Supreme Court Limits Presidential Power: The End of IEEPA Tariffs?

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On February 20, 2026, the Supreme Court issued a landmark 6–3 decision in Learning Resources, Inc. v. Trump, striking down the sweeping global tariffs imposed under the International Emergency Economic Powers Act (IEEPA).   

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The ruling represents a massive shift in the balance of power between the White House and Congress regarding trade policy. Here are the key implications of this ruling. 

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The Court ruled that the IEEPA—a 1977 law typically used for freezing foreign assets and imposing sanctions—does not grant the President the power to unilaterally impose broad, economy-wide tariffs. Chief Justice John Roberts, writing for the majority, emphasized that because the power to tax (including tariffs) is a core Constitutional power of Congress (Article I, Section 8), the President must have "clear congressional authorization" to exercise it. The Court rejected the administration's argument that the power to "regulate importation" implicitly includes the power to levy taxes, noting that when Congress intends to delegate tariff power, it does so explicitly and with strict limits.   

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The ruling effectively invalidated a significant portion of the "Liberation Day" tariffs and reciprocal duties that had pushed the average effective U.S. tariff rate to nearly 17%. Analysts estimate the effective tariff rate will fall from roughly 16.9% to 9.1% if the ruling is fully enforced, providing immediate relief for retailers and manufacturers. The federal government has collected an estimated $175 billion to $264 billion in IEEPA tariffs since early 2025. While the Court did not explicitly order immediate refunds, the ruling declares these collections "illegal," opening the door for thousands of companies to file claims with U.S. Customs and Border Protection.   

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The ruling was narrow in one specific way: it only struck down tariffs based on IEEPA. Other trade authorities were not affected: Section 232 (National Security): Tariffs on steel and aluminum remain in place.   

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Section 301 (Unfair Trade Practices): Existing tariffs on Chinese goods (originally from 2018/2019 and updated in 2024) remain valid.

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AD/CVD: Antidumping and countervailing duties are unaffected.

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The Administration's Pivot: Section 122 In response to the ruling, the administration immediately announced a shift to Section 122 of the Trade Act of 1974. This allows for a temporary 10% tariff to address "large and serious balance-of-payments deficits." Unlike the IEEPA, Section 122 is a "stopgap." It is limited to 150 days unless Congress votes to extend it, and the rate is capped at 15%. This creates a looming "tariff cliff" and a new legislative battle.

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