Late-Night Shock: Supreme Court Decision

On Friday, February 20, 2026, Donald Trump’s signature global tariff policy suffered its biggest legal setback in history. The U.S. Supreme Court ruled 6-3 that Trump’s large-scale imposition of global tariffs was unlawful under the International Emergency Economic Powers Act (IEEPA).

Yet, Trump immediately struck back, invoking a 50-year-old law, and announced an additional 10% global tariff.

1. Supreme Court Ruling: Which Tariffs Are Illegal?

The Court overturned Trump’s series of tariffs imposed under IEEPA (1977). This includes:

• The 2025 “Liberation Day” global tariffs, applied to nearly all countries (10%–50%).

• China-specific tariffs: 20% on fentanyl-related products and trade imbalance tariffs.

• Canada: 35% fentanyl tariffs.

• Mexico, Brazil, India, and other countries: various IEEPA-based tariffs.

White House website updated with official guidance.

However:

• Other tariffs remain in effect, including those on steel, aluminum, automobiles, copper, lumber, and cabinets.

• The ruling does not address whether or how refunds should be issued to importers who already paid these tariffs—a core part of the original lawsuit.

• Estimated amounts involved in potential refunds exceed $200 billion for the previous year alone.

2. Trump’s Immediate Response

At a White House press briefing later that day, Trump expressed extreme dissatisfaction. He announced that, under Section 122 of the Trade Act of 1974, the administration would impose:

• An additional 10% import tariff on all global imports for 150 days.

• The temporary tariff takes effect February 24, 2026, at 12:01 AM EST.

Exemptions include:

• Certain critical minerals, metals used for currency or gold bars, energy and energy products.

• Natural resources and fertilizers that cannot be domestically grown, mined, or produced in sufficient quantity.

• Select agricultural products, including beef, tomatoes, and oranges.

• Pharmaceuticals and pharmaceutical components.

• Certain electronics.

• Passenger vehicles, some light trucks, certain medium/heavy vehicles, buses, and relevant vehicle parts.

• Certain aerospace products.

• Information materials (books), donations, and accompanying luggage.

Additional exemptions:

• Products or components already subject to Section 232 actions.

• USMCA-compliant goods from Canada and Mexico.

• Textiles and apparel entering Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, or Nicaragua under the Dominican Republic–Central America Free Trade Agreement (CAFTA-DR).

Trump expressed outrage at certain Supreme Court Justices, calling them a “national disgrace”, and emphasized that the U.S. could still generate additional revenue through other measures.

3. Will Trump Refund Already Collected Tariffs?

Currently, issuing refunds faces major challenges:

1. Supreme Court ruling did not mandate refunds

• The Court only ruled the tariffs unlawful, without ordering repayment or specifying procedures.

• Justice Kavanaugh warned in dissent that this could create a “total mess.”

2. Trump Administration resists refunds

• Despite previous statements promising refunds if the Court ruled against the tariffs, Trump declared on the day of the ruling that any refund litigation could take years.

• Treasury Secretary Bessent said collected tariff revenue is “disputed” and the government will not proactively refund.

3. Unprecedented scale

• Over 300,000 importers, 34 million import entries, and $129–175 billion in tariffs involved.

• Historically, even much smaller illegal tariff cases took years to process refunds.

4. Small and medium-sized businesses face hurdles

• Refund claims require specialized trade lawyers, massive documentation, and case-by-case legal challenges.

• Large multinational firms may handle this, but small importers likely cannot afford the legal battle.

In short: Trump’s IEEPA tariffs were struck down, but he countered immediately with a new 10% global tariff, creating a legal and logistical storm for importers worldwide.