The story so far:
On February 20, the U.S. Supreme Court delivered a decision that could reshape the legal boundaries of presidential trade power. The court held that the International Emergency Economic Powers Act (IEEPA), which U.S. President Donald Trump relied on, does not authorise a President to impose tariffs. It struck down the sweeping reciprocal and drug-trafficking-related tariffs imposed by Mr. Trump in 2025, calling them unconstitutional.
What authority did Trump rely on?
So far, Mr. Trump has used the IEEPA, a 1977 law that allows the President to regulate certain economic transactions after declaring a national emergency to address an “unusual and extraordinary threat” originating outside the country.
IEEPA emerged out of the Trading with the Enemy Act, which was passed in 1917 when the U.S. entered the First World War, to regulate trade with enemy nations. It has been used to freeze foreign assets held in American banks, block financial transfers, and impose sanctions on hostile governments and terrorist groups. However, before 2025, it was never used to impose tariffs.
After returning to office for his second term, Mr. Trump declared national emergencies tied to drug trafficking from Latin American countries and trade imbalances. His administration imposed 25% tariffs on most goods from its neighbours, Canada and Mexico, 10% tariffs on most goods from China, and a separate reciprocal tariff programme imposing at least a 10% duty on imports from virtually all trading partners. Some countries, including India, were hit with even higher rates.
Why did the Supreme Court strike the tariffs down?
The U.S. Constitution gives Congress the power “to lay and collect taxes, duties, imposts and excises.” Congress also has the power to regulate trade with foreign countries, and tariffs fall squarely within that authority.
The court concluded in a 6-3 ruling that the IEEPA does not authorise the President to impose tariffs. Chief Justice John Roberts, in his opinion, cited a hodgepodge of tariffs announced by Mr. Trump.
“The President asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope,” Justice Roberts wrote in his opinion. “In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorisation to exercise it.”
Does this mean Trump can no longer impose tariffs?
No. The decision only forbids the use of IEEPA, but Mr. Trump was quick to announce a workaround. Shortly after the Supreme Court ruling, his administration announced a new temporary import duty, which went into effect on February 24 for a period of 150 days.
“We will get back to the same tariff level for the countries. It will just be in a less direct and slightly more convoluted manner,” U.S. Treasury Secretary Scott Bessent said after the Supreme Court ruling.
Mr. Trump alluded to using Sections 122, 301, and 232 to levy tariffs.
Section 122 is part of the Trade Act of 1974. It permits the U.S. President to impose tariffs of up to 15% on a country to address “a large and serious United States balance-of-payments deficit.” The tariff can be applied for a maximum of 150 days unless extended by Congress.
Section 301 of the U.S. Trade Act of 1974 allows tariffs to be imposed if the government finds that a trading partner has engaged in what it deems unfair trade practices.
Section 232 is part of the U.S. Trade Expansion Act of 1962. These tariffs are levied on specific sectors if the Secretary of Commerce deems them necessary on national security grounds.
What role does Congress now play?
Congress sits at the centre of tariff authority for two reasons.
The Constitution assigns it the taxing power, and in its ruling, the court leaned heavily on this allocation while interpreting the IEEPA.
Congress determines the scope of executive trade authority through statute. It has the power to narrow existing delegations, require its approval for tariffs, or even expand presidential powers if it chooses to.
Politically, redesigning tariff authority would require bipartisan agreement, especially since the court has made clear that sweeping tariffs must rest on a clear legislative footing.
Will businesses that lost money to tariffs get refunds?
For months, American businesses and customers bore the brunt of the heightened tariffs. The court ruling, while rendering the tariffs illegal, has not created a mechanism for a refund.
According to a Goldman Sachs report, $180 billion was collected through the now-invalidated tariffs.
More than 1,000 companies, including big names like FedEx, have sued the U.S. government in the U.S. Court of International Trade seeking refunds for the tariffs.
The suit is seeking compensation for potentially millions of shippers who paid import duties and related fees on products that should have entered the U.S. duty-free, Reuters reported.
Does the court decision limit future Presidents?
The ruling draws a clearer statutory boundary.
Future Presidents will retain the authority to regulate trade, as Mr. Trump does, but courts rely heavily on precedents. As a result, it may scrutinise attempts to use emergency powers beyond their intended scope.
Published – March 08, 2026 10:37 pm IST
