The US Supreme Court struck down President Donald Trump’s sweeping global tariffs, imposed under the International Emergency Economic Powers Act (IEEPA). The 6-3 verdict, delivered on Friday, which states that the tariffs extend beyond the president’s “legitimate reach”, invalidates the administration’s use of 1970s-era emergency powers to impose tariffs without the consent of Congress. Tariffs imposed under IEEPA have historically been used for targeted economic sanctions with Congressional approval.
The majority opinion, authored by Chief Justice John Roberts, argued that the framers of the US Constitution, gave Congress “alone... access to the pockets of the people” and nowhere in the country’s founding charter did they vest that power in the Executive Branch.
The Supreme Court rejected the government’s broad interpretation of the IEEPA, which would have granted the president the unilateral power to impose and adjust unbounded tariffs. The court ruled that such a “transformative expansion” of executive authority lacks historical precedent, noting that in the 50 years since IEEPA’s enactment, no US president has ever used it to levy tariffs.
The ruling offers a massive reprieve for global markets and for India, which has recently negotiated a trade deal with the US.
Trump’s administration had argued that two words buried in IEEPA, “regulate” and “importation”, were sufficient to authorise the president to impose tariffs of any size, on any product, from any country, for any length of time, simply by declaring a national emergency. The court rejected that reading, saying that “those words cannot bear such weight”.In a Truth Social post early in January, Trump had warned that an adverse Supreme Court ruling on tariffs could expose the US to financial liabilities potentially reaching trillions of dollars. He argued the costs would extend beyond direct tariff refunds to include compensation claims from countries and companies that have made infrastructure investments specifically to avoid US tariffs. He characterised such a scenario as “a complete mess” that would be “almost impossible for our country to pay”.
Several labour-intensive sectors, including textiles and gems and jewellery, are expected to rebound after being severely impacted by skyrocketing costs and a subsequent sharp drop in demand.
Over 1,000 corporations, including retail giant Costco Wholesale and tyre manufacturer Goodyear, joined the legal challenge to Trump’s tariff regime. Now that the court has invalidated the tariffs, these companies are poised to demand refunds.
The Trump administration had, however, already lined up alternative plans before the Supreme Court could rule against its emergency tariff powers. During a CNBC interview in January, National Economic Council Director Kevin Hassett had signalled that senior officials had mapped out alternative strategies using different legal authorities to maintain current trade measures.
Markets rallied after the Supreme Court ruling, with the Nasdaq leading gains at 1 percent. Treasury yields climbed, with the 10-year reaching 4.09 percent, while a surging US dollar signalled strong investor confidence in the stability of American assets following the landmark decision.
First Published: Feb 20, 2026, 22:35
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