Supreme Court Rules Against Presidential Tariff Powers Under IEEPA

The U.S. Supreme Court issued a decision on February 20, 2026, clarifying the limits of presidential authority under the International Emergency Economic Powers Act. The ruling determined that the act does not permit the president to impose tariffs.

Following the decision, Federal Reserve Governor Christopher J. Waller addressed the potential impact on monetary policy. Waller stated that the Supreme Court’s ruling would have minimal effect on his outlook for monetary policy decisions.

Waller explained that the Federal Open Market Committee’s approach to inflation focuses on underlying trends, excluding temporary effects such as those from tariffs. He indicated that tariff-related impacts on inflation are considered short-term and should not drive policy changes.

Waller also noted that his support for pausing interest rate cuts at the upcoming March 17-18 FOMC meeting would depend on the strength of February’s employment and inflation data. He referenced the January jobs report, which showed a substantial increase in employment compared to the previous nine months combined.

What the numbers show

• The Supreme Court decision was issued on February 20, 2026
• The January employment report showed more jobs created than in the previous nine months combined
• Manufacturing production increased by 0.6 percent in January, the highest in nearly a year

In his recent statements, Waller highlighted that business surveys pointed to increased activity in January. He cited a 0.6 percent rise in manufacturing production and continued expansion in services as indicators of economic momentum.

Waller dissented from the FOMC’s decision to pause rate cuts in January, expressing a preference for an additional cut at that time. He based this view on concerns about labor market risks and the observation that underlying inflation remained low.

Regarding the Supreme Court’s ruling, Waller stated that it could have a positive effect on spending and investment, but he noted that the scale and duration of any such impact were not yet clear. He emphasized that future policy decisions would be guided by incoming economic data.

The next FOMC meeting is scheduled for March 17-18, 2026. Waller indicated that his stance on rate cuts at that meeting would be influenced by the results of February’s employment and inflation reports.

* This article is based on publicly available information at the time of writing.