ground operations, while allied support remains symbolic.

    • The conflict is likely measured in quarters, not weeks, and the economic difference is not linear — Businesses should be stress-testing against sustained disruption rather than planning for a return to normal, because the conditions required for a rapid resolution would each need to break favorably — and right now, none of them are.

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This is the first of a two-part series on the impact of the war with Iran as the conflict continues. In this part, we look at different ways the war could wind down quickly, and why none of them offer an immediate pathway.

The war with Iran is not going to be over by the end of this week.

That sentence shouldn’t be controversial four weeks into the ongoing war with Iran being waged by the United States and Israel, but it runs against the grain of how markets, policymakers, and many business leaders have been processing this conflict. The dominant assumption, visible in equity markets that have wobbled but not cratered, is that this is an acute shock with a definable end date.

However, very little about the military, political, or strategic picture supports that assumption.

While I make no claim to predict the war’s exact duration, I can lay out why the most likely scenarios point to a conflict measured in quarters, not weeks — and why that difference matters. In the next part of this series, we’ll sketch the economic consequences on a quarter-by-quarter basis, drawing on the latest projections from top economic thinkers. First, however, here is why this war probably drags on.

The wins aren’t winning…

By a surface level scorecard, Operation Epic Fury has been exactly the kind of lopsided success one would expect of a global superpower that’s going up against a regional player. Iran’s Supreme Leader was killed in the opening strikes, Iran’s conventional navy was sunk at anchor before they could sortie, and full air supremacy by the US appears established. If you were grading this on the metrics that won wars in the 20th century, you’d be forgiven for thinking it was nearly over.

Yet it is not nearly over. The Strait of Hormuz remains effectively closed. Daily transits have collapsed from 138 ships to fewer than five. Approximately 2,000 vessels and 20,000 seafarers are stranded in the region with nowhere to go. Brent crude is at $108 per barrel as of March 26, up roughly 50% since the war began. The International Energy Agency has called the current situation the largest disruption to global energy supplies in history.

The disconnect between the military scorecard and the strategic reality comes down to a single, underappreciated fact that the US destroyed the wrong navy. To be fair, it’s not like they had much of a choice. Iran’s conventional fleet had to go, and it went; however, that was playing on easy mode. Iran’s conventional fleet, its frigates, corvettes, and submarines, was a prestige force built for Indian Ocean power projection.

You can find out more about the here

The force actually designed to fight America, however, is the Islamic Revolutionary Guard Corps Navy (IRGCN), and it is something else entirely: a dispersed network of hundreds of armed speedboats, coastal missile batteries, thousands of sea mines, drone systems, and midget submarines spread across dozens of small bases along hundreds of miles of Persian Gulf coastline. The IRGCN’s entire doctrine, training, and equipment procurement were optimized for exactly one scenario, that of denying the Strait of Hormuz to a technologically superior adversary. That is the war Iran is now fighting.

Even though the IRGCN lost its most advanced platforms, those were not the workhorses of their fleet. The IRGCN retains an estimated 80% of its small-boat fleet, the fast boats that hide among fishing dhows, the crews that can scatter onshore and remount on surviving craft. The US is tasked with the mission of hunting small boats hiding among civilian vessels, in a fight in which Iran is willing to lose dozens of them a day to keep the Strait closed. This is not a mopping-up operation; rather, it is a war of attrition that the US is not structured to win quickly, and one in which Iran can replace its losses in ways a conventional navy cannot. For the US, it’s like trying to empty a bathtub while the spigot is still running.

Further, the math of the Strait itself is unforgiving. Iran had an estimated 5,000 sea mines before the war and has begun laying them. The US Navy decommissioned its last Gulf-based minesweepers in 2025 — timing that, in hindsight, looks catastrophic.

Indeed, the US can sink every major Iranian warship afloat and still not reopen the waterway. That, in fact, is roughly what has happened.

…And the off-ramps are blocked

If conventional military victory hasn’t solved the problem, there are three other ways this war ends quickly. As of late March, however, all three are jammed.

1. The regime isn’t collapsing

A US intelligence assessment completed before the war concluded that military action was unlikely to produce regime change even if Iran’s leadership was killed. That assessment has proven accurate. Iran’s constitutional succession mechanism activated as designed, and a new Supreme Leader, the previous one’s more hardline son, was installed within days. Also, protests are not sweeping the streets. Ideological regimes under external threat tend to harden, not fracture. Indeed, both the Taliban and Hamas have survived worse. The Iranian Islamic Republic, whatever else you want to say about it, appears to be surviving this conflict as well.

2. Diplomacy has nowhere to go

Iran rejected the 15-point plan offered by the US and published five counterdemands, including recognition of Iranian sovereignty over the Strait of Hormuz, which is a nonstarter for the US. Iran’s foreign minister says Tehran has no intention of negotiating, even as President Donald J. Trump insists talks are continuing. These positions aren’t close to overlapping, and both sides are staking their credibility on not budging first.

And Iran has good reason to believe time is on its side. The war is deeply unpopular in the US and the same affordability anxiety that swept Republicans into power is now threatening to sweep them out in the midterms. Tehran knows for every day the war goes on, they get to roll the dice that Trump will back out, giving them a strong incentive to get as many rolls as they can.

3. The military posture is escalating, not resolving

Ground troops, including paratroopers from the 82nd Airborne, are en route to the Gulf or have received deployment orders. Reports indicate the White House is weighing a seizure of Kharg Island, Iran’s primary oil terminal, an operation that would put American boots on Iranian soil for the first time. Seven allied nations signed a statement supporting Strait security, but it’s a paperwork alliance, lacking the kind of committed hardware needed to force a solution to the Strait’s closure.

What does this mean for business?

The Iranian regime isn’t folding, diplomacy doesn’t seem to be catching on, and the US military posture is expanding. None of the conditions point to a rapid resolution, and in fact, several of them point to a prolonged conflict.

If this war is measured in quarters rather than weeks, the economic consequences stop being a temporary, albeit painful price spike and start being a structural disruptive event, one that reshapes supply chains, reprices risk, and forces companies to make hard choices about where and how they operate. The difference between a three-week war and a three-quarter war is not a difference of magnitude, it is a difference in kind.

In the concluding part of this series, we’ll walk through what a quarter-by-quarter economic scenario would look like if the war continues.

Key takeaways:

• • • Companies should act fast on refunds — Companies that paid IEEPA-based duties have potential refund claims, but statutory deadlines are ticking. Business leaders should map exposure, quantify opportunities, and file protective claims now.

    • Remember, other tariffs still apply — This decision only invalidated IEEPA-based tariffs. Tariffs based on Sections 232, 301, and 122 of the 1974 Trade ActĚýremain in force, and the administration is already signaling plans for new global tariffs.

    • Businesses should update their financial models — Tariff refunds flow through cost of goods sold, which affects taxable income and effective tax rates. Business leaders should review their transfer pricing models and contracts to determine which parties receive refund proceeds.

The U.S. Supreme Court’s recent ruling striking down the tariffs that the Trump Administration based on the International Emergency Economic Powers Act (IEEPA) creates immediate refund opportunities for businesses that paid billions of dollars in now-invalidated duties. However, the administration’s pivot to alternative tariff authorities means the trade policy landscape is shifting rather than settling.

Now, corporate tax and trade leaders must move quickly to preserve refund claims while building resilient strategies for the next wave of tariff changes that are already fully in motion.

What actually happened

In , the Supreme Court said last month that President Donald J. Trump went too far by using the IEEPA — a statute designed for genuine national emergencies — to impose broad, peacetime tariffs. The Court’s message was blunt: If you want sweeping tariff authority, get the U.S. Congress to give it to you explicitly — IEEPA doesn’t cut it.

This ruling invalidated the tariffs that relied solely on IEEPA, including certain reciprocal global duties and some measures targeting Canada, Mexico, and China. However, here’s the catch: Other tariff regimes — such as those outlined in Sections 232, 301, and 122 of the TradeĚýActĚýofĚý1974Ěý— are still standing. Those weren’t touched by this decision, and they’re not going away.

Check outĚýĚýfor more on the Supreme Court’s tariff decision here

Further, the administration isn’t sitting still either. There’s already talk of pivoting to Section 122 to impose a new 10% global tariff. So, while one door closed, another may be opening, which means the legal landscape is shifting, not settling.

Why this matters right now

There are several important factors to consider in the wake of this decision, including:

Start with the money — If your company paid IEEPA-based duties, your effective tariff rate on many imports just dropped. That , changes your margin picture, and could shift pricing dynamics across the retail, consumer goods, manufacturing, and automotive sectors.

Then there’s the refund potential — Billions of dollars were collected under tariffs that are now unlawful. The government won’t write checks automatically — indeed, the administration has already signaled it will fight broad refund claims — but for individual companies, the cash at stake could be significant.

Don’t overlook your contracts — Many commercial agreements include tariff pass-through clauses, price adjustments, and indemnities. Those provisions will determine which parties actually gets the money: the importer of record, the customer, or someone else in the chain. If you restructured your supply chain around the old tariff regime, you may need to rethink those decisions, too.

What businesses should do first

There are several steps business leaders should undertake to move forward in this new environment, including:

Map your exposure — Tax and trade teams need to pull multi-year import data by Harmonized Tariff Schedule (HTS) code, country of origin, and legal authority. Figure out which entries were hit specifically by IEEPA-based tariffs, as opposed to Section 232 or 301 duties, which again, are still in effect.

Quantify the opportunity — Calculate total IEEPA duties paid by entity, jurisdiction, and period. Include a rough estimate of interest, prioritize the highest-value lanes, and flag any statutory deadlines for protests or post-summary corrections. Missing a deadline isn’t something you can easily fix later.

Preserve your rights — If you’ve already filed test cases or joined class actions, revisit your strategy with counsel. If you haven’t, evaluate quickly whether to file protests, post-summary corrections, or other protective claims with the U.S. Customs & Border Protection. These procedures will evolve, of course, but the clock already is ticking.

Get the right people in the room — This isn’t just a tax problem or a trade compliance problem. Stand up a cross-functional working group that includes tax, customs, legal, finance, supply chain, and investor relations. Agree on who owns what, how you’ll share data, and how you’ll communicate, especially if the refund could move the needle on earnings or liquidity.

Financial reporting and tax implications

Most importantly, you need to reassess your tariff-related balances and disclosures. If refunds are probable and you can estimate them, that may affect liabilities, expense recognition, and reserves. Even if the accounting is murky, material claims may need to be discussed in your report’s Management’s Discussion & Analysis (MD&A) section or in footnotes.

On the tax side, tariff refunds and lower ongoing duties flow through cost of goods sold (COGS), which changes taxable income and your business’s effective tax rate. Timing matters: When you recognize a refund for book purposes may not match when it hits for tax, creating temporary differences that need Accounting Standards Codification 740 analysis.

And don’t forget transfer pricing. Many intercompany pricing models were built during the high-tariff period and may embed those costs in tested party margins. If tariffs fall or refunds materialize, those models and the supporting documentation may need updates. Review intercompany agreements that allocate customs and tariff costs to make sure they align with both the economics and the legal entitlement to possible refunds.

Think beyond the refund

Yes, the immediate focus is on getting your company’s money back and staying compliant — but this is also a moment in which more strategic thinking is required, including:

Run scenarios — Business show run their models to see what happens if IEEPA tariffs disappear and aren’t fully replaced. Model what happens if a broad 10% global tariff lands under Section 122. Model what happens if country- or sector-specific measures expand. For each scenario, stress-test your gross margin, cash flow, and key supply chain nodes.

Revisit your sourcing strategy — Some nearshoring or supplier diversification moves you made under the old tariff structure may no longer make sense. Others may still be smart as a hedge against renewed trade tensions. The tax team needs to be part of these conversations — not just because tariffs affect cost, but because new structures reshape your effective global tax rate, foreign tax credit position, and your base erosion and profit shifting (BEPS) exposure.

Fix your data and governance — Trade policies can move fast and unpredictably. If you can’t quickly pull clean import data, run classification reviews, or model your exposure across scenarios, then you’re simply flying blind. Now is a good time to fix that.

The bottom line

The Supreme Court’s decision closed one chapter of the president’s tariff story, but it didn’t end it. For corporate tax and trade leaders, the message is straightforward: Grab the refund opportunity, protect your position, and use this moment to build a more resilient strategy for whatever comes next.

Because if there’s one thing we’ve learned, it’s that the next round of tariff changes is already on its way.

For more on the impact of tariffs on global trade, you can download a full copy of the Thomson Reuters Institute’s recent 2026 Global Trade ReportĚýhere

Key insights:

• • • Different tools, different impacts— Tariffs raise costs but allow business to continue; sanctions create legal barriers that can make transactions impossible, with severe penalties for violations.

    • Scale brings scrutiny— Expansive US sanctions risk diminishing returns as targets develop workarounds and alternative financial systems.

    • Strategic or reactive use?— The core challenge isn’t whether sanctions work, but whether they’re deployed as part of coherent strategy or simply as visible action that avoids harder diplomatic or military choices.

In the foreign policy arsenal of the United States, economic sanctions have become a widely used weapon. As their use expands, so does the debate about how effective they actually are, what additional risks they create, and what unintended consequences they may bring.

Tariffs vs. sanctions: What’s the difference?

In wartime or during high-tension economic crises, both tariffs and sanctions can significantly impact businesses, but the two methods work in different ways.

Tariffs are a form of economic pressure. Governments use them to reduce an adversary’s export revenue, raise the cost of critical imports, signal disapproval of countries that continue doing business with the target, and generate funds for their own efforts. For companies, tariffs usually create friction rather than a full stop. Businesses can often continue importing, but at a higher landed cost. And that can compress margins and force decisions around topics such as renegotiating pricing, passing costs to customers, or shifting to lower-tariff suppliers.

Sanctions are closer to an economic blockade. They aim to isolate the target by banning broad categories of trade, restricting strategic sectors, blacklisting specific entities and individuals, and sometimes pressuring third parties through secondary sanctions. The business impact is often binary. For example, if a counterparty or its majority owner is sanctioned, trading partners generally cannot make the deal work by paying more. The transaction becomes illegal, and violations can trigger severe penalties.

How the difference shows up in operations

Consider a European manufacturing company in March 2022 that is trying to manage the crisis situation caused by Russia’s invasion of Ukraine.

If policymakers respond to the crisis with tariffs, such as a steep duty on Russian aluminum and timber, the primary challenge for this manufacturer is financial and operational planning. Costs rise, and then the company must decide whether to absorb the increase, reprice contracts, or switch suppliers, even if alternatives are more expensive.

Check out for more on the Supreme Court’s tariff decision here

If policymakers respond with sanctions, however, the situation can escalate quickly. Restrictions on major banks and key import categories, combined with aggressive designations of targeted companies and individuals can disrupt the entire supply chain. Payments can freeze, and goods can be delayed or seized. Even indirect connections to the sanctioned party can create problems, including for banks, shippers, insurers, and in some cases for logistics providers or warehouse owners. Indeed, what looked like a routine transaction can become non-compliant without warning.

The scale of sanctions use

Over the past several decades, the US has increasingly relied on economic sanctions as a core foreign-policy tool. In fact, by the early 2020s, US sanctions programs were targeting more than 30 countries and thousands of individuals and entities, with the sanctions primarily being administered by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). That trend has not only continued but accelerated under the current administration, which has turned to sanctions more frequently amid a volatile political environment. As the use of sanctions has expanded on a massive scale, their breadth and effectiveness have come under growing scrutiny.

Indeed, the phrase economic warfare reflects how modern sanctions often operate.

Many sanctions now target entire sectors, not only military goods. Secondary sanctions can threaten foreign companies that do business with sanctioned parties, effectively using access to the US financial system and the dollar as leverage. Critics argue that sanctions can also cause harm to civilians through inflation, shortages of essential goods including medicine, and broader economic damage. While targeted sanctions are intended to focus on elites, broader measures can affect entire populations.

What makes sanctions risky

The overuse of sanctions can create several problems. Yet sanctions can be politically attractive because they offer visible action without direct military risk, which may increase the temptation to use them even when they are unlikely to work.

As sanctions become routine, however, their impact may weaken as countries and companies develop workarounds, find alternative payment channels, and establish sanctions-resistant trade networks. Broad pressure from US sanctions can also encourage efforts to reduce reliance on the dollar-based financial system. China, Russia, and others have invested in alternative payment mechanisms such as cross-border interbank payment systems (CIPS) and systems for transfer of financial messages (SPFS) and expanded the use of non-dollar currencies. Over time, this response can reduce US financial leverage.

Sanctions can also provoke retaliation, including cyber activity, support for US adversaries, or wider regional instability. Sanctions also may harden diplomatic positions and make negotiation more difficult. In some cases, shared sanctions pressure can push sanctioned states closer together, strengthening the very coalitions that the US is trying to disrupt.

The argument for a middle ground

Supporters of sanctions argue that they provide an option between doing nothing and using military force. They can impose real costs on harmful actors, signal resolve, and respond to domestic demands for action, while still preserving diplomatic channels and avoiding full-on armed conflict.

The central question, however, is whether sanctions are being used as a substitute for strategy rather than as a single tool within a broader strategy. As sanctions continue to expand, it is worth weighing their benefits against their limits and long-term consequences. For policymakers and businesses alike, understanding these dynamics is critical to making informed decisions and managing risk.

You can find out more about here

Key takeaways:

• • • The Strait of Hormuz crisis threatens a global recession — The effective closure of the Strait, which is being driven more by insurance withdrawal and risk perception than a physical blockade, has effectively halted roughly 20% of global petroleum flow. If this disruptions persist beyond 30 days, economic modeling points to overwhelming recession risk for major importing economies, with oil potentially reaching $100 to $200 per barrel depending on severity.

    • The world is facing an unprecedented dual-chokepoint shipping crisis — With the Strait of Hormuz effectively shut and the Houthis resuming attacks on the Suez/Bab el-Mandeb corridor, roughly one-third of global seaborne crude trade is compromised simultaneously. All five major container lines have suspended Hormuz transits, and the cascading delays will hit supply chains far beyond the Middle East, including those companies with no direct Gulf exposure.

    • Companies that act now will fare far better than those that wait — Supply chain disruptions propagate on a lag of two to four weeks, meaning that the pain from today’s anchored tankers hasn’t arrived yet. Businesses should immediately audit their Gulf supply chain exposure, secure alternative freight capacity before it disappears, and prepare for a significant escalation in cyber threats from Iran and its allies.

Just days into the largest military operation undertaken by the United States since the 2003 Iraq invasion, the potential closure of the Strait of Hormuz has triggered the most severe energy supply disruption since Russia’s invasion of Ukraine. The conflict with Iran has removed roughly 20 million barrels per day of crude from global markets and sent oil prices to above $80 as of press time. The conflict’s trajectory over the coming weeks will determine whether the world faces a manageable price shock or a full-blown recession.

How we got here

The February 28 strikes order by President Donald J. Trump followed weeks of negotiations around Iran’s nuclear program that ended without a deal just two days before the strikes began. Administration officials have since acknowledged that the timing was driven in part by Israel’s plans to strike Iran independently.

Iran’s Supreme Leader Ayatollah Ali Khamenei, age 86, along with his defense minister Brigadier General Aziz Nasirzadeh, the commander of the Islamic Revolutionary Guard Corps (IRGC), and approximately 5 to 10 senior Iranian officials, died in the opening salvo of the operation.

Even after the destruction of a large segment of Iran’s senior leadership, the war continues on. Hezbollah launched a rocket strike on March 3 with Israel initiating a ground invasion of Lebanon in response. Iran’s retaliation has extended across the region as drone and missile strikes have hit targets across Qatar, the United Arab Emirates (UAE), Kuwait, and Bahrain, while the US Embassy compounds in both Kuwait and Riyadh have been struck directly. Six American service members have been killed thus far.

Indeed, the regional escalation has given Iran the context to play one of the most feared cards in its arsenal — and one with the potential to throw an already fragile global economy into recession.

On March 2, Iran closed the Strait of Hormuz, vowing to attack any ship trying to pass through the strait. An European Union official said that began receiving VHF radio transmissions from the IRGC stating that no ships would be permitted to pass.

Ship-tracking data based on the MarineTraffic platform showed at least 150 tankers — crude oil and LNG vessels (those specifically built to transport liquefied natural gas — anchored in open Gulf waters. At least five tankers have been struck near the Strait, including one off Oman that was set ablaze, while the US-flagged tanker Stena Imperative was hit by two projectiles near Bahrain. On March 2, Marine insurers Gard, Skuld, and NorthStandard stated publicly they would effective March 5. One day later, four more of the 12 global insurance groups joined them, with London P&I Club, American Club, Steamship Mutual, and Swedish Club announcing similar moves.

Energy markets absorb the most severe supply shock in years

In light of 20 million barrels per day of crude being frozen out of the global markets, brent crude surged as much as 13% before settling at $83 per barrel, while WTI crude jumped to $76 at press time — both at their highest levels since the June 2025 conflict. Further, that several major oil companies and trading houses suspended shipments through the Strait as soon as strikes began.

“Unless de-escalation signals emerge swiftly, we expect a significant upward repricing of oil,” said , head of the company’s geopolitical analysis, citing the immediate impact of halting of traffic through Hormuz. UBS analysts warned clients that a material disruption scenario could send brent crude above $120 per barrel, while Barclays projected $100 per barrel as increasingly plausible. Just twenty-four hours later, that range has widened considerably. Goldman Sachs now models $120 to $150 per barrel in a prolonged war, JPMorgan sees $120 if the war lasts beyond three weeks, and Deutsche Bank’s worst-case approaches $200 if Iran mines the Strait.

OPEC+ announced a modest 206,000 barrel per day output increase for April, but as LeĂłn told Reuters, markets are now more concerned with whether barrels can physically move than with spare capacity on paper. If Gulf export routes remain constrained, additional production provides limited immediate relief.

Global shipping faces an unprecedented dual-chokepoint crisis

While the energy supply shock is severe, it is only one dimension of a broader shipping disruption that has no modern precedent. For the first time in history, two of the world’s most critical maritime chokepoints are simultaneously compromised — the Strait of Hormuz and the Suez Canal/Bab el-Mandeb corridor, the latter under renewed threat after the Houthis announced they would resume attacks. Together, these two passages that connect Asia to Europe handle roughly one-third of the global seaborne crude oil trade and a significant share of containerized cargo. All five major container lines — Maersk, MSC, CMA CGM, Hapag-Lloyd, and COSCO — have suspended or halted transits through Hormuz and are rerouting via the Cape of Good Hope, adding weeks to voyage times.

The practical consequences for businesses extend well beyond higher shipping costs. The rerouting absorbs vessel capacity that was already stretched thin, meaning delays will cascade across trade lanes that have no direct connection to the Middle East. Companies that source components from Asia, ship finished goods to Europe, or depend on just-in-time inventory models should expect weeks — not days — of compounding delays.

Dubai, Doha, and Abu Dhabi — three of the world’s busiest air cargo hubs — are also facing disruptions, meaning the usual fallback of shifting urgent shipments to air freight is itself constrained. For affected companies, the window to secure alternative routing and lock in freight capacity is closing fast; those companies that wait for the March 5 insurance deadline to pass before acting will find themselves competing for scarce logistics options in a market where scarcity is already the defining feature.

3 scenarios and their divergent economic consequences

There are three most likely scenarios as this conflict unfolds, each with their own challenges and potential outcomes:

Scenario 1: Rapid regime collapse and quick normalization

Credible but unlikely in the near term, this scenario banks on the fact that Iran’s opposition is real — the protest movement of the last year or so has been the largest since 1979, and the regime’s legitimacy has been severely eroded by economic collapse and violent crackdowns. If internal collapse occurs, energy markets would normalize rapidly.

Brent crude would likely retreat to the $70 to $75 range within weeks as the primary disruption drivers — fear and insurance withdrawal, not physical blockade — dissipates. Tanker traffic would resume once insurers restore war-risk coverage.

Scenario 2: Prolonged conflict, Strait mostly reopened

This is the most likely outcome based on available analysis. Energy Aspects founder Amrita Sen said she expects oil prices to , noting it is unlikely Iran could maintain a complete closure. She assessed that the US and Israel possess the military capability to neutralize Iran’s ability to fully shut down the Strait but acknowledged that sporadic attacks on individual vessels are far harder to prevent.

This is the critical distinction: A full blockade is unsustainable against US naval superiority, but one-off tanker strikes create an insurance and risk environment that chills commercial traffic almost as effectively. In this scenario, oil prices remain very high before gradually declining as the U.S. Navy establishes escort operations and mine clearance, with an open question revolving around insurance companies’ willingness to insure floating barrels of flammable liquid sailing into an open warzone, even under escort. Asian refiners face weeks of constrained supply access.

Scenario 3: Sustained Strait closure for weeks or months

This is the catastrophic tail risk. Roughly 20% of global petroleum consumption and significant LNG volumes moves through the Strait daily, representing an estimated $500 billion in annual energy trade. Saudi Arabia’s East-West Pipeline and the UAE’s Fujairah pipeline offer bypass capacity, but these routes can absorb only a fraction of the 15 million barrels per day now stranded.

Capital Economics estimated that a sustained $100 crude price could add to global inflation. And UBS warned that if disruptions extend beyond three weeks, Gulf producers could exhaust storage capacity and be forced to shut in output, pushing brent crude into the $100 to $120 range if not substantially higher if a significant blockade is held for a long duration.

The economic modeling is unambiguous, however, showing that disruption beyond 30 days carries overwhelming recession risk for major importing economies.

What companies should be doing right now

Of course, the economic impact of this conflict will not arrive all at once. Supply chain disruptions propagate on a lag — the tankers anchored outside Hormuz today represent goods and energy that won’t arrive at their destinations in two to four weeks. Companies that wait until these shortages materialize before they develop contingency plans will find themselves competing for scarce alternatives alongside everyone else. The window to act is now, not when the pain becomes visible.

Audit your supply chain exposure immediately

Any inputs, components, or raw materials that originate from or move through the Persian Gulf are at risk — and that extends well beyond oil. For example, one-third of global fertilizer trade passes through the Strait of Hormuz, meaning agricultural and chemical supply chains face disruption as well.

Business leaders should identify their companies’ Tier 1 and Tier 2 suppliers that have Gulf exposure, assess existing inventory buffers, and begin conversations with alternative suppliers before demand for those alternatives spikes. And companies with operations dependent on Middle Eastern air hubs — such as Dubai, Doha, Abu Dhabi — should assume they’ll face weeks of disruption to business travel and cargo routing and therefore plan accordingly.

Prepare for a serious escalation in cyber threats

Iran and its allies — including Russia, which has condemned the strikes and has well-documented cyberwarfare capabilities — have historically used cyber operations as an asymmetric response to kinetic military action. Indeed, there are signs already emerging that such actions are already taking place.

US critical infrastructure, financial services, and professional services firms are all plausible targets. The steps to prevent this are straightforward but urgent: Companies need to ensure that multi-factor authentication is enforced across all systems, verify that endpoint detection and backup protocols are current, brief employees on heightened phishing and social engineering risks, and confirm that incident response plans are not just documented but actually ready to be exercised.

The cost of preparation is negligible; the cost of a ransomware attack or data breach during a period of global economic stress is not.

Peering through the fog of war

As the conflict’s economic aftershocks move from risk to reality, the companies that act decisively now by diversifying supply chains, securing logistics, and hardening defenses will not just weather the disruption, but emerge more resilient whatever the outcome.

You can find out more about here

Key insights:

• • • The Supreme Court decisively limited presidential tariff power under IEEPA—The decision held that the statute’s authority to “regulate importation” does not include the power to impose tariffs, especially absent clear congressional authorization for actions of major economic significance.

    • The ruling creates major uncertainty around refunds of already‑paid IEEPA tariffs— There is more than $175 billion potentially at stake and no clear, orderly mechanism yet for determining who is entitled to refunds or how they will be administered.

    • Tariffs are not ending but shifting to slower, more constrained legal authorities — As the administration pivots to statutes like Sections 232 and 301 that impose procedural hurdles and limits, it is likely to result in continued trade volatility rather than relief for businesses.

In a 6–3 ruling handed down February 20 in Learning Resources, Inc. v. Trump, the U.S. Supreme Court held that the International Emergency Economic Powers Act (IEEPA) does not authorize President Donald Trump to impose tariffs. For businesses that have spent the past year navigating a dizzying storm of rate changes, exemptions, and modifications — sometimes shifting within days of each other — the ruling offers a measure of vindication.

However, don’t exhale just yet. The decision is likely to produce more confusion and instability in the near term, not less. The IEEPA tariffs may be legally dead, but the trade policy fight is very much alive, the refund process is an open question, and the administration is already pivoting to Plan B. For businesses trying to plan around a coherent trade regime, the ground has shifted again — it just shifted in a different direction.

Shortly after the announcement of the Supreme Court’s ruling, President Trump announced that his is planning to invoke new trade authorities and potentially levy new, across-the-board tariff on US trading partners. As of press time, the White House declined further comment but had tentatively scheduled a news conference for later Friday afternoon.

Here’s what happened, what it means, and what comes next.

The Court’s ruling

Chief Justice John Roberts, writing for the majority, framed the case around a simple but consequential question: Can two words — regulate and importation, separated by 16 other words in IEEPA’s text — support President Trump’s claim to his ability to impose tariffs of unlimited amount, duration, and scope on imports from any country?

The answer, from the Court’s majority is No.

The Court’s reasoning proceeded along two tracks. First, three justices — Chief Justice Roberts, and Justices Neil Gorsuch and Amy Coney Barrett — invoked the major questions doctrine, the principle being that executive actions of vast economic and political significance require clear congressional authorization. They found none in the IEEPA. As Roberts wrote, the President must “point to clear congressional authorization” to justify his assertion of tariff power. “He cannot.”

If the past year has taught businesses anything about trade policy, it’s that certainty is now a luxury item.

Second, and commanding a full six-justice majority, the Court worked through IEEPA’s text and concluded that the word regulate simply does not encompass the power to tax. The U.S. Code is full of statutes authorizing agencies to regulate various things, but the government, in its arguments before the Court, could not identify a single one in which that power has been understood to include taxation. In one of the opinion’s sharpest lines, the majority expressed skepticism “that in IEEPA — and IEEPA alone — Congress hid a delegation of its birth-right power to tax within the quotidian power to ‘regulate.'”

What the ruling does not say

Here is where businesses may need to pay close attention: The Court said nothing about refunds of tariffs already paid.

Justice Brett Kavanaugh, writing in dissent, flagged the looming chaos directly. “The Court’s decision is likely to generate other serious practical consequences in the near term,” Justice Kavanaugh wrote. “Refunds of billions of dollars would have significant consequences for the U.S. Treasury… . [T]hat process is likely to be a ‘mess’… . Because IEEPA tariffs have helped facilitate trade deals worth trillions of dollars… the Court’s decision could generate uncertainty regarding various trade agreements.”

Check out for more on the Supreme Court’s tariff decision here

That mess is now a real, operational problem. There is more than $175 billion in IEEPA tariff collections at risk, according to a estimate released today. Nearly 1,000 companies had already filed preemptive refund claims with the Court of International Trade (CIT) before today’s ruling. Indeed, the CIT has indicated it has jurisdiction to order reliquidation and refunds, and the government has stipulated it won’t challenge that authority.

However, the mechanics — who gets paid back, how much, and when — remain deeply uncertain. Some importers passed tariff costs downstream to their customers or absorbed them into pricing adjustments that can’t easily be unwound. For many businesses, the refund question will be less a windfall than a logistical headache.

What the Administration might do next

Make no mistake, the White House took a significant blow today. The IEEPA was the administration’s most flexible and powerful tariff instrument and the tool that let the President impose duties instantaneously, on any trading partner, at any rate, with no procedural prerequisites. That tool is now gone.

However, as mentioned, the administration signaled immediately that it intends an end-around in order to keep as many tariffs in place as possible. the United States would invoke alternative legal authorities, including Section 232 of the Trade Expansion Act (national security tariffs), Section 301 of the Trade Act of 1974 (unfair trade practices), and other statutory provisions. None of these alternatives offer the speed and blunt-force flexibility that the IEEPA provided, however, and they may not replicate the full scope of the current tariff regime in a timely fashion.

Shortly after the announcement of the Supreme Court’s ruling, President Trump announced that his is planning to invoke new trade authorities and potentially levy new, across-the-board tariff on US trading partners.

Justice Kavanaugh’s dissent, notably, conceded the point while framing it sympathetically: “In essence, the Court today concludes that the President checked the wrong statutory box by relying on IEEPA rather than another statute to impose these tariffs.”

That framing understates the practical significance. The alternative statutes each come with procedural requirements — agency investigations, public hearings, durational limits, rate caps — that IEEPA’s emergency framework did not impose. Section 122, for instance, caps tariffs at 15% for 150 days. Section 232 requires an investigation and report from the U.S. a Commerce Department. Section 301 demands a formal determination by the U.S. Trade Representative. These are not insurmountable hurdles of course, but they are hurdles and they will take time.

What businesses should do now

If the past year has taught businesses anything about trade policy, it’s that certainty is now a luxury item. Today’s ruling doesn’t change that; rather, it just changes the axis of uncertainty. Here’s what any organization impacted by trade should be thinking about:

• • Review your tariff exposure immediately — Understand which of your import duties were collected under IEEPA authority compared to the other statutes (Sections 232, 301, 201). Only IEEPA tariffs are affected by today’s Court ruling. Section 232 tariffs on steel, aluminum, autos, and other goods remain fully in place, as do Section 301 tariffs on Chinese imports. For many importers, a significant portion of their tariff burden will not change. For others, it may change everything.
  • Engage trade counsel on refund claims — If you’ve paid IEEPA duties, the clock is ticking. The CIT has a two-year statute of limitations on refund claims, running from the date the tariffs were published. For the earliest IEEPA tariffs (the fentanyl-related duties on Canada, Mexico, and China from February 2025, for example), that window is already narrowing. If you haven’t filed a protective claim yet, consult with counsel now.
  • Prepare for replacement tariffs — The administration has made clear it intends to reimpose tariffs under alternative authorities. Thus, the effective tariff rate is not going to 0%. Even without IEEPA tariffs, estimates suggest the average rate would settle around 9%, still far above the roughly 2% that prevailed before the beginning of President Trump’s second term. Businesses should map out scenarios to plan for a period in which IEEPA tariffs are lifted but gradually replaced by duties under other statutes, potentially with different rates, different product coverage, and different country-specific treatment.
  • Monitor trade deal stability — Many of the bilateral and multilateral trade agreements negotiated over the past year — with the United Kingdome, the European Union, Japan, South Korea, and others — were structured around tariff levels built greatly upon the IEEPA. The legal basis for those arrangements is now uncertain. Watch for renegotiations, modifications, or lapses in these existing frameworks.
  • Build flexibility into supply chain planning — This is the hardest and most important advice. The trade policy environment is not returning to a stable equilibrium anytime soon. Today’s ruling is the end of one chapter, but the broader story — of a political system wrestling with how much tariff authority the President should have — is far from over. The administration will test the boundaries of its remaining statutory tools. And the courts will almost certainly be called upon again.

Taking in the bigger picture

For businesses, the practical takeaway from today’s Court order is more pedestrian but no less important: Strap in. The tariff landscape is shifting again, the refund process will be complicated, and the administration will find another way to pursue its trade objectives. Today brought clarity on the law, but clarity on the market is still a long way off.

For more on the impact of tariffs, you can download a full copy of the Thomson Reuters Institute’s recentĚýĚýhere

Key points:

• • • USMCA at risk — Rising tariffs, political friction, and the potential 2026 review are creating uncertainty around rules of origin, market access, labor obligations, and dispute‑resolution mechanisms — areas that are central to legal and tax planning.

    • Economic impact — Mexico depends on USMCA for exports, investment, and employment; and any disruption would be problematic.

    • Water as a strategic resource — The conflict over the 1944 Treaty and the new law reflect the critical importance of water usage and water rights in the bilateral agenda.

For almost 25 years before the United State-Mexico-Canada AgreementĚý(USMCA), it was the North American Free Trade Agreement (NAFTA) that defined the region’s economic relationship. Enacted in 1994, NAFTA removed most tariffs, encouraged foreign investment, and integrated supply chains across North America, especially in manufacturing, automotive production, and agriculture. This integration helped transform Mexico into a major export platform and contributed to North America’s emergence as a competitive economic bloc.

Over time, however, NAFTA drew criticism, particularly in the US, where concerns grew about trade imbalances, worsening labor conditions, and the agreement’s ability to address modern challenges such as . These political pressures set the stage for renegotiation and ultimately produced the USMCA, a more modern but also more politically sensitive framework.

The current chaotic environment around tariffs and trade suggests that these rules in North America may again be subject to revision. Understanding how tariffs, political dynamics, and resource‑related tensions interact is essential for organizations and corporations as they try to plan for the legal and tax implications that may arise as the 2026 review approaches.

A year of trade tensions

From the beginnings of Donald Trump’s second administration in January 2025, , marking the start of a more protectionist trade policy.

In March, some of those tariffs were exempted for products that comply with USMCA provisions. However, in December, President Trump declared that the US would allow the treaty to expire or seek to renegotiate it in 2026, alleging that Canada and Mexico have gained advantages to the detriment of US interests.

Not surprisingly, throughout 2025 and saw President Trump accuse Mexico of failing to comply with the 1944 Water Treaty, a historic agreement that regulates the distribution of water resources from the Bravo, Colorado, and Tijuana rivers. According to the US government, Mexico had not delivered the agreed-upon volumes, generating friction amid a political context already marked by trade disputes.

Mexico argued that prolonged droughts between 2020 and 2025 made compliance with the treaty difficult, affecting water availability in its own agricultural and urban regions. However, President Trump warned that if water flow to the US did not increase, he would impose a 5% tariff on Mexican exports, adding pressure to the bilateral relationship. Finally, after negotiations, an agreement was reached: Mexico must supply the remaining amount before 2030, which represents a significant challenge for the country’s water management.

In this context, the Mexican government promoted a structural reform to ensure compliance with the treaty and guarantee efficient resource management. On December 11, 2025, the and came into force the following day. This regulation establishes a new legal framework with three fundamental pillars:

• • • comprehensive state responsibility for water management;
    • exclusive powers for Conagua in the allocation, supervision, modification, and revocation of concessions; and
    • prohibition of concession transfers between private parties, preventing speculation and resource hoarding.

The law directly impacts strategic sectors such as agriculture, livestock, industry, and rural communities, as well as domestic services. Beyond its internal scope, this reform is interpreted as a mechanism to guarantee compliance with the Water Treaty, reduce the risk of trade sanctions, and strengthen Mexico’s position in future international negotiations.

Economic impacts and projections

For Mexico, the USMCA is not merely a trade agreement; it represents a strategic pillar for the country’s economic stability and sustained growth. Since its entry into the USMCA, Mexico has become a reliable partner in the North American region, guaranteeing its preferential access to two of the largest markets in the world. This advantage has driven foreign direct investment into the country, especially in sectors such as automotive, advanced manufacturing, agribusiness, and emerging technologies.

The importance of USMCA lies in the fact that . Without this legal framework, Mexico would face an adverse scenario because the imposition of significant tariffs would reduce the competitiveness of national products, increase supply chain costs, and directly affect job creation. The automotive sector, for example — and about 30% of manufacturing GDP in Q3 of 2025 alone and employs more than 1 million people — would be one of the hardest hit by the loss of these preferential conditions.

In addition, USMCA offers legal certainty for investors. Clear rules on intellectual property, digital trade, and dispute resolution reduce risks and encourage the arrival of foreign capital. Without this treaty, Mexico could experience an outflow of investments to other countries with more stable agreements, which would negatively impact job creation and projected economic growth.

The coming USMCA review

The possible renegotiation of USMCA, scheduled for later this year, generates uncertainty. This review process presents several possible paths for Mexico, each with distinct economic, political, and diplomatic implications. If the USMCA is successfully extended without substantial modifications, Mexico would preserve its preferential access to the US and Canadian markets, maintaining the commercial stability that supports most of its exports. This continuity would reinforce investor confidence, support job creation and stabilize diplomatic relations.

However, if no agreement is reached to extend the treaty, this absence of clarity would create uncertainty for businesses operating throughout North America. Investment decisions could be delayed, expansion plans postponed, and operating costs could rise due to increased scrutiny and customs enforcement. Further, diplomatic tensions could begin again, particularly if unilateral measures such as large tariffs are threatened again. In this environment, Mexico would need to adopt a cautious strategy focused on strengthening legal frameworks and offering targeted economic incentives to maintain its own competitiveness.

Another scenario in which the parties fail to reach consensus would activate the formal pathway toward the treaty’s expiration in 2030. While trade flows would continue in the short term, markets would begin adjusting to the anticipated end of the USMCA. This expectation could trigger a gradual relocation of investments and restructuring of supply chains, particularly in industries heavily integrated with US production networks, such as automotive manufacturing and advanced industrial sectors. Pressure on the peso, slower GDP growth, rising import costs, and early job losses would likely follow; and even if diplomatic efforts emerge to prevent severe disruption, the economic effects for Mexico would become progressively more adverse.

However, the most severe scenario involves one country withdrawing from the USMCA, which would cause the agreement to collapse for all three members. For example, if the US were to withdraw, Mexico would immediately face World Trade Organization tariffs, dramatically increasing export costs for manufactured goods and agricultural products and severely disrupting supply chains.

Clearly, any of these scenarios highlight how critical this year will be for Mexico. While a successful extension of the USMCA would support stability, attract investment, and sustain long‑term growth, a failure to reach agreements — or the withdrawal of a partner country — could reshape Mexico’s economic landscape for years to come.

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Key insights:

• • • Trade teams are becoming strategic business partners — Trade is no longer an administrative, reactive function but rather a driver of business strategy and operational resilience.

    • Tariff mitigation strategies — Many organizations are absorbing tariff costs as a tariff mitigation strategy.

    • Technology adoption is surging — Organizations are rapidly adopting automation to improve efficiency and supply chain visibility and are exploring AI and other advanced technologies.

For decades, corporate trade departments have operated in relative obscurity, being viewed largely as cost centers that manage compliance and transactional paperwork. Over the past 12 months, however, there’s been a dramatic change. Corporate trade departments are emerging as a strategic business function within their organizations, due mostly to the unprecedented wave of tariff volatility that is forcing businesses to fundamentally rethink how they view trade management, according to the Thomson Reuters Institute’s 2026 Global Trade Report.

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2026 Global Trade Report

As a result, organizations are looking to their trade leaders to analyze, strategize, and execute key realignments of supply chains, markets, operations, facility locations, and more. “The financial burden caused by tariffs led our company to reorganize our supply chain and production footprint in order to reduce tariff exposure and preserve profitability,” notes one trade professional in the report.

From back office to boardroom

For trade professionals, this change represents both validation and opportunity. Indeed, the numbers tell a compelling story, especially for vanguard organizations that are proactively leading the strategic elevation of their trade functions. About 40% of global trade professionals surveyed for the report say they’ve seen enhanced influence over procurement decisions and greater involvement in executive decision-making over the past 12 months. Many also note the increased visibility of their function’s value across the organization as well.

And forward-thinking organizations are backing this shift with more resources. Many survey respondents say their organizations are increasing budget allocation for hiring, technology solutions, and training and development. And survey respondents also report increased cross-functional collaboration with other in-house departments, such as Finance, Operations, IT, and Procurement/Supply Chain.

The tariff reality check

What’s driving this transformation? According to the report, tariffs have fundamentally recast the entire global trade environment. Almost three-quarters (72%) of trade professionals cite US tariff volatility as the most impactful regulatory change they’re facing, which is up dramatically from just 41% who said this a year earlier.

However, it’s not just about the tariffs themselves. The cascading effects of tariffs touch every corner of business operations, leaving companies to grapple with increased regulatory compliance burdens, as well as significant cost pressures on imported materials and components.

One of the most striking findings in the report is the dramatic acceleration in trade departments’ technology adoption, as trade professionals seek to increase efficiency and improve visibility across the supply chain. About 40% of respondents say their departments are exploring emerging technologies like AI or blockchain for trade management, up from just 6% in 2024 — a nearly sevenfold increase.

Even more revealing is that only 2% of trade professionals now consider their department to be in the early stages of technology adoption, a huge drop from 40% previously. It appears the industry has collectively decided that manual processes and legacy systems are no longer viable in today’s volatile environment.

As a result of the tariff disruption, many organizations are scrambling to adopt strategies that will both minimize the immediate impacts of the tariffs and also position them for a global trade environment that has fundamentally shifted long-term.

Particularly sobering is the fact that 39% of respondents say their organizations are absorbing or considering absorbing tariff costs rather than passing them to customers — triple the 13% who said that a year earlier. This dramatic shift speaks volumes about competitive pressures and the threats that tariffs pose to profitability.

Shifting priorities

Not surprisingly, the ripple effects from tariffs have dramatically reshaped strategic priorities. These aren’t routine worries about supply chain optimization — indeed, they represent fundamental concerns about systemic resilience amid volatility that has reached unprecedented levels.

Supply chain management has surged as the top concern for trade professionals, cited by 68% of respondents — nearly double the percentage from a year earlier. Regulatory compliance has similarly intensified. “Customs paperwork and adjustments to tariff categorization are making trade compliance and operational planning more difficult,” explains one trade professional.

The path forward

The opportunity for trade professionals is to capitalize on this newfound influence and operationalize their heightened strategic organizational involvement through formalized processes and policies that create enduring competitive advantages, including more collaboration, leveraging increased boardroom visibility, and more.

As the report shows, trade today is moving beyond simply managing risks from supply chains and compliance and toward becoming increasingly central to strategic business planning. And those organizations that recognize trade as a strategic function worthy of investment and executive attention, and view technology as a force-multiplier for human expertise will gain significant advantages.

The strategic elevation of the trade function is already underway, making the question not whether it will continue, but rather which organizations will take full advantage of it.

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a full copy of the Thomson Reuters Institute’s “2026 Global Trade Report” by filling out the form below:

Key findings:

• • • Conflicting court rulings— Two federal courts have issued opposing decisions on the legality of Trump-era tariffs, creating a jurisdictional clash that may force the Supreme Court to intervene.

    • Massive stakes for importers — A ruling against the tariffs could trigger large-scale refunds and curtail executive trade authority; a ruling in favor could entrench broad presidential powers around trade.

    • Uncertain timeline & political fallout— With expedited appeals underway and potential Supreme Court review by mid-2026, the litigation is already fueling legislative reform efforts and shaping the future of US trade governanceĚý

Two landmark cases are now at the center of the legal battle over former President Trump’s use of emergency powers to impose sweeping tariffs. With conflicting rulings from federal courts and billions in trade at stake, this could be the most consequential trade-based decision ever put before the United States Supreme Court.

To help navigate this tricky, complex web of litigation, Stephen Josey, a tax controversy attorney from the international law firm Vinson & Elkins, offered his insight into the current situation, its major factors, and where things may go from here.

Two courts, two paths

The first of the two major cases isĚýV.O.S. Selections Inc. v. Trump, a consolidated case combining that of a small business importer with separate lawsuits filed by various states that is being tried in the U.S. Court of International Trade (CIT), a specialized court with jurisdiction over customs and trade matters. Meanwhile, inĚýanother case, Learning Resources, Inc. v. Trump, plaintiffs took a more traditional approach, taking it before to the U.S. District Court for the District of Columbia.

While the named plaintiffs are mostly importers and small businesses, the legal fight has drawn in heavyweight political backing. In the CIT case, several states (including Oregon and New York) have filed briefs supporting the challenge, arguing that the tariffs have harmed their economies and exceeded presidential authority. The DC District case has seen similar support, with a coalition of states and trade associations lining up behind the plaintiffs. These aren’t just isolated business disputes; rather, they’re part of a broader constitutional clash over the limits of President Trump’s executive power, with Democrat-led state governments stepping in to defend their interests.

One of the more arcane but critical issues in the litigation isĚýthat of jurisdiction, which can be a make or break for these kinds of cases even before argument on the merits becomes a factor.

Currently, inĚýV.O.S. Selections andĚýin another case, State of Oregon v. Trump, the CIT ruled that the tariffs issued by President Trump under the International Emergency Economic Powers Act (IEEPA) were unlawful. The court found that the national emergency declared by President Trump did not justify the remedy. To put it simply, tariffs on goods from China, Mexico, and India were illegal because the triggering emergency (fentanyl trafficking and trade deficits) bore no rational connection to the trade measures imposed, the CIT ruled.

Meanwhile, inĚýLearning Resources, the DC District court went even further, holding that the IEEPA doesn’t authorize tariffs at all. The statute, which has historically been used to freeze assets or block specific transactions, contains no mention of tariffs and was never intended as a tool for reshaping global trade.

These rulings are now stayed pending appeal. The U.S. Court of Appeals for the Federal Circuit has agreed to hear the CIT cases en banc on an expedited basis starting July 31, while the DC District court’s injunction has been paused by the U.S. Court of Appeals for the District of Columbia Circuit. For now, importers must continue paying the tariffs — but the legal ground beneath them is anything but stable.

What’s at stake

One of the more arcane but critical issues in the litigation isĚýthat of jurisdiction, which can be a make or break for these kinds of cases even before argument on the merits becomes a factor. Vinson & Elkins’ Josey says that while it appears that a Congressional statute gives exclusive jurisdiction to the CIT to consider these challenges to the president’s authority under the IEEPA, as it has near exclusive authority over tariff-related cases, the DC District court’s ruling has created a parallel litigation track. While district courts have occasionally weighed in on trade matters, they’ve rarely done so in direct opposition to the CIT.

“Several other federal district courts — including one in Florida and one in Montana — have transferred cases challenging the IEEPA tariffs to the CIT due to a holding that the jurisdictional statute (28 USC Sec. 1581(i)) confers exclusive jurisdiction on the CIT,” Josey notes, further supporting the CIT as the likeliest venue for a true resolution.

Further, the implications of these cases go far beyond the named plaintiffs. If the courts ultimately rule that the IEEPA tariffs were imposed ultra vires — beyond the President’s legal authority — it could triggerĚýit could usher in a wave of duty refund claims and severely curtail the executive branch’s ability to unilaterally reshape trade policy. Conversely, if the ruling is in favor of the President’s actions, it would signal a massive expansion of presidential authority which is likely to reshape the relationship between the U.S. Congress and the President. A case with such substantial implications is all but certain to end up before the Supreme Court.

At that point, there are four likely paths forward:

1. 1. 1. The Supreme Court grants certiorari — Affirming the lower courts’ rulings would greatly curtaining President Trump’s ability to place tariffs without the authorization of Congress. It could also trigger a return of previously collected tariff revenue.
      2. The Supreme Court reverses — By restoring broad presidential authority under IEEPA would allow the administration to continue on its current course without oversite.
      3. The Court punts — By either ruling narrowly or on procedural grounds, the Court could leave the core question unresolved and effectively allow President Trump to continue as is while forcing plaintiffs to go back to the beginning, potentially delaying any ruling until 2027 or 2028.

1. 1. 4. The Court could issue a split decision — By upholding one ruling while reversing another, the Court could simply complicate the effort even further.

The timeline is fluid. The Federal Circuit’s expedited review could yield a decision by late summer or early fall. From there, a Supreme Court petition could be filed before year’s end, with a final ruling possible by June 2026.

Of course, it’s impossible to know which of the paths the Supreme Court (or even the Appeals Courts) would take, Josey says, adding that this could leave a massive question mark hanging over the US economy, which in turn could potentially set up a substantial wave of significant duty refund claims to consider if things go against the Trump Administration.

Policy fallout and the road ahead

Regardless of the outcome, the litigation has already sparked calls for reform. Democratic lawmakers are eyeing theĚýTrade Review Act, which would limit presidential authority under IEEPA and require Congressional approval for future tariff actions. But with the current Congress in control of the president’s party, any action is unlikely until after the 2026 mid-term elections.

“International trade law has always been around, but it wasn’t recently front of mind until Trump’s first term,” explains Josey. “Now, it’s front and center — and the courts are being asked to draw the line.”

Whether that line holds — or shifts again — will shape the future of US trade policy for years to come.

You can download a full copy of the Thomson Reuters Institute’s recentĚý2025 Tariffs ReportĚýhere

Key takeaways:

• • • Understanding the announcement — The G7 “exemption” is an informal understanding, not a legal change.

    • Rules still in effect — Pillar 2 rules remain in effect across most jurisdictions, and US multinationals must still comply. Compliance and reporting obligations will continue and may increase.

    • Corporate tax departments need to keep informed — Tax departments should stay the course and be prepared to adapt as guidance evolves.

The global tax landscape is in flux, especially for US multinationals navigating Pillar 2’s global minimum tax rules. The G7’s recent announcement of a potential exemption for US-parented groups from certain aspects of Pillar 2 has raised questions and cautious optimism. To provide clarity on this issue, Jacob Fulton, HeadĚýof the Quantitative Tax Practice for , shares his insights with Nadya Britton of the Thomson Reuters Institute (TRI).

Nadya Britton (TRI): The G7’s June announcement about a Pillar 2 exemption for United States-based multinationals created a stir. Can you explain what this actually means?

Jacob Fulton (Orbitax): The announcement suggested that G7 countries — led by the US, Canada, and the United Kingdom — had reached an understanding to exclude US-parented groups from the Income Inclusion Rule and Undertaxed Profits Rule under Pillar 2. On its face, it sounded like significant relief for US multinationals.

However, there’s little detail on how this would work in practice. The statement is more of a political commitment than a change in law. The Qualified Domestic Minimum Top-up Tax (QDMTT) remains in place, and the legislative removal of Section 899 from the One Big Beautiful Bill in the US doesn’t change the current Pillar 2 obligations for multinationals. So, while the announcement sounds promising, it introduces more questions and uncertainty rather than offering clear, immediate relief.

Britton: Given the uncertainty, should the in-house tax departments of US multinational change their approach to Pillar 2 compliance?

Fulton: No, they should not — the G7’s understanding doesn’t override existing laws. More than 50 jurisdictions have enacted Pillar 2 legislation, and those rules remain in force. For tax years 2024 and 2025, US multinationals are still subject to the same compliance and reporting obligations as before.

It’s important for corporate tax departments to stay the course. While there may be future guidance, we don’t know the timeline or the specifics. Delaying or pausing Pillar 2 implementation based on this announcement would be risky and could leave companies noncompliant if nothing changes.

Britton: What about tax planning? Is there an opportunity for companies to adjust their strategies in light of the G7 announcement?

Fulton: Not really. The current uncertainty makes tax planning more complex, not less. While it’s tempting to consider planning opportunities, there’s no concrete framework for how the exemption would be applied, or even if the exemption will be applied.

The Pillar 2 regime already contains robust transition rules designed to prevent companies from exploiting gaps or planning opportunities during the rollout. Any new guidance could target retroactive planning aimed at leveraging this potential exemption. Until there’s greater clarity, companies should be cautious and avoid making significant planning changes based on speculation.

Britton: Beyond the exemption, what broader challenges does Pillar 2 present, especially now?

Fulton: Pillar 2 was initially envisioned as a uniform global minimum tax, but in practice, it’s fragmented. Each jurisdiction has implemented the rules on different timelines and with varying interpretations. The G7’s move may add further complexity, as only a few countries are part of this understanding. In fact, most jurisdictions have not agreedĚýto adjust their laws to this point, so US multinationals could face inconsistent rules and additional compliance requirements.

If only some countries adopt the exemption for US groups while others do not, companies may need to navigate a patchwork of rules, increasing the risk of errors and duplicative reporting. This environment heightens the need for robust technology solutions to manage calculations, track legislative changes, and handle complex reporting obligations.

Britton: Does this mean the compliance burden for US multinationals is likely to increase?

Fulton: Yes, absolutely. The G7 announcement, rather than simplifying things, adds another layer of complexity. Even if some countries provide relief, others may not, so corporate tax departments need to be prepared for additional filings and ongoing compliance rules in multiple jurisdictions.

For example, even where the Global Anti-Base Erosion (GloBE) Information Return might not be required due to an exemption, local jurisdictions may impose increased QDMTT reporting or other compliance burdens. Each country’s requirements are unique, and in many cases, they apply regardless of whether a tax liability exists. The compliance workload will not decrease in the near term.

Britton: Given all this, what should in-house tax departments be doing right now?

Fulton: Tax departments should continue with their current Pillar 2 compliance and implementation plans. It’s critical to keep up with local legislation, maintain documentation, and be prepared for reporting in every jurisdiction in which it’s required.

Investing in technology is more important than ever. Automated solutions can help track legislative changes, manage calculations, and streamline reporting. As the rules evolve and complexity increases, manual approaches will struggle to keep pace.

Finally, corporate tax teams should stay engaged with industry groups and advisors, monitor new guidance closely, and be ready to adapt as the situation develops.

Britton: Any final thoughts for US multinationals navigating this evolving landscape?

Fulton: The G7’s announcement is a headline, not a new law — and it doesn’t change the immediate reality for US multinationals. The best course is to continue preparations, invest in robust technology, and remain vigilant for further developments.

As Pillar 2 evolves, flexibility and readiness to adapt will be critical. While the promise of an exemption is attractive, the reality is increased complexity and ongoing compliance obligations for the foreseeable future.

You can find more of our coverage ofĚýthe impact of the One Big Beautiful Bill ActĚýhere