President Donald Trump has intensified his global trade strategy following a significant legal development that could reshape international trade and import costs. On February 20, 2026, the US Supreme Court ruled that the president does not have the authority to impose broad tariffs under the International Emergency Economic Powers Act (IEEPA), reinforcing that the constitutional power to levy tariffs rests primarily with Congress. Absent explicit statutory authorization, the executive branch cannot impose sweeping import duties under emergency economic powers statutes. As a result, many of the extensive tariffs implemented over the past year were struck down as unlawful.
The 6-3 decision concluded that the administration had overstepped its authority when it relied on IEEPA to justify tariffs on goods from nearly every country. Chief Justice John Roberts joined the court’s three liberal justices, along with two conservative justices appointed by Trump, in finding that Congress had not granted open-ended tariff powers under the emergency law. Three conservative justices dissented.
The ruling represents a major victory for businesses and states that challenged the tariffs and opens the possibility of tens of billions of dollars in refunds for customs duties collected under the invalidated authority. Industry analysts say the financial implications could be substantial, although the timing and process for refunds remain uncertain and may require further litigation or administrative action. Governors have publicly called for repayment, with Illinois alone estimating billions in potential refunds. However, the administration has signaled that any effort to secure repayments could face extended legal battles.
For businesses, especially small and medium-sized importers, the decision could bring meaningful cost relief. Companies that had faced sharp increases in import taxes may see reduced expenses on goods previously subject to IEEPA tariffs. Yet uncertainty remains. The ruling does not automatically guarantee refunds, and implementation is expected to be complex, potentially stretching over many months as lower courts and federal agencies clarify procedures.
Despite the legal setback, Trump moved swiftly to preserve his broader trade agenda. Within hours of the decision, he invoked Section 122 of the Trade Act, a rarely used provision allowing the president to impose tariffs of up to 15% for 150 days, pending congressional approval. He initially announced a 10% global tariff, then increased it to the maximum 15% permitted under that authority. The new duties are expected to take effect immediately, with further guidance to follow in the coming months.
The proclamation outlines numerous exemptions, including certain minerals and natural resources, fertilizers, select agricultural products, pharmaceuticals, some electronics and specific vehicles. Canada and Mexico retain exemptions for most goods under the US-Mexico-Canada Agreement. Meanwhile, countries that previously negotiated trade arrangements with the United States, including the United Kingdom, India and members of the European Union, are now expected to face the uniform 15% tariff while still adhering to earlier concessions.
Economists note that, in some cases, the new 15% rate may be lower than the “reciprocal” tariffs imposed last year, which reached as high as 50% for certain trading partners. As a result, some countries may experience reduced duties, while others could see higher costs than under negotiated agreements. Retailers and consumer-facing industries may benefit from a lower overall tariff burden compared to the previous regime, though sectors such as steel and aluminum remain subject to separate national security-based duties.
Key questions remain unresolved. It is unclear whether the federal government will seek legislative clarification or alternative statutory authority to reassert broader tariff powers. Congress could enact remedial legislation that affects the scope or timing of refunds. The timeline for resolution in lower courts is uncertain, and the total fiscal impact on the Treasury could be significant.
Financial markets reacted positively to the court’s decision, reflecting expectations that tariff burdens might ease. However, trade experts caution that the era of sweeping, executive-driven tariff negotiations may be narrowing. The Supreme Court’s ruling reinforces the constitutional balance of powers, showing that Congress retains primary authority over taxation and trade policy.
As federal agencies and courts work through the implications, businesses are being advised to consult legal and customs professionals regarding refund eligibility, compliance obligations and strategic planning. The implementation process is expected to be intricate and prolonged, and we are actively monitoring developments and will share further information as it becomes available.
