THE Supreme Court of the United States has struck down the legal foundation of President Donald Trump’s sweeping global tariff regime, ruling that a 1977 emergency powers statute does not grant the executive authority to impose across-the-board import duties.
In a six-to-three decision, the court held that the International Emergency Economic Powers Act was never intended to be used as a vehicle for universal tariffs.
“IEEPA does not authorise the President to impose tariffs,” the justices said in a 170-page judgment that sharply reasserts congressional primacy over trade policy.
The ruling dismantles the central mechanism underpinning Trump’s so-called “Liberation Day” tariffs, unveiled in April 2025, which imposed duties of between 10 per cent and 50 per cent on goods entering the United States from nearly all trading partners.
The measures had generated more than US$175 billion in revenue, with the Treasury collecting approximately US$30 billion a month at their peak.
Although the court did not rule on whether previously collected tariffs must be refunded, the judgment removes what had become the administration’s principal negotiating lever in trade talks.
The opinion was written by Chief Justice John Roberts and joined by Justices Neil Gorsuch, Amy Coney Barrett and the court’s three liberal members. Justices Samuel Alito, Clarence Thomas and Brett Kavanaugh dissented. The conservative-majority bench has frequently sided with Trump in other contentious cases, making the rebuke particularly notable.
Financial markets rose in immediate reaction to the decision, reflecting investor expectations that the most expansive elements of the tariff regime would fall away.
However, uncertainty remains over how swiftly the administration will act to restore duties under alternative statutes.
There was no immediate formal statement from Trump following the ruling, though CNN reported that he described the judgment as a “disgrace” in a private conversation.
Addressing reporters later, he said: “I’m ashamed of certain members of the court, absolutely ashamed, for not having the courage to do what’s right for our country.”
He announced plans to impose a uniform 10 per cent tariff on all imports under different legal authority, adding: “In order to protect our country, a president can actually charge more tariffs than I was charging in the past,” and insisting the ruling left him “more powerful”.
Trade specialists expect the White House to pivot to more conventional tools.
Section 232 of the Trade Expansion Act of 1962 allows tariffs on national security grounds following a Commerce Department investigation, while Section 301 of the Trade Act of 1974 provides for action against unfair trade practices.
Other provisions offer temporary or country-specific remedies, but none authorises the sweeping universal tariffs previously imposed.
Wendy Cutler of the Asia Society Policy Institute said the legal risk had long been apparent. “The President took a serious risk in using IEEPA as the legal basis for many of his tariff threats and hikes, and this gamble did not pay off,” she said.
“Now, the administration will need to put in place its ‘Plan B’, using safer statutes to justify the tariffs. This all could have been avoided if clear tariff adjustment statutes had been initially relied upon, as during his first term.”
William Reinsch of the Center for Strategic and International Studies said the immediate commercial impact might be limited.
“The impact on businesses will likely be limited, since the President has made clear that he has plans to reimpose the tariffs under other laws,” he said. “That will lead to more lawsuits, but many of the tariffs will stay in place.”
The decision could nevertheless complicate existing trade arrangements. Several governments negotiated bilateral agreements with Washington in response to tariffs now declared unlawful.
“That does not automatically invalidate the trade agreements, but it may make negotiating new ones more difficult, and it may ultimately persuade other governments that they do not have to adhere to the concessions they made,” Reinsch said. “I would not rush to judgment on that, but it is something other governments will no doubt consider.”
The tariff campaign had targeted a broad swathe of countries. South-east Asian exporters such as Cambodia, Laos, Myanmar and Vietnam initially faced duties approaching 50 per cent, later reduced through negotiation. Additional levies were imposed on China, Canada and Mexico in connection with fentanyl trafficking concerns, while India’s tariff rate, which had climbed to about 50 per cent, was cut to 25 per cent after talks in February.
The litigation originated with lawsuits from an educational toy manufacturer and a family-owned wine and spirits importer.
Lower courts, including the US Court of International Trade and a federal appeals court, had already concluded that the president had exceeded his authority.
Elana Ruffman, vice-president of marketing and product development at Illinois-based toymaker hand2mind, described the impact on her firm.
“Most of the products that we import from China went from having 0 per cent tariffs to the prospect of 145 per cent tariffs in April,” she said.
“Of course, the tariff policy has changed many times since then, but we calculated that our tariff bill would be US$100 million in 2025 if the tariff stayed at 145 per cent.”
Trump has argued that tariff revenues — which he claims will “soon” exceed US$600 billion — could finance domestic priorities, including a proposed US$2,000 dividend for low- and middle-income Americans and efforts to reduce the country’s US$38 trillion national debt.
Although US gross domestic product expanded by 4.4 per cent in the third quarter of 2025, growth slowed to 1.4 per cent in the final quarter, with job creation easing in sectors most exposed to tariffs.
The ruling does not disturb sector-specific duties on steel, aluminium and other goods imposed under separate legal authority, nor ongoing investigations that could yield additional targeted measures.
Nonetheless, it marks the most significant judicial check on Trump’s second-term trade agenda and a clear reaffirmation of Congress’s constitutional role in setting tariffs. - February 21, 2026
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