The Supreme Court just pulled the tariff lever out of the president’s hands. In a 6-3 ruling on Learning Resources, Inc. v. Trump, the court determined that the International Emergency Economic Powers Act, known as IEEPA, does not grant the president authority to impose tariffs.

The decision, handed down on February 20, 2026, invalidated billions of dollars in tariffs on imports from Canada, Mexico, China, and other countries. It also potentially unlocked $175 billion in refunds for US importers who paid those duties.

What the ruling actually says

IEEPA has long been one of the most expansive tools in the presidential toolkit. It allows the commander-in-chief to regulate economic transactions during a declared national emergency. Trump’s legal team argued that this broad language encompassed the ability to slap tariffs on imports, framing trade deficits and supply chain concerns as national emergencies warranting executive action.

The Supreme Court disagreed. The six-justice majority held that the power to levy taxes, including tariffs, belongs to Congress under the Constitution. IEEPA, however sweeping its language, was never designed to be a backdoor tariff machine.

The plaintiffs in the case included Learning Resources, Inc., a collection of small businesses, and 24 states. The administration has filed appeals against the decision.

Trump’s Plan B didn’t survive either

After the Supreme Court ruling, the administration pivoted to a different legal foundation, enacting new global tariffs under Section 122 of the Trade Act of 1974. The initial rate was set at 10%, later raised to 15%.

Section 122 allows the president to impose temporary tariffs when the US faces a balance-of-payments deficit. The US Court of International Trade struck down the Section 122 tariffs as well, ruling that the administration failed to provide sufficient justification for claiming a balance-of-payments deficit.

What this means for markets and crypto

The potential $175 billion in importer refunds is the number that should grab your attention. That figure represents duties already collected under what the Supreme Court now considers an unconstitutional exercise of executive power.

There’s also the legislative path. Congress could pass tariff legislation that achieves what Trump tried to do unilaterally. That would be constitutional. It would also require bipartisan negotiation, committee hearings, and the kind of deliberative process that doesn’t lend itself to 2 a.m. policy announcements.