The US Supreme Court has ruled 6–3 that last year’s globally applied import duties exceeded presidential authority under the International Emergency Economic Powers Act (IEEPA). Within hours, President Donald Trump announced a replacement measure: a 10% tariff applied to most countries under Section 122 of the Trade Act, due to take effect on 24 February 2026 after a proclamation signed on Friday, 20 February.
Chief Justice John Roberts, writing for the majority, concluded that IEEPA allows a president to regulate economic transactions in an emergency but does not confer an open-ended power to set tariffs. He noted that when Congress delegates tariff authority it does so in clear terms and with tight limits. The court’s three liberal justices joined the opinion, as did Justices Amy Coney Barrett and Neil Gorsuch. Justices Clarence Thomas, Brett Kavanaugh and Samuel Alito dissented.
The White House’s IEEPA-based tariffs had covered goods from nearly all trading partners after initially focusing on Mexico, Canada and China. Businesses and several states challenged the measures, arguing Congress had not authorised a new tax via IEEPA or permitted the executive to discard existing tariff schedules and trade commitments. The court sided with that view, reinforcing Congress’s role over tax and tariff powers.
Markets welcomed the decision. The S&P 500 closed up about 0.7% as firms assessed the potential for duty refunds and the easing of immediate cost pressures. However, the relief is tempered by legal uncertainty. President Trump said refunds would be contested and could be tied up in court for years, signalling a prolonged process rather than quick cash returns for importers.
Refund mechanics are not spelled out by the ruling and are likely to be shaped by the US Court of International Trade. Hundreds of companies-including Costco, Alcoa and Bumble Bee-have already filed suits to position themselves for repayment. KPMG’s Diane Swonk cautioned that litigation costs may be prohibitive for smaller firms, while Pillsbury’s Steve Becker argued that a government-administered procedure would be the most efficient way to return funds.
To maintain tariff pressure, the President has switched to Section 122 of the Trade Act of 1974. According to the White House, this provision permits temporary duties of up to 15% for a period of 150 days, after which further action would be needed. The announced 10% rate is framed as a short-term measure to support domestic investment and manufacturing while the administration reviews additional avenues.
The proclamation lists wide exemptions that make practical application complex. Certain minerals, natural resources and fertilisers, selected agricultural products such as oranges and beef, pharmaceuticals, some electronics and specific vehicle categories are carved out. In several areas the language is broad, leaving importers to wait for clarifications on exact product coverage and classification thresholds.
Canada and Mexico retain extensive exemptions under the USMCA, covering the bulk of bilateral trade, according to the White House. A senior official also said that countries with trade arrangements with the United States-including the UK, India and the EU-would face the new 10% rate under Section 122 rather than previously negotiated tariff schedules, and that Washington expects existing concessions to be honoured.
Other trade powers remain available to the administration. Section 232 (national security) and Section 301 (unfair trade practices) were not affected by the Supreme Court ruling and have previously been used on sectors such as steel, aluminium and vehicles. Analysts expect these instruments to feature in any broader strategy the White House develops alongside the new global tariff.
Business reaction reflects both relief and caution. Small manufacturers involved in the litigation described the judgment as lifting a heavy financial burden but accept that supply chains will take months to normalise. Policy advisers note that while refunds could ultimately be substantial-the government has collected at least $130bn in IEEPA duties-timelines and net recoveries remain uncertain pending court-administered processes.
For importers, the immediate planning task is operational rather than rhetorical. Shipments entering from 24 February may attract the 10% duty unless clearly exempt or covered by USMCA rules of origin. Finance teams will need to update landed-cost models, review product classifications against the exemptions, and prepare documentation to support origin claims. Legal teams are weighing protective filings in the Court of International Trade while awaiting any administrative refund pathway.
International reaction has so far been measured. The European Commission said it had noted the Supreme Court ruling and was assessing its implications. Trade officials and company counsel will now track three variables: any clarification of exemptions in federal notices, whether Congress engages before the 150‑day window closes, and whether the administration expands use of Sections 232 and 301. As one Washington-based analyst put it, the legal and commercial picture has become more complicated rather than simpler.