On February 20, 2026, the Supreme Court struck down the tariff regime that President Trump had built using the International Emergency Economic Powers Act. The 6-3 ruling in Learning Resources, Inc. v. Trump held that IEEPA “does not authorize the President to impose tariffs.” Chief Justice Roberts, joined by Justices Gorsuch and Barrett alongside the Court’s three liberal justices, declared that the power to tax imports belongs to Congress.¹

The ruling immediately invalidated the IEEPA-based tariffs that had driven the effective U.S. tariff rate to approximately 16% — the highest since 1936. Penn Wharton projects up to $175 billion in potential refunds.⁴ The Tax Foundation estimates that IEEPA tariffs raised more than $160 billion through February 20, 2026, and would have generated $1.4 trillion over the next decade.³

Within hours, President Trump imposed replacement tariffs under Section 122 of the Trade Act of 1974 — first at 10%, then raised to the statutory maximum of 15% the following day.^9,10 These expire after 150 days absent Congressional extension, placing the deadline in late July 2026.

For equipment finance companies, the ruling creates a complex new operating environment. The IEEPA tariffs are gone, but the Section 232 tariffs that most directly affect the equipment you finance remain fully in force. And a pending Section 232 investigation into robotics and industrial machinery could deliver an entirely new tariff layer on the core assets in your portfolios.

The Tariffs That Matter Most to Equipment Finance Are Still Standing

The distinction between what the Supreme Court struck down and what remains is critical for equipment finance firms. The IEEPA tariffs were broad-based, country-specific tariffs — the “Liberation Day” reciprocal tariffs, the fentanyl-related tariffs on China, Canada, and Mexico. These are gone.

But the Section 232 tariffs — which target specific materials and product categories on national security grounds — were imposed under entirely different statutory authority and are unaffected by the ruling. For equipment finance companies, these are the tariffs that have the most direct impact on equipment costs, residual values, and borrower economics:

Steel and aluminum: 50% on all imports globally (raised from 25% in June 2025). In August 2025, the Commerce Department added over 400 derivative product categories — including machining centers (HTS 8457.10.00) — to the tariff list. The 50% tariff applies to the steel and aluminum content of these derivative products.^26,27

Automobiles and auto parts: 25% on passenger vehicles, light trucks, and parts. This directly affects fleet financing, dealer floor plan lending, and any equipment finance firm with exposure to automotive manufacturing equipment.³¹

Copper and copper derivatives: 50%. Copper is a core component in electrical equipment, transformers, generators, and wiring harnesses that are integral to many financed assets.

Timber, lumber, and wood products: 10–25% (with potential increases to 50% announced for January 2026). This affects construction equipment economics through higher material costs for end-users.³²

Semiconductors: 25% on certain advanced semiconductor articles as of January 15, 2026, though with exemptions for industrial applications including factory robotics and industrial machinery.³¹

The new 15% Section 122 baseline tariff adds an additional layer on top of all non-Section 232 imports for the next 150 days, but it does not “stack” on goods already subject to Section 232 tariffs.

The Coming Threat: Section 232 and Robotics/Industrial Machinery

This is the development that should command the attention of every equipment finance executive. On September 2, 2025, the Commerce Department’s Bureau of Industry and Security initiated a Section 232 investigation into imports of robotics and industrial machinery.²⁸ The investigation covers an exceptionally broad range of equipment:

The scope includes robots and programmable, computer-controlled mechanical systems; CNC machining centers, turning and milling machines; grinding and deburring equipment; industrial stamping and pressing machines; laser and water-cutting tools; industrial ovens; and their parts and components. Only unmanned aircraft systems are excluded (they are covered by a separate investigation).²⁹

Under Section 232, the Commerce Secretary has 270 days from initiation to deliver a report to the President, setting the latest date for completion in late May 2026. The Trump administration has moved faster than this statutory timeline on prior investigations. If Commerce finds that these imports threaten national security, the President can impose tariffs without limits on rate or duration.²⁸

The National Association of Manufacturers has warned that tariffs on robotics and industrial machinery would “significantly increase costs” on factory floor equipment and “stall investment” in domestic manufacturing.²⁹ The U.S. Chamber of Commerce submitted formal comments stating that for much of the imported industrial machinery, tariffs would raise costs without providing an actionable incentive to reshore manufacturing of the machinery itself, effectively locking in a cost disadvantage for U.S. manufacturers who rely on imported equipment.³⁰

For equipment finance companies, this investigation represents a potential direct tariff on the assets you originate, fund, and hold as collateral. If a 25–50% tariff is imposed on imported CNC machines, industrial robots, and their components, the implications cascade across new equipment pricing, residual value assumptions, and end-user demand.

How Equipment Finance Navigated the Tariff Regime in 2025

The $1.3 trillion equipment finance industry entered 2025 with momentum and ended the year having weathered historic tariff volatility. Total new business volume among ELFA member companies reached $119.8 billion for the year, down just 0.5% from the all-time high set in 2024.¹⁴

But the path was not smooth. The ELFA’s Monthly Confidence Index plunged to 41.9 in April 2025 — immediately following the “Liberation Day” tariff announcement — before recovering to 58.2 by June as companies gained clarity on the tariff landscape.^15,16 Industry originations through the first eight months totaled $80.9 billion, down 2.7% year over year, before a strong second-half recovery.¹⁷

The Equipment Leasing & Finance Foundation’s 2025 Q2 economic outlook, released in April 2025, captured the tension: it revised the equipment and software investment growth forecast downward from 4.7% to 2.8% and GDP growth from 2.7% to 1.2%, calling the tariff regime “the single largest risk to growth.”¹⁵ Foundation President Leigh Lytle described the environment as one of “extraordinarily high economic uncertainty related to U.S. trade policy.”

By year-end, the industry’s resilience was evident. December new business volume hit $10.6 billion, up 5.9% year over year, marking the longest streak of monthly volumes above $10 billion since early 2023. The MCI reached an 11-month high of 64.6 in January 2026.¹⁴ The Foundation’s 2026 outlook projected real equipment and software investment growth of 6.2%, supported by AI-driven capital expenditure and three Fed rate cuts in Q4 2025.¹²

Equipment Finance Industry Performance Through the Tariff Cycle

Sources: ELFA CapEx Finance Index monthly reports, Equipment Leasing & Finance Foundation MCI-EFI

What the SCOTUS Ruling Means for Equipment Finance Operations

Residual Value Recalibration

The tariff ruling creates a split-screen residual value challenge. Equipment acquired during the IEEPA tariff regime was priced at tariff-inflated acquisition costs. With those tariffs now invalidated, the “true” cost basis of recently originated assets is uncertain — particularly for equipment with significant import content.

As The Alta Group noted in its April 2025 analysis, tariff-driven price increases create an artificial floor under new equipment prices that can temporarily inflate secondary market values. When tariffs are removed, that floor disappears.¹⁹ Equipment finance firms with operating leases and significant residual positions should reassess exposure to assets where the tariff-era price premium may not persist.

The used equipment market is already showing softness. EquipmentWatch data showed a 12% drop in auction values through mid-2025, which an analyst described as unusual for construction equipment.²⁴ Gordon Brothers’ Scott Ribeiro told MonitorDaily that the old buy-run-scrap model is fading, and sellers should track used equipment values more closely to decide whether it makes more sense to scrap or sell older machines.¹⁷

An equipment appraiser quoted by Construction Equipment magazine captured the practical challenge: “Not only are the amounts of tariffs somewhat unknown, but valuations of existing assets are more uncertain.” He cited a recent example where the cost of an imported machine increased 29% when tariffs were applied — for a $500,000 machine, that represents an extra $145,000 in acquisition cost that may not be recoverable on disposition.²⁵

The response from leading equipment finance firms has been structural. MonitorDaily reported that lenders are selectively tightening credit standards and reassessing asset values and residual assumptions on a more frequent basis, particularly in volatile sectors like trucking and manufacturing.²⁰

Deal Structure and Origination Strategy

The tariff environment has reinforced a shift toward structure-first underwriting. JPMorgan’s 2026 Business Leaders Outlook found that 71% of middle market executives remain optimistic about their company’s trajectory, with 73% expecting revenue gains — but 61% are already feeling a moderate to significant impact on their bottom lines from tariffs.²³

But structure matters more in this environment. MonitorDaily reported in July 2025 that vendor finance partners are leaning into fair market value leases, deferred payment structures, and subsidy programs to help equipment buyers navigate cost uncertainty.²² FMV leases in particular offer end-users the lowest monthly payments and eliminate ownership risk in a volatile pricing environment — but they concentrate residual risk with the lessor.

The AL Group’s April 2025 analysis identified several structural trends that the SCOTUS ruling will accelerate: increased demand for operating leases as companies seek to avoid ownership risk; longer equipment lifecycles and more lease extensions as companies defer replacement at higher tariff-inflated prices; and tighter used equipment supply as fewer off-lease assets return to market.¹⁹

Credit Quality and Portfolio Risk

Portfolio credit metrics showed strain during the peak tariff period but stabilized. The ELFA CapEx Finance Index reported charge-offs rising to 0.60% in March 2025 — the highest since September 2020 — before stabilizing. Aging receivables over 30 days rose to 2.3%.¹³

The Alta Group flagged a specific credit risk that remains relevant: end-users whose businesses rely on foreign production of raw materials or require foreign parts to maintain their leased equipment face higher operating costs that could lead to payment defaults from historically high-quality obligors.¹⁹ This risk is particularly acute for lessees in sectors still subject to Section 232 tariffs on steel, aluminum, and copper.

JPMorgan’s survey found that as input costs rise, companies are expected to lean more on used equipment, life-extension overhauls, and financing structures that prioritize liquidity — shifting borrower behavior in ways that directly affect equipment finance portfolio composition and credit performance.²³

The Section 232 Tariff Matrix: What Equipment Finance Firms Need to Track

Sources: White & Case; Congressional Research Service; PwC; Commerce Department BIS

The robotics and industrial machinery investigation deserves special emphasis. The Commerce Department has been completing Section 232 investigations faster than the 270-day statutory timeline. The steel and aluminum derivative expansion took roughly 90 days from initiation to implementation. If a similar pace applies, equipment finance companies could face new tariffs on core asset classes as early as spring 2026.²⁸

The Refund Question: Does Your Portfolio Have a Hidden Asset?

Equipment finance companies and their borrowers/lessees who imported equipment or components during the IEEPA tariff period may have refund claims. The Penn Wharton Budget Model projects up to $175 billion in total refunds across all importers.⁴

The operational challenge is significant. PwC advised in its post-ruling analysis that companies should focus on three critical considerations: robust modeling to understand true eligibility at the entry level; timing of potential refunds given procedural and capacity constraints; and execution risk, noting that “customs brokers and in-house trade compliance teams already are operating at capacity.”³⁵

For equipment finance firms, the refund dynamic operates at two levels. First, your own import activity: if your company or a captive finance affiliate imported equipment directly, those entries may qualify for refund claims. Second, your borrowers’ import activity: lessees who passed tariff costs through to you in the form of higher equipment acquisition prices may now have refund claims that improve their cash position — or that become contested assets in distressed situations.

Under U.S. Customs rules, importers have 180 days after goods are “liquidated” to protest and request refunds. Given the volume of entries liquidated throughout 2025 and early 2026, the refund process will likely stretch into 2027 and beyond.⁸

The Opportunity Side: Reshoring, AI, and Pent-Up Demand

The tariff environment is not solely a risk story. Several dynamics are creating meaningful origination opportunities for equipment finance companies.

Reshoring and onshoring: Gordon Brothers’ Tim Bowling told MonitorDaily that buyers are scouting Europe, Australia, and South America more diligently as alternatives to Asia in response to the 50% Section 232 steel tariff.¹⁷ While full reshoring of product lines takes years, the incremental shift of production to domestic facilities creates sustained demand for the equipment that equipment finance firms fund.

AI infrastructure spending: The Equipment Leasing & Finance Foundation’s 2026 outlook identified the AI investment boom as “the primary engine of economic and industry growth,” noting that 2025 saw a record $350 billion in AI infrastructure spending. This investment is driving demand for data center equipment, power generation and distribution equipment, cooling systems, and related infrastructure.¹²

Pent-up demand: Jim DeFrank, EVP and COO of Isuzu Finance of America, noted in June 2025 that “as companies are getting a better feel for where tariffs will land, it’s very plausible we’ll see pent-up demand begin to release, backlogged or postponed purchases resurface, and a shift in financing behavior.”¹⁶ The SCOTUS ruling, by removing the IEEPA tariff overhang, may accelerate this release.

Leasing as tariff hedge: An Equipment Leasing & Finance Foundation industry report found that 32% of surveyed end-users cited labor costs or scarcity as the reason for financing additional equipment in 2025.³⁶ The combination of labor pressure and tariff-driven cost uncertainty is pushing more buyers toward leasing as a risk-transfer mechanism — expanding the addressable market for equipment finance.

Action Items for Equipment Finance Executives

Immediate (Next 30 Days)

Conduct a portfolio-wide tariff exposure audit. Identify which assets in your portfolio were acquired at tariff-inflated prices and what the acquisition cost would have been absent IEEPA tariffs. This informs both residual value reassessment and potential refund opportunities.

Review all pending originations for Section 232 exposure. Any equipment with significant steel, aluminum, copper, or lumber content is subject to tariffs that survived the ruling. Price this into your underwriting.

Engage legal counsel on refund claim positioning. Determine whether your company or your borrowers/lessees have actionable refund claims for IEEPA tariffs paid on imported equipment during 2025–2026.

Near-Term (60–90 Days)

Monitor the Section 232 robotics and industrial machinery investigation. If Commerce delivers its report to the President on an accelerated timeline (as it has for prior investigations), tariff action could come as early as spring 2026. Prepare scenario analyses for 25% and 50% tariffs on imported industrial machinery.

Reassess residual value assumptions on operating leases for imported equipment categories. The combination of IEEPA tariff removal (reducing new equipment prices for competing imports) and sustained Section 232 tariffs (maintaining high prices for steel/aluminum-intensive equipment) creates divergent residual trajectories by asset type.

Evaluate vendor finance program structures. OEMs and dealers are adapting pricing and program structures in real time. Equipment finance firms that can offer flexible structures — deferred payments, FMV leases, subsidy programs — will capture share.

Strategic (Q2–Q3 2026)

Prepare for the Section 122 expiration in late July 2026. If Congress does not extend the 15% baseline tariff and replacement tariffs under other authorities are not yet in place, the effective tariff rate could fall significantly — potentially unlocking a wave of deferred equipment purchases.

Position for the reshoring cycle. Domestic manufacturing investment driven by the full suite of tariff policy, CHIPS Act funding, and Inflation Reduction Act incentives is creating multiyear equipment demand. Companies that build sector expertise and origination capacity in reshoring-driven verticals will have a durable competitive advantage.

Build or enhance asset management and remarketing capabilities. In a volatile pricing environment, the ability to disposition off-lease assets effectively — and to provide transparent residual value guidance to origination teams — becomes a core competency, not a back-office function.

The Bottom Line

The Supreme Court’s ruling removes the broadest and most legally vulnerable layer of the tariff regime. But for equipment finance companies, the tariffs that matter most — the Section 232 tariffs on the materials and products that go into the equipment you finance — remain fully in force and are expanding. The pending investigation into robotics and industrial machinery represents a direct threat to the cost structure of core equipment finance asset classes.

The industry enters this period from a position of strength: confidence near historical highs, and a projected 6.2% growth in equipment and software investment for 2026. The companies that navigate the evolving tariff landscape most effectively will be those that understand which tariffs affect which assets, structure deals to account for residual value uncertainty, and position for the reshoring and AI-driven investment cycles that the broader tariff environment is accelerating.

Sources

All sources verified as of February 22, 2026. Superscript numbers throughout the text correspond to the entries below.

1. Supreme Court of the United States, Learning Resources, Inc. v. Trump, 607 U.S. ___ (2026) [Link]
2. SCOTUSblog, “A Breakdown of the Court’s Tariff Decision,” February 20, 2026 [Link]
3. Tax Foundation, “Supreme Court Trump Tariffs Ruling: Analysis,” February 20, 2026 [Link]
4. Penn Wharton Budget Model, “IEEPA Revenue and Potential Refunds,” February 20, 2026 [Link]
5. Yale Budget Lab, “State of U.S. Tariffs: SCOTUS Ruling Update,” February 20, 2026 [Link]
6. Federal Reserve Bank of New York, “Who Is Paying for the 2025 U.S. Tariffs?,” February 2026 [Link]
7. WilmerHale, “Supreme Court Strikes Down IEEPA Tariffs,” February 20, 2026 [Link]
8. CNBC, “Supreme Court Trump Tariff Decision Impact,” February 20, 2026 [Link]
9. CNBC, “Trump Announces New 10% Global Tariff,” February 20, 2026 [Link]
10. Axios, “Trump Raises Global Tariffs to 15%,” February 21, 2026 [Link]
11. Council on Foreign Relations, “How Trump’s Tariffs Could Survive,” February 20, 2026 [Link]
12. Equipment Leasing & Finance Foundation, “2026 U.S. Economic Outlook,” December 17, 2025 [Link]
13. ELFA CapEx Finance Index, December 2025 [Link]
14. MonitorDaily, “ELFA CapEx Finance Index December 2025: Equipment Demand in 2025 Reached All-Time Second Highest Level,” January 27, 2026 [Link]
15. Equipment Leasing & Finance Foundation, “2025 Economic Outlook: Weaker Growth Expected as Tariffs, Uncertainty Complicate Business Climate,” April 24, 2025 [Link]
16. Equipment Leasing & Finance Foundation, “Equipment Finance Industry Confidence Rebounds from Tariff Pressures,” June 18, 2025 [Link]
17. MonitorDaily, “When Tariffs Rewrite the Playbook: How Asset Strategy Is Evolving in Real Time,” October 23, 2025 [Link]
18. ELFA, “Equipment Finance Industry Sees 3.1% Growth in New Business Volume,” August 4, 2025 [Link]
19. The Alta Group, “How Alta Sees Tariffs Reshaping the Equipment Finance Landscape,” April 7, 2025 [Link]
20. MonitorDaily, “Credit & Risk in 2025: Managing Changing Credit Conditions,” August 2, 2025 [Link]
21. MonitorDaily, “Tariffs and Taxes: Impacts on Equipment Leasing,” May 28, 2025 [Link]
22. MonitorDaily, “Impact of Economic Uncertainty on Vendor Equipment Finance Strategy,” July 17, 2025 [Link]
23. MonitorDaily, “JPMorgan’s 2026 Outlook: Middle Market Holds Steady as Tariffs and Tech Redefine the Playbook,” January 7, 2026 [Link]
24. Engineering News-Record, “With Tariffs Still Uncertain, Used Equipment Prices Show Signs of Leveling Off,” August 12, 2025 [Link]
25. Construction Equipment, “Impact of Tariffs on Equipment Valuation and Fleet Management Strategies,” October 30, 2025 [Link]
26. Congressional Research Service, “Expanded Section 232 Tariffs on Steel and Aluminum,” September 2025 [Link]
27. PwC, “Steel and Aluminum Goods Under Section 232 Tariff Coverage Expanded,” August 2025 [Link]
28. White & Case, “Trump Administration Initiates Section 232 Investigation on Robotics and Industrial Machinery,” September 2025 [Link]
29. Manufacturing Dive, “Commerce Department Looks to Add Tariffs on Robotics, Sparking Industry Concerns,” September 29, 2025 [Link]
30. U.S. Chamber of Commerce, “Comments on Section 232 Investigation of Imports of Robotics and Industrial Machinery,” October 2025 [Link]
31. White & Case, “President Trump Orders 25% Section 232 Tariff on Certain Advanced Semiconductor Articles,” January 14, 2026 [Link]
32. Wipfli, “Manufacturers Tariffs Update: What’s Ahead for the Industry,” November 24, 2025 [Link]
33. AMT (Association for Manufacturing Technology), “Section 232 Tariffs and Trade 2025: What AMT Members Need to Know,” 2025 [Link]
34. CNBC, “Customs Bond Funding Gap Hits Record $3.5 Billion,” February 12, 2026 [Link]
35. PwC, “US Supreme Court Invalidates IEEPA Tariffs,” February 20, 2026 [Link]
36. Huntington Commercial Bank, “2025 Equipment Finance Trends,” March 2025 [Link]