US Supreme Court Overturns Trump Trade Tariffs: Explained

On February 20, 2026, the United States Supreme Court issued a landmark 6-3 ruling striking down the broad, sweeping tariffs imposed by the Trump administration under the International Emergency Economic Powers Act (IEEPA). The decision, authored by Chief Justice John Roberts, marks a significant constitutional limit on executive authority, affirming that the power to levy taxes and duties rests firmly with Congress under Article I of the Constitution. This ruling upends a centerpiece of the administration's "Liberation Day" economic agenda, which sought to unilaterally reshape global trade through high-speed import levies.

The legal dispute centered on whether the president could use the 1977 IEEPA—historically used for asset freezes and sanctions—to impose broad-based tariffs on most global imports. The court ruled that the statutory authority to "regulate importation" does not grant the power to raise revenue through taxation. By invoking the "major questions doctrine," the majority emphasized that actions with "vast economic and political significance" require explicit congressional authorization. The justices noted that the silence of the IEEPA on revenue-related terms like "duties" or "surcharges" was a clear indication that Congress had not relinquished its "power of the purse" to the executive branch.

The immediate impact of the ruling is the invalidation of billions of dollars in reciprocal tariffs collected since early 2025, potentially triggering a chaotic refund process for thousands of small and large businesses. For trade partners like India, the ruling initially signaled a reprieve, but the landscape remains volatile. Within hours of the verdict, the president signed a new 10 percent global tariff order under Section 122 of the Trade Act of 1974. This "stopgap" authority allows for temporary surcharges but is limited to 150 days and faces stricter caps on the rate of taxation, ensuring that the legal battle over trade powers will continue in the months ahead.