The text below is an edited version of an Insight originally published on CRU Online, dated 24 February 2026. For the full version, contact us here.
The Supreme Court of the United States (SCOTUS) has finally issued a ruling on the legality of many of Trump’s tariffs. On 20 February, the Court struck down President Trump’s commodity tariffs in a 6–3 vote. The Court’s decision specified that the 1977 law, International Emergency Economic Powers Act (IEEPA), did not give the President the authority to “unilaterally impose tariffs of unlimited amount, duration, and scope.”
As cited by the Court, the IEEPA does not directly reference tariffs or duties. Instead, the administration had relied on the Act’s authority to “regulate importation.” The Court stated that there is no existing statute in which Congress has included the power to “tax” within the power to “regulate.” Thus, the President’s powers fell short.
This move does not mean the end of Trump’s commodity tariffs. However, it will limit the flexibility the administration has in using tariffs going forward.
New tariffs raise fiscal questions and re-order relative advantage of exporters
Several questions regarding IEEPA tariffs remain. Throughout 2025, these tariffs provided a major boost to US customs revenues, accounting for roughly half of all duties collected, or about $160 billion. However, the SCOTUS decision did not explicitly address the possibility of refunds, and it remains uncertain what the process would look like for companies seeking reimbursement for the additional costs incurred. In his statement, President Trump said that the issue will be disputed before the US Court of International Trade and could take years to resolve.
Beyond the legal questions, the ruling also carries fiscal implications. A decline in tariff revenue – whether from revoked duties or potential refunds – could reduce government receipts and increase the need for borrowing. A deterioration of the US fiscal position would have potential effects on interest rates, the US dollar and macro-sensitive markets such as gold, energy and industrial metals.
However, given the administration has moved swiftly to replace much of the lost revenue with other instruments, the fiscal impact should be limited in the central case. The reaction from bond markets has been relatively relaxed, with yields rising only a few basis points.
The more important impact will be on relative tariff rates, rather the average US tariff rate. Countries which were already paying 10% – such as Australia and the UK – will not benefit, whereas countries with IEEPA tariffs above 10% will gain competitiveness, with countries with the highest current tariffs – such as India – gaining the most.
Near-term uncertainty remains over response, but limiting executive powers reduces tail risks further out
Additional measures are expected from the administration. Most likely, these will come in the form of additional Section 232 tariffs, which apply to specific sectors. However, these are cumbersome tools for bilateral trade negotiations, which have been underway for months.
Moreover, the US Department of Commerce is expected to conclude its investigation with policies under Section 301 addressing “unfair trading practices,” as specified in the latest executive order. Lastly, the administration could seek greater authority from Congress to implement tariffs. However, this would need to happen quickly, as the midterm elections in November 2026 are expected to change the distribution of power between the two parties, possibly in favour of the Democrats. Such a shift could require President Trump to make major concessions.
Overall, the SCOTUS decision does not change things radically. The administration will continue to use tariffs, albeit with a more limited scope. This reduces the likelihood of some of the more damaging downside scenarios for US trade policy. Although on the face of it, this ruling creates fresh uncertainty, it probably reduces the downside risks to US and global growth at the margin.
Given the current period of lower tariffs may prove temporary, we may see a further round of imports into the US in an attempt to ‘front-run’ new tariffs. However, the risk for importers is two-sided – if the administration cannot find alternatives to S122 before end-July, tariffs could fall further.
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