The Supreme Court handed the Trump administration a significant legal defeat on February 20, 2026, ruling 6-3 that the International Emergency Economic Powers Act does not give the president authority to impose tariffs. By the next morning, the White House was already looking for workarounds.

The case, Learning Resources, Inc. v. Trump, originated from challenges to Trump’s sweeping second-term tariff expansions, which had been argued before the court on November 5, 2025. Chief Justice John Roberts authored the majority opinion, and the ruling invalidated broad import duties covering goods from Canada, Mexico, China, and most other trading partners.

The pivot: new authority, same tariffs

Rather than accept the ruling as a full stop, the Trump administration announced temporary across-the-board tariffs under Section 122 of the Trade Act of 1974, effective almost immediately after the decision came down.

Section 122 is a balance-of-payments provision. In plain terms, it lets the president impose emergency tariffs when the country is running a significant trade deficit, which gives the administration a statutory hook that the court’s IEEPA ruling cannot directly touch.

Those tariffs start at 10% and can climb to a maximum of 15%. The catch is that Section 122 tariffs carry a hard expiration: 150 days, unless Congress votes to extend them.

Beyond Section 122, the administration has signaled it intends to explore Sections 232 and 301 of U.S. trade law as additional foundations for a more comprehensive tariff regime. Section 232 covers national security-based trade restrictions, while Section 301 addresses unfair foreign trade practices.

What the Supreme Court actually said

The Roberts opinion did not say the president has no trade authority. It said IEEPA, specifically, is not a tariff statute.

The 6-3 split suggests the court’s conservative majority was not willing to hand the executive branch unlimited trade authority through an emergency powers statute. Three justices dissented, but the majority held firm on a textual reading of IEEPA that found no explicit congressional authorization for tariff imposition.

What this means for markets and investors

The immediate market question is not whether tariffs exist. They do, at 10% to 15%, under Section 122. The question is whether that level, and that legal basis, holds.

Retaliatory measures from affected trading partners remain a live risk. Canada, Mexico, and China had all been subject to the now-invalidated tariffs.

The 150-day Section 122 window creates a specific legislative catalyst. If Congress allows the tariffs to lapse without acting, the administration’s fallback position weakens considerably. If Congress extends or codifies the tariffs, it potentially opens a broader debate about rewriting U.S. trade law in ways that could affect global supply chains for years.

As of mid-2026, the administration is still working through the legal and legislative architecture needed to restore the scope of tariffs it had under IEEPA.