The U.S. Supreme Court delivered a historic ruling on February 20, 2026, striking down the majority of President Donald Trump’s sweeping tariffs imposed under emergency powers. In a decision that reverberated through Washington and global markets, the Court found that Trump’s use of the International Emergency Economic Powers Act (IEEPA) to reshape American trade policy was unlawful, effectively dismantling what had been the cornerstone of his second-term economic agenda. The 6-3 decision, authored by Chief Justice John Roberts and joined by both liberal justices and two Trump appointees, set a clear boundary on the president’s authority to invoke emergency statutes for broad economic measures.
According to Nexstar Media Inc., the ruling invalidates what the Trump administration had touted as its most significant economic and foreign policy initiative of the second term. The tariffs, which had been imposed on nearly all imports—including so-called reciprocal duties on dozens of countries and additional levies tied to the fentanyl crisis—were struck down as exceeding presidential authority. The Supreme Court’s move not only curtails a policy Trump credited with strengthening America’s leverage abroad but also carries substantial financial and legal consequences for the government and businesses alike.
Chief Justice Roberts, writing for the majority, emphasized the constitutional principle that the power to impose taxes and duties rests with Congress. "The President asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope," Roberts stated in the opinion, as reported by TIME. "In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorization to exercise it." He concluded unequivocally: "We hold that IEEPA does not authorize the president to impose tariffs." Justices Neil Gorsuch and Amy Coney Barrett, both Trump appointees, joined Roberts and the three liberal justices in the majority, underscoring the cross-ideological nature of the decision.
The ruling immediately invalidated a broad set of tariffs imposed the previous year, which had generated roughly $130 billion in revenue by mid-December 2025, according to TIME. These funds had been earmarked to help finance tax cuts enacted by the administration. However, the government’s authority to collect such revenues under IEEPA is now extinguished, and the Treasury Department faces a looming wave of claims from companies seeking refunds for duties already paid. As CBS News noted, major corporations such as Costco, Crocs, and Revlon are expected to pursue litigation to recover tariff payments, though there is no formal mechanism for American consumers to recoup higher prices that were passed down to them.
The Yale Budget Lab estimates that the average effective U.S. tariff rate fell from about 17% to 9% following the Supreme Court’s decision, a shift that could provide some relief to consumers and businesses from price pressures that had built up over the past year. Yet, as Justice Brett Kavanaugh warned in his dissent, "refunds of billions of dollars would have significant consequences" and the process is likely to be "a mess." The majority did not address the specifics of how or whether the government should return billions already collected, leaving that thorny issue unresolved for now.
The legal battle over Trump’s tariffs marked the first time the Supreme Court evaluated the merits of one of his second-term policies. Trump had invoked IEEPA’s emergency powers to justify the tariffs, arguing that persistent trade deficits and the flow of fentanyl across U.S. borders constituted national emergencies. The law, enacted in 1977, allows presidents to "regulate" economic transactions during an "unusual and extraordinary threat" to the nation, but it had never before been used to impose tariffs. Lower courts and, ultimately, the Supreme Court concluded that IEEPA could not be stretched to grant what one judge called "unbounded tariff authority" to the president.
The Court’s reasoning drew on the "major questions doctrine," which holds that presidents must point to clear congressional authorization before taking actions with vast economic and political consequences. This doctrine had previously been used to block President Joe Biden’s student loan forgiveness plan, and several justices suggested it applied squarely to Trump’s tariff regime. Justice Neil Gorsuch, in a concurring opinion, wrote, "The legislative process helps ensure each of us has a stake in the laws that govern us and in the Nation's future. For some today, the weight of those virtues is apparent. For others, it may not seem so obvious. But if history is any guide, the tables will turn and the day will come when those disappointed by today's result will appreciate the legislative process for the bulwark of liberty it is."
In dissent, Justice Kavanaugh, joined by Justices Clarence Thomas and Samuel Alito, argued that tariffs are a "traditional and common tool" to regulate importation and that the IEEPA’s text, history, and precedent supported the president’s actions. "The tariffs at issue here may or may not be wise policy," Kavanaugh wrote, "but as a matter of text, history and precedent, they are clearly lawful." The disagreement among the justices reflected the broader political divide over executive power and economic policy.
Trump, for his part, did not mince words. During a meeting with governors at the White House just after the decision was announced, he called the ruling a "disgrace" and insisted he had a backup plan to reimpose tariffs under different authority, according to sources cited by CBS News. Ahead of the decision, Trump had warned that an adverse ruling would force the U.S. to repay significant sums to importers, describing it as "a complete mess, and almost impossible for our country to pay." Despite the setback, administration officials suggested the president could move quickly to reimpose tariffs using other laws.
The decision does not wipe out all of Trump’s tariffs. Duties imposed under other statutes, such as Section 232 of the Trade Expansion Act of 1962—which covers steel, aluminum, and automobiles—remain in place. These measures are based on Commerce Department investigations and were not challenged in this case. However, the Supreme Court’s ruling dismantles the most expansive part of Trump’s trade program, leaving the administration with narrower options for using tariffs as a tool of economic and foreign policy.
In Congress, Trump’s allies criticized the ruling and floated the possibility of codifying the tariffs through budget reconciliation, a legislative process that allows certain tax and spending measures to bypass the Senate filibuster. But as TIME reported, Republicans are divided over the scope and economic impact of the tariffs, and there is no guarantee that such an effort would succeed given the slim majority in both chambers. Senator Rand Paul commented pointedly on social media, "The Supreme Court makes plain what should have been obvious: ‘The power to impose tariffs is very clearly a branch of the power to tax.’"
For businesses and consumers, the immediate future holds uncertainty. Companies that paid the now-invalidated tariffs are expected to seek refunds, but the process promises to be complex and protracted. For ordinary Americans, relief from higher prices may come gradually as the effective tariff rate falls, but there is no direct path for consumers to recover the extra costs they bore while the tariffs were in effect.
As the dust settles, the Supreme Court’s decision stands as a landmark in defining the limits of presidential power over trade and taxation. While Trump and his supporters vow to find new ways to wield tariffs as leverage, the ruling leaves no doubt that, at least for now, Congress—not the White House—holds the keys to America’s economic arsenal.