WASHINGTON — The Supreme Court dealt a significant blow to former President Donald Trump’s trade policy ambitions on February 20, 2026, invalidating his use of the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs. However, the ruling appears to be a check on his power, not an outright defeat, as Trump swiftly moved to reinstate a 10% global tariff under a different authority – Section 122 of the Trade Act of 1974. The move underscores the ongoing battle over presidential trade powers and introduces a new layer of uncertainty for the U.S. Economy and global trade relations. This latest development in Trump’s emerging tariff battle plan has sparked debate among analysts about the long-term implications for businesses and consumers.
The Supreme Court, in a 6-3 decision in Learning Resources, Inc., et al. V. Trump, determined that IEEPA does not authorize the president to impose tariffs, a power reserved for Congress. This invalidated tariffs imposed to address fentanyl-related threats involving Canada, Mexico, and China, as well as broader concerns tied to global trade deficits, including the administration’s “reciprocal” tariff program. Within hours of the ruling, Trump announced his intention to utilize alternative authorities to reinstate the tariffs, directing agencies to terminate IEEPA tariff collection and simultaneously issuing an executive order to impose a replacement 10% global tariff under Section 122.
A Temporary Fix, With a Catch
Section 122 of the Trade Act of 1974 permits the president to temporarily impose import surcharges – for up to 150 days – to address balance-of-payments issues. The current surcharge is temporary, and Trump has already stated his intention to increase it to the statutory maximum of 15% for the duration of the effective period. However, the temporary nature of the measure introduces significant uncertainty, as its continuation beyond the 150-day window requires Congressional approval.
Securing that approval may prove challenging, according to Heng Koon How, head of markets strategy at UOB. He noted that some Republican lawmakers have voiced opposition to tariffs on close allies like Canada, potentially hindering Trump’s ability to garner majority support in both houses of Congress. This potential roadblock suggests the tariff landscape is likely to remain volatile, clouding the outlook for both the U.S. Economy and global trade. “For the next 150 days, there will be much more uncertainty as to how tariffs are stacked up, how they apply, if the existing trade deals still apply, etc.,” Heng told CNA’s Asia First programme.
Beyond Section 122: Other Avenues Remain
While Section 122 provides an immediate, albeit temporary, solution, Trump retains other legal avenues for imposing tariffs. These include Section 301 of the Trade Act of 1974, which targets unfair trade practices, and Section 232 of the Trade Expansion Act of 1962, which addresses national security concerns. Section 232 is already in use for industry-specific tariffs on steel, aluminum, lumber, and automobiles.
The Supreme Court’s decision has similarly cast a shadow over a series of trade deals struck in recent months. While Trump has indicated that some agreements would remain in effect, details remain unclear. Trade partners are expressing concern that they may be required to pay the 15% global rate in addition to any rates already negotiated with Washington. Edmund Sim, a partner at Appleton Luff International Lawyers in Washington DC, explained, “(Trump) can always impose higher rates above the 15 per cent … because of other sections of the law.” He added, “So, it’s a consideration for every country (if) they want to … on a diplomatic level disturb the status quo. It would be difficult for countries, for example, those at last week’s Board of Peace meeting, to revisit agreements they already have with the US.”
Implications for Importers
The rapid shift in tariff policy is creating operational challenges for importers. According to BDO, implementation will depend on follow-on steps by U.S. Customs and Border Protection (CBP) and the Treasury Department, and potentially additional proceedings before the Court of International Trade (CIT). Importers should anticipate near-term uncertainty, as CBP updates its Automated Commercial Environment (ACE) system and issues technical filing instructions. Until these updates are complete, some entries may continue to reflect IEEPA-based duty calculations and/or require post-entry corrections.
The situation is further complicated by the continued suspension of de minimis treatment, a policy that allows for the duty-free import of goods below a certain value. This suspension, coupled with the new tariffs, adds to the cost and complexity of importing goods into the United States.
The Supreme Court’s ruling and Trump’s subsequent actions highlight the ongoing tension between presidential authority and Congressional power in the realm of trade. While the court has reined in the president’s use of IEEPA for tariff imposition, Trump has demonstrated his willingness to utilize other available tools to achieve his trade policy objectives. The next 150 days will be critical as the administration navigates the implementation of the Section 122 surcharge and seeks Congressional approval for its continuation. Importers and trade partners will be closely watching these developments, assessing the potential impact on their businesses and the global economy.
Share your thoughts on this developing story in the comments below.
