Supreme Court Strikes Down Trump's Tariffs, But Damage to Small Businesses Remains

Democrats push for refunds, but large corporations have advantage in recouping costs

Published on Feb. 27, 2026

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The U.S. Supreme Court ruled that President Trump's use of the Economic Emergency Power Act to impose tariffs was unconstitutional, but the president quickly pivoted to a different legal basis to keep the tariffs in place. Small businesses, which make up 99.9% of all U.S. businesses and employ nearly half the population, were disproportionately impacted by the tariffs and are now looking to recoup costs. Democrats have introduced a bill to require refunds, but large corporations have an advantage in filing lawsuits to recoup their own costs.

Why it matters

The tariffs imposed by the Trump administration have had a devastating impact on small businesses across the country, forcing many to raise prices, lay off workers, delay expansion plans, and in some cases, close down entirely. This has rippled through local economies, leading to job losses and reduced tax revenue. Refunding the estimated $175 billion in tariffs collected so far is crucial to helping small businesses recover and stabilize their operations.

The details

The Supreme Court ruled 6-3 that Trump's use of the Economic Emergency Power Act to impose the tariffs was unconstitutional. However, the president immediately signed an executive order to keep the tariffs in place under a different legal basis, Section 122 of the Trade Act of 1974. Democrats have introduced a bill to require the U.S. Customs and Border Patrol to issue refunds to small businesses within 180 days, but large corporations have an advantage in filing lawsuits to recoup their own costs. Small businesses typically operate on tight profit margins and have limited financial flexibility, and the tariffs more than tripled costs for some, forcing difficult choices like raising prices or laying off workers.

  • On February 20, 2026, the Supreme Court struck down Trump's use of the Economic Emergency Power Act to impose the tariffs.
  • Shortly after the court decision, Trump signed an executive order to keep the tariffs in place under a different legal basis, Section 122 of the Trade Act of 1974.
  • On Monday, Democratic Senators introduced a bill to require refunds of the estimated $175 billion in tariffs collected so far, with a focus on prioritizing small businesses.

The players

President Donald Trump

The former president who imposed the tariffs that were later ruled unconstitutional by the Supreme Court.

U.S. Supreme Court

The court that ruled 6-3 that Trump's use of the Economic Emergency Power Act to impose the tariffs was unconstitutional.

Sen. Ron Wyden

The Democratic senator from Oregon who unveiled a bill to require refunds of tariffs, with a focus on prioritizing small businesses.

Main Street Alliance

A network of 30,000 small business owners that is working with lawmakers on reimbursement mechanisms for small businesses harmed by the tariffs.

Richard Trent

The executive director of the Main Street Alliance, who said the tariffs were a "raw deal" for small businesses.

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What they’re saying

“Trump's illegal tax scheme has already done lasting damage to American families, small businesses, and manufacturers who have been hammered by wave after wave of new Trump tariffs.”

— Sen. Ron Wyden, Democratic Senator from Oregon (Patch)

“This was a raw deal. They were forced to absorb higher costs or pass them on to customers. That is not economic strength. That is a squeeze on Main Street.”

— Richard Trent, Executive Director, Main Street Alliance (Patch)

“Every penny taken from small businesses under this framework should be returned.”

— Richard Trent, Executive Director, Main Street Alliance (Patch)

What’s next

The judge in the case will decide on Tuesday whether or not to allow President Trump's new executive order to keep the tariffs in place under a different legal basis.

The takeaway

This case highlights the disproportionate impact of the Trump administration's tariffs on small businesses, which make up the vast majority of U.S. companies and employ nearly half the population. While large corporations have the resources to file lawsuits to recoup their costs, small businesses face significant challenges in recovering the funds they were forced to pay. Refunding the tariffs is crucial to helping small businesses stabilize and recover from the damage done to their operations and local economies.