On February 20, 2026, the Supreme Court delivered a landmark decision that reshaped how the President can use tariffs during national emergencies. In *Learning Resources, Inc. v. Trump*, the Court ruled 6-3 that the International Emergency Economic Powers Act does not allow the President to impose tariffs without clear permission from Congress.
The Supreme Court ruled that presidents cannot impose tariffs under emergency powers without explicit congressional authorization.
Chief Justice John Roberts wrote the main opinion, explaining that tariffs are taxes under the Constitution. Since Congress holds the power to tax, the President needs explicit authorization to create new tariffs. The Court found that IEEPA’s language about regulating imports simply does not include the power to impose taxes on those imports.
The decision invalidated all tariffs imposed under IEEPA, including those responding to the fentanyl crisis and the reciprocal tariff regime affecting nearly every country. These tariffs had collected roughly $142 billion in 2025 alone. The ruling creates potential refunds of up to $175 billion for companies that paid these now-invalid tariffs, though processing those refunds will likely take years. The loss of IEEPA tariff revenue could affect federal receipts and fiscal policy planning going forward.
President Trump responded swiftly on the same day. He signed an executive order stopping IEEPA tariff collection and issued a proclamation creating a new 10 percent global tariff under Section 122 instead. This replacement tariff is temporary, lasting 150 days until July 23, 2026, and requires congressional approval to continue beyond that point. The President posted on social media that the rate would increase to 15 percent, but the increase was not implemented as of posting. Trump publicly praised Justices Kavanaugh, Thomas, and Alito for their votes to leave tariffs in place.
The practical impact on trade is significant but not catastrophic for the administration’s trade policy. While IEEPA tariffs disappeared, other major tariffs under Sections 301 and 232 remain untouched. For Chinese imports, the effective tariff rate dropped by nearly two-thirds. Canadian and Mexican importers saw smaller reductions.
The Court emphasized that tariffs are enormous in scope and amount. Without a clear historical precedent—noting no President had used IEEPA for tariffs in the law’s 50-year history—the justices required unmistakable congressional authorization for such significant economic policy.
Looking ahead, the decision limits presidential tariff authority but does not end the trade war. Projections still estimate tariffs will raise $1.2 trillion through 2035, though economic growth may slow.
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