U.S. Supreme Court strikes down Trump's emergency tariffs

(Updated - February 20, 2026 10:43 AM EST)

Investing.com - The Supreme Court has ruled against President Donald Trump’s decision to employ emergency powers to impose sweeping import tariffs, denying the White House one of the pillars of its economic agenda.

Trump had used a 1977 law called the International Emergency Economic Powers Act, or IEEPA, as justification for placing levies on a host of countries. IEEPA gives the president broad powers over international economic transactions in the event of a national emergency.

But, in a 6-3 decision, the high court found that IEEPA does not authorize Trump to put the tariffs in place.

Writing in an opinion for the majority, Chief Justice John Roberts argued that while the U.S. constitution "very clearly" gives Congress taxing power, that does not extend to the executive branch.

Roberts added that the Trump administration conceded that Trump "enjoys no inherent authority to impose tariffs during peacetime," and was instead relying on language in IEEPA -- specifically the words "regulate" and "importation" -- to "effect a sweeping delegation of Congress’s power to set tariff policy."

Justices expressed enough skepticism over the White House’s arguments at hearings late last year that markets were anticipating that the high court would rule against Trump.

The president called the Supreme Court’s decision a "disgrace" while inside a White House breakfast with U.S. state governors this morning, CNN reported, citing sources. He reportedly said he had a backup plan in the event the ruling went against him.

The outcome of the case could influence how Trump proceeds with tariffs, a policy tool he has employed throughout his second term as a cudgel in international negotiations.

U.S. stock markets shot higher in the wake of the Supreme Court’s decision, with a number of individual companies viewed as exposed to tariff pressures surging.

The ruling may "reduce trade uncertainty and cool inflation concerns -- paving the path for lower U.S. interest rates," Lukman Otunuga, Senior Market Analysts at FXTM, told Investing.com.

"However, the White House has said that it will seek methods to restore tariffs through other means. So, this short-term optimism may be swallowed by renewed trade uncertainty at a period where sentiment remains gripped by geopolitical risk."

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