What Happened
- The US Supreme Court ruled 6-3 on February 20, 2026 in Learning Resources Inc. v. Trump and V.O.S. Selections v. United States that the International Emergency Economic Powers Act (IEEPA) does not authorise the President to impose tariffs.
- The ruling reversed the Trump administration's use of IEEPA emergency powers to impose sweeping tariffs on imports — including from India, China, and multiple other trading partners — during Trump's second term.
- All US tariffs imposed under IEEPA were terminated at midnight on February 24, 2026, following the Supreme Court's final order.
- The estimated value of tariff refunds owed to importers who paid IEEPA tariffs is approximately USD 175 billion.
- The Supreme Court remanded decisions on refund mechanisms to lower courts — the process for actually claiming refunds remains in litigation.
- The Court of International Trade (CIT) had originally struck down the IEEPA tariffs in May 2025; the Federal Circuit upheld that decision in August 2025; the Supreme Court heard oral arguments in November 2025 before issuing its February 2026 ruling.
Static Topic Bridges
IEEPA — International Emergency Economic Powers Act (1977)
The International Emergency Economic Powers Act (IEEPA) was enacted by the US Congress on December 28, 1977, signed by President Jimmy Carter. It authorises the president to regulate international commerce after declaring a national emergency in response to an "unusual and extraordinary threat" to the US originating substantially from outside the country. Historically, IEEPA had been used to impose sanctions, freeze assets, and restrict financial transactions — but not to impose broad tariffs on trade. The Trump administration's novel use of IEEPA to impose tariffs was the central legal question resolved by the 2026 Supreme Court ruling.
- IEEPA enacted: December 28, 1977 (as successor to the Trading with the Enemy Act of 1917)
- IEEPA's key provision: authorises the president to "regulate...importation or exportation" in national emergencies
- Prior IEEPA uses: asset freezes on Iran (1979), sanctions on Iraq, Libya, Syria, Russia, etc.
- Trump administration (2025): invoked IEEPA to impose tariffs citing trade deficits as a national security emergency
- Constitutional basis of challenge: US Constitution (Article I, Section 8) grants Congress, not the executive, the power to "lay and collect...Duties" and "regulate Commerce with foreign Nations"
- Supreme Court's 6-3 ruling: IEEPA does not delegate tariff-setting power to the President; Congress did not authorise tariffs through IEEPA
Connection to this news: The ruling redraws the boundaries of executive power in US trade policy, forcing future tariff actions to go through Congress (e.g., Section 232 national security tariffs, Section 301 unfair trade practice tariffs) rather than emergency declarations — with significant implications for global trade predictability.
WTO Framework and Unilateral Tariffs
The World Trade Organisation (WTO) is the primary multilateral framework governing international trade. Member countries are bound by Most Favoured Nation (MFN) commitments — the principle that a country must apply the same tariff rate to imports from all WTO member countries. IEEPA tariffs, imposed unilaterally by the US outside WTO processes, were challenged at the WTO by multiple trading partners (including China, India, EU) as violations of US MFN commitments and bound tariff rates. The US invoked national security exceptions under GATT Article XXI to justify the tariffs — an article whose scope the WTO has been grappling with in multiple disputes.
- WTO established: January 1, 1995 (successor to GATT, which dated to 1947)
- WTO MFN principle: Article I of GATT 1994 — all WTO members must receive the same (most favoured) tariff rates
- US bound tariff rates: US has committed at WTO to specific maximum tariff rates; IEEPA tariffs often exceeded these
- GATT Article XXI (Security Exceptions): allows members to take measures "it considers necessary for...protection of its essential security interests" — the US invoked this for IEEPA tariffs
- WTO Appellate Body crisis: the US blocked new Appellate Body appointments from 2019, rendering the dispute settlement mechanism non-functional for new appeals
- India's IEEPA tariff exposure: India was subject to Trump's reciprocal tariffs under IEEPA; Indian exports of textiles, pharmaceuticals, and steel were affected
Connection to this news: The US Supreme Court's ruling that IEEPA tariffs were illegal under US domestic law removes one layer of trade conflict — but WTO challenges (the international law dimension) remain separately pending. The ruling also restores US credibility in the rules-based trading order, which India has consistently supported.
India-US Trade Relations — Tariff Disputes and GSP
India-US bilateral trade has been characterised by periodic tensions over market access, intellectual property rights, and tariff regimes. India was a significant target of Trump's IEEPA reciprocal tariffs in his second term, particularly given India's substantial merchandise trade surplus with the US. The revocation of India's Generalized System of Preferences (GSP) benefits in June 2019 — a programme that provided duty-free access for approximately USD 5.6 billion of Indian exports — was a prior example of US unilateral trade actions affecting India.
- US-India merchandise trade (FY 2024-25): approximately USD 190 billion (bilateral); India's surplus approximately USD 35-40 billion
- India's GSP revocation: June 5, 2019 — US removed India from GSP beneficiary status, affecting exports of jewellery, pharmaceuticals, textiles
- India's key exports to US: pharmaceuticals, software services, textiles, gems and jewellery, engineering goods
- IEEPA tariff impact on India: sweeping "reciprocal tariffs" applied to Indian goods, estimated at 26-52% on various categories
- India-US FTA: negotiations ongoing (trade package discussions); no comprehensive FTA signed
- Section 301 tariffs: these remain separately applicable on Chinese goods and were not affected by the IEEPA Supreme Court ruling
Connection to this news: The Supreme Court ruling directly benefits Indian exporters who were subject to IEEPA tariffs — they are now entitled to refunds on duties paid. Simultaneously, it opens a window for India-US trade normalisation and reduces pressure on Indian export competitiveness.
Key Facts & Data
- IEEPA enacted: December 28, 1977 (signed by President Carter)
- Supreme Court ruling: 6-3 decision, February 20, 2026 (Learning Resources Inc. v. Trump)
- IEEPA tariffs terminated: February 24, 2026 (midnight)
- Estimated refund liability: approximately USD 175 billion
- Court of International Trade first ruling: May 2025 (IEEPA tariffs illegal)
- Federal Circuit upheld CIT: August 29, 2025
- Supreme Court oral arguments: November 5, 2025
- WTO established: January 1, 1995
- US GSP for India revoked: June 5, 2019 (USD 5.6 billion in affected Indian exports)
- US-India bilateral merchandise trade: approximately USD 190 billion
- India's trade surplus with US: approximately USD 35-40 billion annually