On Friday, 20 February 2026, the Supreme Court ruled 6-3 that President Trump cannot use the International Economic Powers Act (IEEPA) to unilaterally impose tariffs. This ruling nullified all tariffs imposed under IEEPA, including the Liberation Day reciprocal tariffs and the fentanyl-related tariffs on Mexico, Canada, and China.

In response, the Trump administration swiftly invoked Section 122 of the Trade Act of 1974 to initially impose a 10% tariff on almost all imports (with sectoral carve-outs), which President Trump increased to 15%. Section 122 grants the president authority to temporarily impose tariffs of up to 15% for 150 days to address balance of payments problems, however, these tariffs cannot be targeted at specific countries.

The ruling leaves several significant issues unresolved. Importers who have paid an estimated US$175 billion in duties under IEEPA tariffs over the past nine months will want to know whether they will be refunded, and how quickly. (The majority opinion made no mention of how this could be handled). Countries who made concessions to the United States and negotiated lower tariff rates through recent trade deals have been told by the Trump administration to stand by their commitments. For countries still negotiating deals with the Trump administration, the calculus has shifted considerably without Trump’s tariff leverage. Countries like Australia, who received the lowest Liberation Day tariff rate of 10%, now face a higher 15% tariff, and are left worse off.

Looking ahead, Trump’s attention will turn to what other legal authorities he can draw on to reimpose targeted, country-specific tariffs — more developments are likely over the coming weeks and months.

Related Content