On 20 February 2026, the US Supreme Court, in a 6 to 3 majority ruled that the International Emergency Economic Powers Act (IEEPA) of 1977 does not authorise the President to impose tariffs. The decision not only invalidated the Trump administration’s sweeping Liberation Day Reciprocal Tariffs but also brought into question the legitimacy of all the trade deals that were signed. This judgement invalidated nearly 60% of President Trump’s tariff, removing tariffs across several industries, while pausing many negotiations mid-way.
The US Constitution, under Article I, Section 8 granted the legislative body of the Congress the power to lay and collect Taxes, Duties, Imposts and Excises. A tariff is, at its core, a tax on imported goods. As the Supreme Court observed in Gibbons v. Ogden, tariffs are very clearly a branch of the taxing power. There is no inherent presidential authority to impose tariffs in peacetime. The President requires Congress to act first.
Congress has nonetheless delegated portions of this authority to the executive, particularly where speed or foreign policy flexibility is required. Section 232 of the Trade Expansion Act of 1962 permits tariffs on imports that threaten national security. Section 301 of the Trade Act of 1974 allows the United States Trade Representative (USTR) to investigate and respond to unfair trade practices. Section 122 of the Trade Act of 1974 permits temporary tariffs of up to 15% for 150 days to address balance of payments problems. IEEPA, enacted in 1977, grants the President power to regulate commerce, transactions and property during genuine national emergencies. Each statute was written for a defined and limited purpose.
Key members of the Trump administration, as proponents of the Unitary Executive Theory, used these sections as mandates for expansive use of tariffs by considering the declining manufacturing sector and growing trade deficits as national emergencies.
The Unitary Executive Theory holds that the President exercises near complete authority over the executive branch and enjoys broad discretion where Congress has delegated power.
In practice, this meant invoking IEEPA not for targeted sanctions or asset freezes but to impose country specific tariffs at varying rates on almost every trading partner. The justification combined economic and geopolitical claims. The administration argued that persistent trade deficits hollowed out American manufacturing and weakened supply chains. It also used tariffs as leverage in immigration talks with Mexico and Canada, and as diplomatic pressure against China. As stated by the President, these tariffs have also allegedly been used to mediate conflicts across the globe.
IEEPA offered speed and flexibility. Unlike Section 232 or Section 301, it required no formal investigation, no extended inter-agency coordination and no time constraints. For an administration seeking rapid and unconstrained action, it was an ideal instrument. That position held until the courts intervened.
In May 2025, the US Court of International Trade ruled unanimously that the IEEPA tariffs were unlawful, after this, the case moved to the appeals court. In August, the US Court of Appeals for the Federal Circuit upheld the decision on statutory grounds but allowed the tariffs to continue while appeals proceeded to the Supreme Court. The Supreme Court heard the argument in November 2025 and issued its ruling on 20 February 2026.
The judgment was 6 to 3 in outcome but divided in reasoning. The majority opinion, authored by Chief Justice John G. Roberts Jr., held that IEEPA’s authority to regulate importation does not include the power to impose tariffs. The analysis was textual. IEEPA contains no reference to tariffs, duties or revenue. When Congress intends to grant tariff authority, it does so expressly. It did not do so here. Regulation may include restriction, control or blocking of transactions. It does not include taxation.
The justices brought used the “major questions doctrine” to state that President’s imposition of tariffs of any rate, on any product, for any duration, based solely on an emergency declaration insulated from review, would constitute a transformative expansion of executive power thus becoming a subject of the doctrine. The judgment also noted that this move by the administration lacked any historical precedent as no President had used IEEPA to impose tariffs in its 50 year history.
Major questions doctrine states that where the executive claims authority over matters of vast economic and political significance, it must point to clear congressional authorisation and not to an ambiguous phrase in an older legislation.
The ruling thus invalidates both the reciprocal tariffs and the trafficking and immigration tariffs. These measures covered the majority of United States import duties by value. Approximately 60% of the announced tariffs became invalid.
Tariffs imposed under other statutes such as Section 232 duties on steel, aluminium, copper and automotive products and Section 301 tariffs on Chinese goods continue. The courts also did not address the refunds of between USD 130-179 billionin IEEPA based tariffs that had been collected before judgment. With more than 1,000 importers having already filed claims, the recovery process is expected to unfold in lower courts in the coming months.
Within hours of the ruling, the Trump administration responded with the imposition of 10% global tariffs through an executive order under Section 122 of the Trade Act of 1974, effective 24 February 2026. He later increased it to 15%. The White House also announced fresh Section 301 investigations to construct longer term tariff cases against specific partners.
Section 122 was designed for balance of payments emergencies and has never previously been used. The administration cited a 1.2 trillion dollar goods trade deficit and a net international investment position of -90% of GDP as a justification.
Its features are clear with no formal investigation requirements and its uniform application across all countries. However, without Congressional approval, it expires automatically after 150 days. The present order runs from 24 February 2026 and will lapse around 24 July 2026 unless Congress extends it.
The implications for trading partners are significant. The European Union had agreed to a 15% tariff arrangement negotiated under IEEPA. That legal foundation has now fallen away. The European Union has delayed ratification and extended suspension of retaliatory tariffs through August 2026, signalling that it views the Section 122 surcharge as temporary.
For China, the earlier 10% IEEPA duty has been replaced by the 15% global rate. Combined with Section 232 and Section 301 duties, China’s effective rate stands at roughly 35%. For the United Kingdom, India, Japan, South Korea and Bangladesh, where negotiations were under way or agreements were reached under IEEPA authority, the legal underpinning is now uncertain. The White House has stated it will continue to honour legally binding agreements on reciprocal trade. How that translates under a uniform Section 122 framework remains unclear.
Treasury Secretary Scott Bessent announced that that the tariff revenue would remain unchanged despite the ruling following the President’s announcement that combines Section 122, Section 232 and Section 301. This announcement signals administration is trying to project the ruling as a procedural setback which has to be worked around rather than a defeat resulting in policy reversal.
This view is also furthered by the signals of support from the Republican Congressional to the President, wherein the Congress might attempt to pass fresh legislation authorising the current administration’s use of IEEPA. However, several Republican members have also opposed these tariffs and might complicate the Congressional support.
Additionally, the question of Section 122 and the 150-day deadline will also remain action. As the deadline expires around 24 July 2026, the Congress would be just three months away from the November 2026 mid-term elections and many members would be actively campaigning. This timing places Republican legislators in a difficult position. Extending tariffs that may increase consumer prices and create supply chain uncertainty carries electoral risk. Refusing to extend them entails confronting President Trump and elements of the Republican base during the final phase of the election campaign.
There is a further possibility. If Section 122 lapses, the President could declare a new balance of payments emergency and restart the 150 day period. The statute does not explicitly prohibit repetition. Such a course would raise serious separation of powers concerns and would almost certainly invite litigation. As Section 122 has never been tested judicially, its boundaries remain uncertain.
The Supreme Court has ruled on one statutory instrument. It has not ruled on Section 122, Section 232, Section 301 or Section 338. Each authority would require its own challenge and judicial record. The contest over presidential tariff power is therefore ongoing.
The judgment in Learning Resources, Inc. v. Trump marks an important legal correction. It restores a constitutional boundary whereby the President cannot use an emergency sanctions statute to rewrite the import tax regime. It does not end the trade conflict, nor does it restore the pre 2025 trading order. The Section 122 window, the continuing Section 301 investigations and the standing Section 232 authority suggest elevated tariffs will continue testing US credibility globally.