New York, New York
— February 20, 2026

Supreme Court Strikes Down Trump’s Tariffs: What Happened and What’s Next

The Supreme Court just delivered a major ruling on trade policy, voting 6–3 to strike down large portions of President Trump’s tariff regime. The tariff saga seems never ending and so is the chaos. We got you though, let’s talk break it down.

The Court ruled that the administration’s use of the International Emergency Economic Powers Act (IEEPA) to implement sweeping tariffs was not legally authorized. In plain terms, the Court said this kind of broad economic move requires clearer authority from Congress.

Which tariffs does this hit?

The decision covers two major buckets tied to the IEEPA strategy.

1. A broad “baseline” tariff of 10% applied to nearly every country.
2. Steeper “fentanyl-related” tariffs targeting Mexico, Canada, and China, justified by the administration as pressure over fentanyl flows.

The Court’s bottom line: IEEPA did not give the president the power to impose tariffs on this scale.

Why IEEPA matters

IEEPA is a 1970s-era law designed for fast action during national emergencies. It has been used for sanctions and other emergency economic measures, but the Court found tariffs of this breadth cross into Congress’s taxing and trade authority. Several write-ups note the Court leaned on the “major questions” idea, meaning actions with huge economic impact need explicit congressional authorization.

Can the administration impose tariffs another way?

Possibly, but it gets harder.

The ruling does not eliminate tariffs as a tool. It blocks this specific legal path. Reporting and legal analyses point to other avenues, such as:

• Going through Congress directly (slow, uncertain)
• Using more targeted trade laws, depending on the rationale (for example, national-security tariffs under Section 232 have been used historically)
• Other trade authorities that are narrower and more procedurally constrained than IEEPA

So yes, there are “other levers,” and it looks like the Trump administration has pivoted immediately to them, but the ruling makes it an uphill battle to recreate a sweeping global program quickly.

What about refunds?

Still unclear.

A central open question is what happens to tariffs already collected. Reuters notes the case gets pushed back for next steps, and the refund issue remains in play. Penn Wharton estimates that potential refunds could be very large (on the order of $175B), but the timing and mechanics depend on what the lower courts decide and how the government responds.

Market impact: initial pop, then reality check

Markets initially reacted positively on the clarity, but that optimism can fade quickly because this ruling reintroduces big macro uncertainty:

• Will new tariffs be attempted under different authorities?
• How will trading partners respond?
• Does this change inflation expectations?
• Do refunds become a fiscal story?

In other words, the market can like “less chaos,” but it still has to price the next policy move.

Bottom line

This is a big legal roadblock for emergency tariff policy. It puts Congress back closer to the center of trade power, and it forces any future tariff push to use more constrained pathways. Refunds remain unresolved, and the policy chessboard is still moving.

We’ll have the GDP and PCE update coming shortly, because macro is clearly back in the picture.

Be good!