What Happened
- On February 20, 2026, the US Supreme Court ruled 6-3 in Learning Resources, Inc. v. Trump that President Trump's sweeping tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unconstitutional, holding that "IEEPA does not authorize the president to impose tariffs."
- The ruling struck down the bulk of Trump's tariff regime, which had collected approximately $130 billion in IEEPA-based duties; total refunds to businesses could approach $150 billion according to economists.
- Immediately following the ruling, Trump signed a new executive order under Section 122 of the Trade Act of 1974, initially imposing a 10% global tariff, then quickly raising it to 15%, valid for 150 days.
- The ruling introduces uncertainty around executive-driven interim trade arrangements concluded with the EU, UK, Japan, Vietnam, and India — while the agreements remain politically intact, sweeping tariff authority now requires explicit Congressional sanction.
- Striking down IEEPA tariffs drops the average US tariff rate to the 7% range, down from the elevated levels during Trump's second-term tariff regime.
Static Topic Bridges
International Emergency Economic Powers Act (IEEPA), 1977 — Authority and Limits
The International Emergency Economic Powers Act, enacted by Congress in 1977 and signed by President Jimmy Carter on December 28, 1977, grants the President broad authority to regulate international economic transactions after declaring a national emergency. IEEPA was enacted specifically to limit the sweeping emergency economic powers previously delegated under the Trading with the Enemy Act (TWEA) of 1917. IEEPA authorizes the President to declare an "unusual and extraordinary threat to national security, foreign policy, or economy" originating substantially outside the US, and then to block transactions and freeze assets. The President must report to Congress every six months on actions taken.
- Enacted: December 28, 1977 (successor to TWEA provisions in non-wartime)
- Operates within the National Emergencies Act (NEA), 1976 framework — emergencies require formal declaration and periodic Congressional renewal
- IEEPA authorizes "regulation" of international economic transactions, but per the February 2026 ruling, does not extend to imposing tariffs (tariff power is constitutionally a legislative prerogative under Article I, Section 8)
- Justices Thomas, Kavanaugh, and Alito dissented; Chief Justice Roberts authored the majority opinion
- The ruling is significant for the non-delegation doctrine and the separation of powers between Congress and the Executive in trade policy
Connection to this news: The Supreme Court ruled that Trump exceeded the scope of IEEPA by using it as tariff authority, compelling the administration to pivot to alternative legal authorities for its trade policy.
Section 122 of the Trade Act of 1974 — Balance of Payments Surcharge
Section 122 of the Trade Act of 1974 (codified as 19 USC §2132) grants the President authority to impose a temporary import surcharge of up to 15% ad valorem for a maximum period of 150 days, when there are "large and serious United States balance-of-payments deficits" or when action is needed to prevent significant depreciation of the dollar or to cooperate on correcting international payments disequilibrium. The authority is time-limited by statute — measures expire after 150 days unless Congress votes to extend them.
- Maximum rate: 15% ad valorem import surcharge
- Maximum duration: 150 days; requires Congressional action to extend
- Triggering condition: Large and serious balance-of-payments deficit, or imminent significant dollar depreciation
- Critics note that the US does not have a balance-of-payments deficit in the classical sense (it runs a capital account surplus even as it runs a current account deficit), making the statutory trigger legally questionable
- Compared to IEEPA: Section 122 is narrower in scope (balance-of-payments only) but explicitly permits a surcharge, unlike IEEPA's "regulate" language
Connection to this news: Trump immediately invoked Section 122 as a replacement legal authority after the IEEPA tariffs were struck down, imposing a 15% global surcharge for 150 days, demonstrating that trade policy volatility was not eliminated by the ruling.
Congressional Tariff Power and the Non-Delegation Doctrine
Under Article I, Section 8 of the US Constitution, Congress holds the power "To regulate Commerce with foreign Nations" and "To lay and collect Taxes, Duties, Imposts and Excises." Tariff authority is fundamentally a legislative prerogative. Over the 20th century, Congress progressively delegated tariff-setting authority to the President through statutes like IEEPA, Section 201 (safeguards), Section 232 (national security), and Section 301 (unfair trade practices). The Learning Resources ruling signals a judicial recalibration — broad, open-ended executive tariff authority will face scrutiny under the non-delegation doctrine and the constitutional text.
- Section 232 tariffs (steel and aluminum) were NOT struck down by the ruling — these were imposed under a different statute with more explicit authority and remain in force
- Trade Act of 1974, Section 301: allows tariffs on countries engaging in unfair trade practices — these also survive the ruling
- US tariff law framework: GATT/WTO multilateral framework vs. unilateral instruments (Sections 201, 232, 301, 122, IEEPA)
- India's MFN (Most Favoured Nation) tariff rate from the US under WTO commitments is separate from these unilateral surcharges
Connection to this news: The ruling restores Congressional primacy on trade policy but does not eliminate the executive's residual tariff toolkit — Section 122, Section 232, and Section 301 remain available, ensuring continued unpredictability.
Key Facts & Data
- Ruling date: February 20, 2026; Case: Learning Resources, Inc. v. Trump
- Vote: 6-3; Chief Justice Roberts wrote the majority opinion
- IEEPA tariff revenue collected as of January 2026: approximately $130 billion
- Estimated refunds to businesses: up to $150 billion (PNC Financial Services economists)
- Post-ruling average US tariff rate: ~7% (down from elevated IEEPA levels)
- Section 122 replacement tariff: 15% global surcharge for 150 days (expiry: ~July 2026)
- India's tariff trajectory: 25% (reciprocal) → 18% (interim deal) → 15% (new Section 122 global surcharge)
- India-US trade deal negotiation team scheduled to meet in Washington, February 23-26, 2026
- Commerce Minister Piyush Goyal: deal may be signed in March, effective from April 2026