Supreme Court Rules Against Trump Tariffs — 10% Reimposed, Raised to 15% Within 24 Hours

Table of Contents

Breaking News

On February 20, 2026, the U.S. Supreme Court ruled 6–3 that the comprehensive tariffs imposed by President Trump under the International Emergency Economic Powers Act (IEEPA) were unlawful.

The majority held that while IEEPA grants the executive branch authority to regulate economic transactions during a declared national emergency, it does not provide clear congressional authorization for broad-based tariffs of the kind imposed. The Court emphasized that tariff-setting authority, given its functional similarity to taxation, remains fundamentally tied to Congress under the Constitution.

The case concerned a blanket tariff of 10% or more applied to nearly all imports under the justification of a “national emergency.” The Court clarified that IEEPA was designed primarily for economic sanctions, asset freezes, and restrictions on financial transactions — not as a standing mechanism for comprehensive trade policy.

In response, President Trump announced he would invoke Section 122 of the Trade Act of 1974, imposing a universal 10% tariff surcharge on top of existing duties. Section 122 permits the President to implement temporary import surcharges for up to 150 days in cases of serious balance-of-payments or trade deficit concerns. Any continuation beyond that period would require congressional action.

Markets initially interpreted this as a legal pivot rather than a retreat.

Source: Reuters

Update: February 22, 2026 — Tariff Raised from 10% to 15%

Early on February 22 (JST), President Trump announced that the 10% universal tariff would be raised to 15%, the statutory maximum allowed under Section 122.

The escalation came less than 24 hours after the Supreme Court ruling.

While the Court curtailed the use of IEEPA for broad tariff authority, the administration shifted to a different statutory framework and immediately pushed it to its upper limit. Trade policy did not pause; it adapted and intensified.

The speed of the adjustment — from 10% to 15% within a single day — underscored that the central issue for markets is not merely the rate itself, but the extreme unpredictability of the policy environment.

Source: Reuters

Background & Context

What Are “Trump Tariffs”?

“Trump Tariffs” refers to a series of additional duties implemented during the Trump administration to address trade deficits, protect domestic industries, and strengthen leverage in international negotiations.

For the administration, tariffs have functioned not only as fiscal instruments but also as political and strategic tools — signaling economic nationalism, supply chain reshoring, and a hardline trade stance.

The Legal Boundary at Issue

The administration relied on language within IEEPA permitting the President to “regulate importation” during national emergencies. Critics argued that this language was stretched beyond its intended scope.

The Supreme Court did not reject tariffs as a policy instrument. Rather, it rejected the use of emergency executive powers as a substitute for congressional tariff authority.

This distinction is central: the ruling addressed the legal pathway, not the broader philosophy of protectionism.

A Conservative Court Draws a Line

The current Supreme Court holds a conservative majority. The fact that this Court limited executive power in this instance highlights the enduring weight of the separation of powers doctrine over partisan alignment.

The majority opinion reaffirmed that even in matters of national economic concern, constitutional structure constrains unilateral executive action.

Which Tariffs Were Affected?

Only tariffs imposed solely under IEEPA authority were invalidated.

Section 301 tariffs on China and Section 232 national security tariffs on steel, aluminum, and automobiles remain in effect. What was halted was the newest comprehensive layer, not the broader architecture of preexisting trade measures.

The Refund Question

The invalidated tariffs are estimated at approximately $175 billion in collected revenue.

Ongoing litigation will determine whether and how refunds are distributed. Even if funds are returned to importing firms, there is no certainty that benefits will flow to end consumers. The issue risks prolonged legal and accounting disputes.

More significantly, the precedent that a sweeping tariff regime can be reversed by judicial action introduces long-term planning challenges for corporations and investors.

Analysis & Insights

What Remains After the Judicial Brake

The Supreme Court decision marks a boundary on how far U.S. trade policy can be driven by presidential discretion.

Yet the immediate pivot to a 15% universal tariff demonstrates that policy continuity can be maintained through alternative statutory channels. One legal tool was constrained; another was activated.

Corporations and global governments now face dual uncertainty: resolving the legacy of invalidated tariffs and forecasting the lifespan of the new 15% temporary measure.

The Meaning of a 15% Cap

The significance of the 15% rate lies less in the number itself and more in the fact that it represents the statutory ceiling under Section 122.

The measure is temporary, capped at 150 days. This structure creates a difficult environment for businesses: too short to justify large-scale supply chain relocation, yet long enough to disrupt pricing, inventory management, and procurement cycles.

Structural change may be limited, but short-term volatility becomes more likely.

From “Broad and Shallow” to “Narrow and Deep”

A universal tariff spreads costs widely. However, the next phase may involve more targeted investigations under provisions such as Sections 201, 232, or 301.

Such measures follow established procedural paths, potentially reducing judicial vulnerability while concentrating economic impact on specific sectors or countries.

For businesses, the risk shifts from a broad but predictable burden to a narrow and concentrated exposure.

Two Timelines for U.S. Allies

Allied economies must assess both short-term and mid-term implications.

In the short term, a sustained 15% tariff increases costs across sectors such as automotive, machinery, and electronics. Order front-loading and postponement driven by tariff uncertainty may intensify supply chain management pressures.

In the mid term, large bilateral investment frameworks — such as Japan’s $550 billion U.S. investment plan — intersect with economic security strategy. As tariff volatility rises, allies may seek stability through deeper strategic integration.

However, when domestic political dynamics shift rapidly, such investments can evolve from stabilizing mechanisms into vehicles absorbing additional political demands.

Conclusion

The Supreme Court reaffirmed congressional authority over tariffs and limited the executive branch’s use of emergency powers.

Yet the rapid shift to a 15% tariff under a different statute demonstrates that trade policy remains fluid rather than restrained.

For markets, the principal cost is not the tariff rate itself, but the unpredictability of policy durability.

Trade policy now sits at the intersection of constitutional law, executive strategy, and global economic stability — and recent events suggest that volatility has moved from the margins to the institutional core.