On Friday, February 20, 2026, the Supreme Court delivered a landmark ruling that sharply curtails presidential authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA)—a decision with broad economic and political ramifications. In a 6-3 decision, the Court struck down sweeping tariffs that President Donald Trump had enacted throughout much of 2025 via executive orders, targeting steel, aluminum, and hundreds of billions of dollars’ worth of imports from China and other countries. The ruling puts at risk more than $175 billion in U.S. tariff collections, with some estimates from 2025 alone exceeding $200 billion, according to analyses by the Penn-Wharton Budget Model and reporting by Reuters and ScotusBlog.
At the heart of the dispute was the scope of IEEPA, a 1977 law that allows the president to regulate commerce during national emergencies arising from foreign threats. Trump’s administration argued that the law gave the president sweeping authority to impose tariffs to counteract economic threats, citing national security and unfair trade practices. However, a coalition of small businesses, states, and industry groups challenged this interpretation, contending that Trump had overstepped the bounds of the statute and, by extension, the Constitution.
Chief Justice John Roberts, writing for the majority, made it clear that the words "regulate" and "importation" in IEEPA could not be stretched to grant the president the independent power to "impose tariffs on imports from any country, of any product, at any rate, for any amount of time." As Roberts put it, "Those words cannot bear such weight." He further noted that IEEPA "contains no reference to tariffs or duties" and that, until now, no president had ever interpreted the law to confer such sweeping power. The opinion, joined in part by Justices Neil Gorsuch and Amy Coney Barrett, invoked the "major questions" doctrine—an increasingly prominent principle that says Congress must speak clearly if it intends to grant the executive branch authority over issues of vast economic or political significance.
"When Congress has delegated its tariff powers," Roberts wrote, "it has done so in explicit terms, and subject to strict limits." This test, the Court found, was not met in the case of Trump’s tariffs. The three Democratic appointees—Justices Sonia Sotomayor, Elena Kagan, and Ketanji Brown Jackson—joined another part of the opinion, underscoring that the power to regulate does not include the power to tax. As Roberts observed, "The U.S. Code is replete with statutes granting the Executive the authority to ‘regulate’ someone or something. Yet the Government cannot identify any statute in which the power to regulate includes the power to tax."
Justice Brett Kavanaugh penned the main dissent, joined by Justices Clarence Thomas and Samuel Alito. He argued that tariffs are a traditional and common tool to regulate importation and that the president’s actions were within the historical scope of executive authority. "Although I firmly disagree with the Court’s holding today, the decision might not substantially constrain a President’s ability to order tariffs going forward … because numerous other federal statutes authorize the President to impose tariffs and might justify most (if not all) of the tariffs at issue in this case," Kavanaugh wrote. He also warned that the Court’s decision could have significant interim effects: "The United States may be required to refund billions of dollars to importers who paid the IEEPA tariffs, even though some importers may have already passed on costs to consumers or others."
The ruling leaves IEEPA intact for its traditional uses, such as sanctions and targeted trade restrictions, but blocks the kind of open-ended "economic emergency" rationale that Trump’s administration used to justify global, indefinite tariffs. The Court’s decision also did not address the thorny issue of how—or even if—the federal government should refund the massive sums collected under the now-defunct tariffs. This omission leaves importers, lawyers, and policymakers in a state of uncertainty, with refund procedures and timelines up in the air.
Economic research cited by investment banks and the Federal Reserve has consistently shown that the tariffs raised costs for U.S. industries and consumers. Duties on imported steel and aluminum, for example, increased expenses for downstream industries such as automotive manufacturing and construction equipment. Tariffs on Chinese goods contributed to higher prices on a wide array of products, from electronics to furniture. These costs, analysts found, overwhelmingly fell on U.S. companies and consumers rather than foreign exporters. Retaliatory tariffs from China and other trade partners further battered U.S. agriculture and exporters, resulting in lost exports, forgone investment, and higher input costs—collectively amounting to hundreds of billions of dollars over the duration of the measures.
The government, for its part, defended the tariffs as necessary for national security and to address unfair trade practices. Officials warned that invalidating these actions could undermine U.S. leverage in negotiations with China and weaken the country’s ability to respond to supply-chain vulnerabilities and geopolitical shocks. Yet, as the Supreme Court’s majority made clear, such sweeping economic interventions require unmistakable statutory language from Congress, not executive improvisation.
Blake Harden, Managing Director at EY’s global trade policy practice in Washington, D.C., told Fortune that "this is far from the end of tariffs," despite the Supreme Court’s ruling. She emphasized that the administration still has other tariff authorities at its disposal and predicted that refunding the tariffs would be a "time-consuming and complex" process. "Companies should start preparing supporting materials for that process now, while staying alert to which levers the administration pulls next to advance its trade agenda," Harden advised.
On the political front, Democratic National Committee Chairman Ken Martin hailed the Supreme Court’s decision, declaring, "Donald Trump has tanked America so bad in one year that even the Supreme Court thinks he’s gone too far. This historic decision is a step in the right direction to rein in Trump’s illegal tariff taxes." Martin suggested that the Court had handed Trump an "off-ramp" but doubted he would take it, saying the former president would likely "double down, even though it means screwing over everyday Americans, including his own voters."
Despite the ruling’s potentially massive financial implications—David Wagner of Aptus Capital Advisors pointed out that "somehow, the $133.5 billion collected under IEEPA in 2025 and 2026 will have to be refunded"—the financial markets barely flinched. The S&P 500 rose less than 1% after the news broke, with Wagner describing the outcome as a "non-event—at least for now." Other market watchers echoed this sentiment, noting that the decision had been widely anticipated.
The Supreme Court’s ruling in cases like Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections marks a decisive moment in the ongoing tug-of-war between Congress and the presidency over the nation’s economic levers. While the immediate future of tariff refunds and trade policy remains uncertain, the Court has drawn a clear line: when it comes to taxing Americans in the name of emergency powers, the president must have explicit congressional approval. That’s a message that will reverberate through Washington—and global markets—for some time to come.