The Supreme Court struck down the IEEPA tariffs in February 2026, but new duties replaced them within days and again in July. Here is the legal sequence, what brokerages are seeing in industrial demand and how it reaches Kern buildings and farms.
The tariff impact on industrial real estate in Kern County, California, has been indirect but real. The Supreme Court ruled Feb. 20, 2026 that the emergency-powers law behind the 2025 tariffs (IEEPA) does not authorize them. A 10% Section 122 surcharge ran until July 24, when Section 301 tariffs took over. Section 232 metals duties still raise building costs.
Tariffs and Kern County at a glance
| Item | Detail |
|---|---|
| Key court decision | Learning Resources, Inc. v. Trump, No. 24-1287 (consolidated with Trump v. V.O.S. Selections), decided Feb. 20, 2026, 6 to 3 |
| Holding | “IEEPA does not authorize the President to impose tariffs” |
| IEEPA duties ended | Goods entered after 12:00 a.m. ET, Feb. 24, 2026 |
| Bridge tariff | Section 122 surcharge of 10%, Feb. 24 to July 24, 2026 (150-day limit) |
| Current broad tariff | Section 301 duties on 60 trading partners from July 24, 2026, mostly 10% or 12.5% |
| Canada | Separate 50% Section 338 duties on specified goods from Aug. 19, 2026 |
| Metals | Section 232 duties restructured April 6, 2026: 50% for goods made almost entirely of foreign steel, aluminum or copper |
| Refunds | IEEPA refunds run through U.S. Customs and Border Protection (CBP) and the Court of International Trade; not automatic |
| Kern industrial (Q2 2026) | Bakersfield vacancy 9.55% per a regional brokerage report; 1.5 million SF of Q2 net absorption in buildings over 50,000 SF per a national brokerage report |
| Kern agriculture | China fell from Kern’s top export market in 2024 to 10th in 2025, per the county crop report as reported by SJV Sun |
| Open items | Section 301 challenges, refund processing, Section 232 changes and foreign-trade zone options |
Key takeaways
- In Learning Resources, Inc. v. Trump, decided Feb. 20, 2026, the Supreme Court held 6 to 3 that IEEPA does not authorize the President to impose tariffs.
- A 10% Section 122 surcharge ran from Feb. 24 to July 24, 2026. Section 301 tariffs covering 60 trading partners and 99.4% of U.S. imports took effect the day it expired.
- Since April 6, 2026, Section 232 duties apply to the full customs value of imports, with a 50% rate on products made almost entirely of foreign steel, aluminum or copper.
- A national brokerage report put U.S. industrial vacancy down 20 basis points to 6.5% in Q2 2026, the first decline since Q2 2022. It named California’s Central Valley among the three markets with the fastest net-absorption growth.
- China dropped from Kern County’s top agricultural export destination in 2024 to 10th in 2025, while the county’s crop value still rose 12%.
What is the tariff impact on industrial real estate in Kern County?
Tariffs reach Kern buildings through three channels. The first is what tenants import and how much inventory they hold. The second is what it costs to build and equip a warehouse or plant. The third is how Kern’s farm economy sells abroad. None of these shows up as a line item in a lease, but each affects demand, rents and land values.
The legal ground has shifted three times since early 2025. Knowing which tariffs were struck down, which replaced them and which were never at issue is the first step for any owner, tenant or buyer modeling costs.
What did the Supreme Court decide about IEEPA tariffs?
The Court held on Feb. 20, 2026 that IEEPA does not authorize the President to impose tariffs, ending the 2025 emergency tariffs. In 2025 the President had used the law for two sets of tariffs. The Court described them as “drug trafficking” tariffs of 25% on most Canadian and Mexican imports and 10% on most Chinese imports, and “reciprocal” tariffs of at least 10% on imports from all trading partners, with dozens of nations facing higher rates. Reciprocal tariffs on Chinese goods reached 145% at one point.
In Learning Resources, Inc. v. Trump, consolidated with Trump v. V.O.S. Selections, Chief Justice John Roberts wrote the opinion. Justices Thomas, Alito and Kavanaugh dissented.
The ruling did not order refunds. The Court “issued no directives concerning enforcement, refunds, or other remedial actions,” law firm K&L Gates noted, which left that to CBP and the Court of International Trade. Tariffs under other laws, including Section 232, were not before the Court.
What replaced the IEEPA tariffs in 2026?
A Section 122 surcharge replaced them the same day, and Section 301 tariffs replaced that surcharge on July 24. Covington reported that a Section 122 proclamation issued Feb. 20, 2026 imposed a 10% surcharge effective Feb. 24, when IEEPA collections stopped. Section 122 of the Trade Act of 1974 allows such a surcharge for 150 days, so it ran through July 24, 2026. It exempted USMCA-compliant goods, Section 232 articles, critical minerals and energy, pharmaceuticals, certain electronics and aerospace products, among others.
The administration said on Feb. 21 that it intended to raise the surcharge to 15%, the statutory ceiling. One trade publication, FreightFigures, reported that CBP guidance kept the rate at 10% and that collections stayed there as of May 2026. This article uses 10%.
When Section 122 expired, new Section 301 tariffs took effect on July 24, 2026, following U.S. Trade Representative investigations into forced labor and other practices, according to UHY. They cover 60 trading partners representing 99.4% of U.S. imports, mostly at 10% or 12.5%, with the European Union and Taiwan generally capped at a combined 10%.
Per Troutman Pepper Locke, Canada, Mexico and India are in the 10% tier and China and Vietnam in the 12.5% tier. Goods of Canada or Mexico that enter duty-free under USMCA are fully exempt, as are Section 232 steel, aluminum, copper and vehicle articles. Goods subject to the new Section 301 tariffs may enter a foreign-trade zone only in privileged foreign status.
Canada faces a separate layer. Holland & Knight reported that three July 20, 2026 proclamations under Section 338 of the Tariff Act of 1930 impose 50% duties on specified Canadian goods entered on or after Aug. 19, 2026. They cover motor vehicles and a wide list of related product lines, alcoholic beverages and dairy, roughly $20 billion in imports.
| Date | Action | Legal authority |
|---|---|---|
| Early 2025 | 25% on most Canadian and Mexican imports; 10% on most Chinese imports | IEEPA |
| April 2025 | Reciprocal tariffs of at least 10% on all trading partners; higher rates for dozens | IEEPA |
| Feb. 20, 2026 | Supreme Court holds IEEPA does not authorize tariffs | Learning Resources v. Trump |
| Feb. 24, 2026 | IEEPA collection stops; 10% surcharge begins | Section 122, Trade Act of 1974 |
| April 6, 2026 | Metals tariffs restructured on full customs value; 50% top tier | Section 232 |
| July 24, 2026 | Section 122 expires; tariffs on 60 trading partners begin | Section 301 |
| Aug. 19, 2026 | 50% duties on specified Canadian goods begin | Section 338, Tariff Act of 1930 |
For importers, the lesson is that a court win did not lower landed costs for long. UHY cautioned against cutting landed-cost assumptions by 10% when Section 122 ended, because the Section 301 duties began the same day.
Refund claims for IEEPA duties paid in 2025 are a separate track. UHY reported that most refunds were expected within 60 to 90 days after CBP accepts a refund declaration. Law firm Offit Kurman advised importers to assemble entry summaries, payment records and liquidation dates.
How have tariffs changed industrial demand?
Nationally, demand improved in 2026 despite the trade turmoil. A national brokerage’s Q2 2026 report put U.S. industrial vacancy at 6.5%, down 20 basis points and the first decline since Q2 2022, with demand outpacing completions for the first time since then. Manufacturers accounted for more than 12% of leasing. A second national brokerage reported 6.8% vacancy and a 58.3% year-over-year rise in leasing of big-box buildings of 500,000 SF and up.
Brokerages mostly describe tariffs as one source of uncertainty, not the main driver. A third national brokerage said in a July 23, 2026 release that “e-commerce, onshoring, nearshoring and ongoing supply chain optimization continue to support occupier activity.” It added that tenants are prioritizing “cost efficiency and network resilience” while macroeconomic uncertainty remains. None of the three Q2 2026 national brokerage reports credited the quarter’s gains directly to tariffs.
In our view, two tariff effects matter most for warehouses. Importers that front-loaded inventory before rate changes needed more space for a time. Higher duty costs also reward buildings that let tenants hold goods longer and closer to customers. Both favor well-located, functional distribution space.
How is Kern County’s industrial market holding up?
Kern’s numbers moved the right way in Q2 2026. A regional brokerage report put Bakersfield industrial vacancy at 9.55%, down from 10.90% in Q1. A national brokerage report counted 1,499,945 SF of positive net absorption in Bakersfield buildings of 50,000 SF and larger, with 11.3% vacancy. A second national brokerage put average asking rent at $0.71 per SF per month NNN. The reports measure different inventories, so their figures are not directly comparable; our guide to reading an industrial market report explains why.
Kern competes on cost with the Inland Empire, where a national brokerage reported a record 15.5 million SF of new leasing in Q2 2026. A tenant absorbing higher import costs has more reason to look at Kern’s lower rents, if its customers and drive times allow. See why Kern County works for logistics for the corridor and cost comparison.
Large commitments continued. On June 18, 2026, the state approved a $25 million California Competes credit for Ross Dress for Less in Bakersfield, tied to $494.5 million of investment, according to GO-Biz. No published source ties that project to tariffs. See our coverage of the Ross distribution center in Bakersfield.
How do tariffs affect construction costs for Kern buildings?
Section 232 metals tariffs add cost to imported steel, aluminum and copper products, and they remain in force. They were not part of the Supreme Court case. A proclamation effective April 6, 2026 moved metals duties to the full customs value of imported products. Phillips Lytle reported a 50% rate for goods made almost entirely of foreign steel, aluminum or copper, 25% for derivatives with more than 15% foreign metal by weight and 0% at 15% or less.
Structural steel, rebar, metal roofing, racking, dock equipment and copper-heavy electrical gear are all exposed. Expect developers to carry contingencies for imported components and to lock supplier quotes earlier; that is our reading, not a figure from a source. Domestic production sits on the other side of the same policy. Pacific Steel Group’s rebar mill, under construction near Mojave, is one example (see Mojave Micro Mill).
What have tariffs meant for Kern agriculture?
Kern’s farm economy sells heavily abroad, so retaliation and shifting trade deals matter. The county’s 2025 crop report showed total value of about $8.93 billion, up 12% from 2024, with pistachios, grapes, citrus, almonds and carrots each above $1 billion, SJV Sun reported on Oct. 1, 2026.
The export mix changed sharply. Mexico was Kern’s top export destination in 2025, followed by Vietnam, India, Taiwan and South Korea. China, the leader in 2024, fell to 10th. The crop report does not assign a cause, but the drop coincided with the 2025 tariff escalation between the U.S. and China.
For ag-industrial property, a shift in export markets changes where product is stored, packed and shipped, and for how long. Cold storage and packing operators with flexible space and good access to ports and Mexico-bound routes are better placed than single-market operations.
What should Kern owners, tenants and buyers do now?
- Importing tenants: Mapping goods to Section 301 and Section 232 exposure and filing IEEPA refund claims through a customs broker are the main cost-control steps.
- Duty-heavy users: A foreign-trade zone can defer or reduce duties for some users; Policy 50 covers Kern’s zone.
- Owners: Tenant concentration in import-heavy categories bears on renewal and credit underwriting.
- Developers: Lock steel and electrical pricing early and carry a tariff contingency in budgets. Kern’s manufacturing sales tax exemption may offset some equipment costs for qualifying manufacturers.
- Ag-industrial owners: Export market shifts change storage time and throughput needs for tenants.
- Everyone: Court challenges to the Section 301 and Section 338 actions and any further Section 232 changes could move costs again.
Frequently asked questions
Did the Supreme Court strike down Trump’s tariffs?
It struck down the tariffs imposed under IEEPA, not all of them. On Feb. 20, 2026, in Learning Resources, Inc. v. Trump, the Court ruled 6 to 3 that the law does not authorize tariffs. That covered the 2025 trafficking tariffs on Canada, Mexico and China and the reciprocal tariffs. Duties under other laws, such as Section 232 on metals, stayed in place.
What tariffs replaced the IEEPA tariffs?
A 10% Section 122 surcharge took effect Feb. 24, 2026 and ended July 24, 2026 at its 150-day limit. Section 301 tariffs on 60 trading partners, covering 99.4% of U.S. imports and mostly set at 10% or 12.5%, began that same day, according to UHY. Section 232 metals duties continued throughout.
Can importers get refunds of IEEPA tariffs?
Possibly, but not automatically. The Court ordered no refunds and left the process to CBP and the Court of International Trade. UHY reported that most refunds were expected 60 to 90 days after CBP accepts a refund declaration. Claims typically rest on entry summaries, payment records and liquidation dates, and a customs broker or trade attorney can advise on a specific claim.
How do tariffs affect warehouse demand in Kern County?
Indirectly. Tariffs change how much inventory importers hold, where they stage it and what rent they can afford. Bakersfield posted about 1.5 million SF of positive net absorption in larger buildings in Q2 2026, per a national brokerage report, and regional brokerage data showed vacancy falling to 9.55%. Brokerages call tariffs a source of uncertainty, not the main demand driver.
Are steel tariffs raising construction costs in California?
They raise the cost of imported metal products. Since April 6, 2026, Section 232 duties apply to full customs value, at 50% for goods made almost entirely of foreign steel, aluminum or copper and 25% for many derivatives. Rebar, roofing and electrical equipment are exposed, so developers should price contingencies and lock quotes early.
How have tariffs affected Kern County agriculture?
Crop value still rose 12% in 2025, to about $8.93 billion, but export destinations shifted. China, the top market in 2024, fell to 10th, and Mexico took the lead ahead of Vietnam, India, Taiwan and South Korea, per SJV Sun’s report on the county crop report. The report does not name a single cause.
Can a foreign-trade zone help with tariffs in Kern County?
For some importers it can. A zone defers duty until goods leave for U.S. consumption, and exports from a zone are not assessed U.S. duty. Many goods, including those under the July 2026 Section 301 tariffs, must enter in privileged foreign status, which limits some savings. Our FTZ 276 guide explains Kern’s zone.
If tariffs are changing how much space you need or where you need it, call Kern CRE at 855-KERN-CRE (855-537-6273) or contact us to compare Kern County warehouse, manufacturing and cold storage options with Southern California alternatives. Get Kern County CRE news monthly: subscribe to the Kern CRE report.
Sources
- Learning Resources, Inc. v. Trump, No. 24-1287, U.S. Supreme Court (via Justia), Feb. 20, 2026.
- Summary: Supreme Court Decision on IEEPA Tariffs, K&L Gates, Feb. 20, 2026.
- IEEPA Tariffs Terminated, Replacement Section 122 Tariffs Take Effect, Covington & Burling, February 2026.
- Tariff Litigation Updates: IEEPA Refund Claims & Section 122 Tariffs, Offit Kurman, March 2, 2026.
- Tariff Reset: Section 122 Expires as Section 301 Duties Expand to 60+ U.S. Trading Partners, UHY, July 24, 2026.
- Administration Restructures Section 232 Tariffs on Metal and Derivative Products, Phillips Lytle, April 2026.
- Q2 2026 U.S. Industrial & Logistics Market Report, CBRE, July 29, 2026.
- U.S. Industrial Market Dynamics, Q2 2026, JLL, July 21, 2026.
- Cushman & Wakefield Market Report: Modest New Supply and Intensifying Demand Push Industrial Vacancy Back Below 7%, Cushman & Wakefield via Business Wire, July 23, 2026.
- South Central Valley Industrial Figures Q2 2026, CBRE, Aug. 3, 2026.
- Q2 2026 Bakersfield, CA Industrial Market Report, Lee & Associates, July 2026.
- Bakersfield Industrial MarketBeat Q2 2026, Cushman & Wakefield, Q2 2026.
- Inland Empire Industrial Figures Q2 2026, CBRE, July 9, 2026.
- Kern County crops gain value as farmland decreases, SJV Sun, Oct. 1, 2026.
- California Competes Committee Meeting, June 18, 2026, approval summary, GO-Biz, June 18, 2026.
- Forced Labor, Meet Section 301: New Tariffs Target 60 of America’s Biggest Trading Partners, Troutman Pepper Locke, July 24, 2026.
- 50 Percent Opening Bid: Canadian Imports Subject to Section 338 Tariffs Amid USMCA Talks, Holland & Knight, July 2026.
- Is the Section 122 Tariff 10% or 15%? Current Rate as of May 2026, FreightFigures, May 2026.
About this article
Kern CRE prepared this article with help from AI research and writing tools. An editor reviewed the draft, checked its facts against the sources linked above and edited it for accuracy and clarity. It is general information, not legal, customs, tax, investment or financial advice. Tariff rules change quickly, so confirm current rates and refund options with a licensed customs broker or trade attorney.