Supreme Court Rules IEEPA Cannot Authorize Presidential Tariffs

On February 18, 2026, the United States Supreme Court issued a sweeping ruling in National Foreign Trade Council v. United States, holding that the International Emergency Economic Powers Act (IEEPA) does not grant the President authority to impose tariffs on imported goods. The 6-3 decision invalidated a series of executive orders issued in 2025 that had used IEEPA to levy tariffs of up to 145% on Chinese imports and 10-20% on goods from other nations.

Writing for the majority, Chief Justice Roberts emphasized that IEEPA was enacted in 1977 to address genuine national security emergencies — such as freezing foreign assets during hostage crises — not to serve as a backdoor mechanism for comprehensive trade policy. The Court found that tariffs are a tax on imports, and under Article I of the Constitution, the power to levy taxes resides with Congress. While Congress has delegated limited tariff authority through statutes like Section 301 and Section 201, IEEPA was never intended to be among them.

The immediate market reaction was significant. Futures markets rallied as traders anticipated lower import costs, while the U.S. Trade Representative's office announced it would work with Congress to develop replacement legislation. Legal scholars noted the ruling effectively closes a loophole that had been exploited to bypass the traditional legislative process for trade policy, restoring a degree of congressional oversight that had eroded over the past two years.

For importers, the practical impact is substantial but phased. The Court's order includes a 90-day wind-down period, meaning IEEPA-based tariffs remain in effect until mid-May 2026. During this transition, importers should review their current duty exposure, identify which tariffs were imposed under IEEPA versus other statutory authorities (such as Section 301 or Section 232), and prepare to adjust their landed-cost models accordingly. Tariffs imposed under other legal authorities remain unaffected by this ruling.

The decision also has global implications. Trading partners who had imposed retaliatory tariffs in response to IEEPA-based actions are now reassessing their own measures. The European Union and Canada have signaled willingness to negotiate rollbacks of counter-tariffs, potentially opening a window for bilateral trade normalization that has been absent since 2025.