February 20, 2026 – The U.S. Supreme Court dealt a major blow to President Trump’s trade policies on Thursday. In a 6-3 decision, the justices ruled that Trump exceeded his authority. He had used a 1977 law to impose sweeping emergency tariffs on dozens of countries.
What the Court Decided
The case revolved around the International Emergency Economic Powers Act (IEEPA). Trump used IEEPA to justify broad tariffs on imports. The law grants presidents wide authority during a national emergency. However, the Court found that those powers do not extend to blanket trade levies.
The justices signalled scepticism as early as late 2025. Markets began pricing in a likely ruling against the White House. Thursday’s decision confirmed those expectations.
Why This Matters for Markets
Trump’s tariffs had been a cornerstone of his second-term economic strategy. He used them as leverage in trade negotiations across Asia, Europe, and Latin America. The ruling now removes a key policy tool from the White House’s arsenal.
For businesses, the decision brings some clarity. Companies that restructured supply chains due to tariffs may now reassess their strategies. Importers who paid higher duties could face complex refund questions. Legal experts say litigation over back tariffs is likely.
What Comes Next
The Trump administration has not yet said how it will respond. Congress could attempt to pass new tariff legislation. Alternatively, the White House may seek other statutory authority. Trade partners will be watching closely for any next steps.
The ruling is one of the most significant checks on executive trade power in decades. In a deeply globalised economy, it redraws the limits of presidential authority. The full impact on U.S. trade policy remains to be seen.
