Supreme Court Strikes Down Trump-Era IEEPA Tariffs in 6-3 Ruling

The U.S. Supreme Court issued a 6-3 decision on February 20, 2026, invalidating tariffs imposed by former President Trump under the International Emergency Economic Powers Act (IEEPA). The ruling clarified the limits of presidential authority in trade matters and had immediate effects on financial markets.

Chief Justice John Roberts authored the majority opinion, stating that the IEEPA does not grant the president the power to impose tariffs. According to the ruling, the authority to set tariffs remains with Congress, not the executive branch. This decision directly addressed the scope of powers under the IEEPA and resolved a dispute over executive and legislative roles in trade policy.

The Supreme Court’s decision affected tariffs that had been implemented during the Trump administration under the IEEPA framework. Other tariffs, such as those under Section 232 and Section 301, were not included in the case and remain in place. The ruling focused specifically on the legal basis for tariffs imposed using emergency economic powers.

Following the announcement, U.S. stock markets responded with modest gains. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all closed higher on the day of the ruling. Treasury yields showed little change, with only minor increases in long-term rates reported.

What the numbers show

• The S&P 500 rose about 0.6%-0.7% on the day of the ruling
• The Dow Jones Industrial Average increased by approximately 0.5%
• The Nasdaq Composite climbed around 0.9% after the decision
• Ralph Lauren’s stock gained roughly 3.3% following the announcement
• The ruling potentially affects over $130 billion in tariff revenue

Ralph Lauren’s stock, which had experienced earlier losses, reversed course and ended the day up by about 3.3%. This movement was observed after the Supreme Court’s decision was released. The broader market’s reaction was described as muted, with many investors reportedly having anticipated the outcome in advance.

The decision has implications for tariff revenue collected under the IEEPA, which totals more than $130 billion. The ruling has prompted questions regarding the possibility of refunds to importers who paid tariffs under the invalidated authority. However, the decision did not address tariffs established under other statutory provisions.

Treasury yields remained broadly stable after the Supreme Court’s announcement. Only slight upward movement was noted in long-term yields, indicating limited immediate impact on government bond markets.

Many investors had expected the Supreme Court’s decision, which contributed to the relatively calm response in financial markets. The ruling clarified the limits of executive authority in imposing tariffs under emergency economic powers, while leaving other trade measures unaffected.

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