The Supreme Court of the United States has ruled that former President Donald Trump exceeded his authority in imposing sweeping global tariffs under emergency powers, triggering fresh uncertainty over US trade policy and the future of billions of dollars collected in duties.
In a 6–3 decision delivered on February 20, the court held that the president could not use the International Emergency Economic Powers Act (IEEPA) to impose tariffs on imports from nearly every country. The judgment clarified that the constitutional authority to levy tariffs rests with the US Congress and that IEEPA is intended to address national emergencies—not to generate revenue.
IEEPA Tariffs Declared Illegal
Trump first invoked IEEPA in February 2025 to impose tariffs on goods from China, Mexico and Canada, citing fentanyl trafficking as a national emergency. He later expanded the move on what he termed “Liberation Day,” raising tariffs on imports from almost all countries, with rates ranging between 10 and 50 percent. He described the US trade deficit as an “extraordinary and unusual threat.”
The Supreme Court’s ruling applies specifically to tariffs imposed under IEEPA. Economists estimate that approximately $130 billion has already been collected from importers under the disputed tariffs.
However, the court did not specify how refunds should be issued. Trump has indicated that any repayment could be tied up in years of litigation, a view echoed by US Treasury Secretary Scott Bessant. The United States Court of International Trade is expected to handle refund-related cases.
Analysts note that more than 1,000 companies had already sought tariff refunds even before the ruling, and the number may rise significantly. If refunds are granted, experts believe large corporations are more likely to benefit, given the complexity and cost of legal proceedings.
Section 122 Invoked for New Global Tariff
Within hours of the ruling, Trump invoked Section 122 of the Trade Act of 1974, a rarely used provision that permits the president to impose tariffs of up to 15 percent for 150 days without Congressional approval.
Initially setting a 10 percent global tariff, Trump later announced he would raise it to 15 percent, stating that the court’s decision was “extremely anti-American.” Under Section 122, any extension beyond 150 days would require Congressional consent.
The White House said the move aims to address international payment imbalances and rebalance US trade. Treasury Secretary Bessant indicated that combining tariffs under Sections 122, 232 and 301 would likely offset revenue losses from the invalidated IEEPA duties, with “almost no impact” on overall tariff revenue in 2026.
Other Tariffs Remain in Force
Tariffs imposed under Section 232 of the Trade Expansion Act of 1962 remain unaffected by the court’s ruling. These include industry-specific duties on steel, aluminum, timber and automobiles, justified on national security grounds.
Section 301 of the Trade Act of 1974 also continues to provide authority for the US Trade Representative to investigate and penalize unfair or discriminatory foreign trade practices.
Scope of the New Global Tariff
According to the White House, the new 10 percent (soon to be 15 percent) global tariff under Section 122 will apply from February 24 to nearly all imports into the United States, regardless of origin. Even countries with trade agreements with Washington—including India, the United Kingdom and members of the European Union—will be subject to the uniform tariff rather than previous country-specific rates.
However, several exemptions will apply for economic or administrative reasons. These include critical minerals, energy products, natural resources, food crops, pharmaceuticals, electronics, vehicles, aerospace products, as well as books, donations and personal baggage. Products covered under the US-Mexico-Canada Agreement (USMCA) will remain exempt. Textiles and apparel from DR-CAFTA member countries—Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua—will also continue to receive tariff-free access.
Trump has additionally confirmed that low-value imports will remain subject to tariffs after the administration ended the ‘de minimis’ exemption for goods valued at $800 or less.
Trade Policy Uncertainty Ahead
The ruling marks a significant constitutional check on executive trade authority while leaving room for alternative tariff mechanisms. With multiple legal pathways still available to the administration, analysts say US trade policy is likely to remain fluid in the coming months.
While the decision limits the use of emergency powers for sweeping trade measures, it does not eliminate the administration’s ability to impose tariffs under other statutory frameworks—ensuring that the debate over US tariff policy is far from settled.
