The United States Supreme Court delivered a major constitutional blow to President Donald Trump's trade agenda, striking down a significant portion of his tariff programme. However, far from dismantling the protectionist push, the ruling has merely forced a legal pivot, ensuring tariffs will persist as a core element of US economic strategy, much to the dismay of global trading partners and businesses.
On 20 February 2026, the high court ruled 6-3 that many tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unconstitutional. The Justices found that IEEPA does not grant the President the authority to levy taxes, including import duties, without explicit authorisation from Congress, a clear rejection of the White House’s unilateral trade assertions.
Crucially, within hours of the verdict, President Trump acted to replace the invalidated levies using a different legal mechanism. This swift action confirms that the administration's broader commitment to trade restrictions remains unwavering. Consequently, markets and international partners are left grappling with continued uncertainty and a shifting legal landscape for global commerce.
IEEPA Tariffs Invalidated, Other Duties Remain
The court's decision targeted tariffs enacted solely under IEEPA, including many of the broad, country-specific levies central to President Trump's trade offensive. The core principle upheld was that only Congress can authorise taxation, a power not clearly delegated to the executive branch through IEEPA.
The legal fallout means tariffs based solely on this emergency authority are invalid. This opens the US Treasury to an estimated $175 billion in potential refund claims from companies that paid the unlawful duties.
It is vital to note that the ruling does not nullify all existing trade barriers. Duties imposed under other statutes, such as national security provisions (Section 232) and other trade remedy laws, remain in effect. Furthermore, the President immediately invoked Section 122 of the Trade Act of 1974 to impose a new global tariff, initially set at 10 per cent. The Supreme Court's rebuke, therefore, targeted the legal basis for the tariffs, not the administration’s ultimate goal of maintaining higher trade barriers.
Invoking Section 122 for Temporary Surcharges
President Trump responded decisively to the court's announcement by signing an order under Section 122. This provision allows for temporary surcharges of up to 15 per cent for 150 days without requiring congressional approval. This stopgap measure ensures that a significant level of protectionist levies continues while the administration develops long-term legal strategies. This new legal basis is distinct from the IEEPA tariffs and signals the President's determination to adapt his tools to sustain the underlying agenda.
While Section 122 provides a temporary and perhaps less sweeping authority than the invalidated emergency powers, it allows the administration to ride above the immediate Supreme Court challenge and continue trade restrictions aimed at addressing perceived unfair practices and trade deficits.
Uncertainty Despite Potential Refunds
The mixed outcome has elicited a complex response globally. While some welcome the legal overturning of the IEEPA tariffs as a reduction in policy volatility, the rapid legal manoeuvring has introduced fresh uncertainty regarding the stability of US trade law. Analysts warn that even companies due tariff refunds may face years of litigation to confirm repayment procedures and eligibility.
In the US, logistical firms have already initiated lawsuits to reclaim funds collected under the invalidated regime, asserting that the government must return money paid under unlawful terms. For consumers, the immediate practical impact on prices may be minimal. Economists suggest that new Section 122 tariffs and other existing duties will continue to inflate costs, providing only marginal near-term relief.
International Partners Seek Clarity Amid Policy Shift
Internationally, the continuation of tariffs, even in a revised form, complicates matters for countries that negotiated trade agreements based on the presumed stability of prior arrangements. The European Union, Japan, and the UK have voiced concerns about the potential impact of new levies, though the UK government sought to reassure domestic firms that key bilateral commitments would be honoured.
Global trading partners remain cautious, with some delaying agreement ratification and others seeking clarification on sector-specific carve-outs. The confusing legal environment, where one set of tariffs is invalidated while a new set is simultaneously introduced highlights how US domestic legal battles have profound consequences for the international trading order.
Reaffirming Congress's Tax Power, But Executive Adaptability Prevails
The Supreme Court’s ruling firmly reaffirms a fundamental constitutional principle: Congress, not the executive, controls the power of taxation and duties. However, the political response demonstrates the limits of judicial intervention when the executive can simply shift to alternative statutory tools to achieve similar policy goals.
President Trump has politically framed the ruling as enabling him to pursue "more powerful" legal tools for tariffs, a disputed claim that nonetheless underscores the high political stakes. In Congress, the decision has intensified debate over the need for clearer legislative oversight to restrain executive flexibility in trade matters, with some arguing for enduring trade law and others for the necessity of executive agility in a contested global economy.
Continued Risk for Health and Technology Supply Chains
For the UK's health and technology sectors, these developments are significant. Tariffs impact supply chains, regulatory alignment, and the cost of imported medical equipment, pharmaceuticals, and digital goods. Continued transatlantic trade disruption, regardless of its legal basis, complicates long-term planning for firms relying on the flow of technology, components, and data-intensive services.
While the UK government has played down the direct impact on bilateral deals, the continued market volatility and policy ambiguity remain tangible risks for exporters and tech investors. The key takeaway from the aftermath of the Supreme Court ruling and President Trump's countermove is that legal setbacks do not guarantee policy reversal in trade disputes; businesses must prepare for a prolonged period of tariff-related uncertainty.
