The Supreme Court delivered a major setback to President Donald Trump’s trade agenda on February 20, 2026, ruling 6-3 that his sweeping blanket tariffs—imposed using the International Emergency Economic Powers Act (IEEPA)—were illegal. Chief Justice John Roberts, writing for the majority, stated clearly that “IEEPA does not authorize the President to impose tariffs.” This decision upheld lower court rulings and halted a key part of Trump’s second-term economic strategy, which had relied on the 1977 law to declare national emergencies over issues like trade deficits and drug inflows.
Trump’s tariffs, often called the “Liberation Day” tariffs from last year, placed duties on imports from nearly every country. These included broad “reciprocal” tariffs on all trading partners and specific ones tied to concerns like illegal drugs from Canada, Mexico, and China. The ruling means these IEEPA-based tariffs can no longer be collected, affecting global trade, businesses, consumers, and inflation. Estimates suggest the government collected between $160 billion and $175 billion (or more) in such duties, raising big questions about refunds to importers. The Supreme Court did not decide on refunds, leaving that issue for lower courts like the U.S. Court of International Trade to handle. This could lead to lengthy legal battles, as companies that paid the duties seek their money back—though some costs may have already been passed on to consumers.
Trump reacted strongly, calling the ruling “deeply disappointing” and attacking the majority justices as a “disgrace to our nation.” He hinted at using other legal paths to keep pushing his trade goals. Hours later, he signed an executive order imposing a new 10% “global tariff” on imports from all countries, using Section 122 of the Trade Act of 1974. This law allows the president to place temporary tariffs of up to 15% for up to 150 days to address serious balance-of-payments problems or international payment issues. Unlike the struck-down tariffs, this one has a built-in time limit—Congress would need to approve any extension beyond 150 days. The new tariffs are set to start February 24, 2026, at 12:01 a.m. Washington time, with some exemptions for critical items like certain minerals, energy products, pharmaceuticals, agricultural goods, and vehicles.
Trump described the move in a social media post: “It is my Great Honor to have just signed, from the Oval Office, a Global 10% Tariff on all Countries, which will be effective almost immediately.” He also said the administration would launch new trade investigations under Section 301 of the same act, which could lead to more targeted tariffs later. Other tariffs remain in place, such as those under Section 232 for national security reasons (e.g., on steel, aluminum, semiconductors, and some autos).
The ruling and quick response created market reactions: U.S. stocks rose in the immediate aftermath, with tariff-sensitive sectors like transportation seeing gains, as investors viewed the end of the broader IEEPA tariffs as a relief. However, the new temporary tariff adds uncertainty for companies and global partners. Ongoing trade talks, like Trump’s planned visit to China next month, could be complicated, especially after recent deals that eased some tensions (e.g., China’s actions on fentanyl and minerals).
Experts note that while the Supreme Court blocked one path, Trump has other tools—like Section 232 and Section 301—from his first term to rebuild parts of his tariff program, though they are more limited and require specific justifications. The decision highlights limits on presidential power over taxes and duties, which the Constitution assigns to Congress. For now, the trade landscape remains in flux, with potential impacts on prices, supply chains, and international relations.
