US Supreme Court Overturns Trump's Global Tariffs; Trump Responds With 10% Alternative Levy

Washington | EcoPulse24

In a landmark decision issued Friday, February 20, 2026, the US Supreme Court overturned the majority of the global tariffs imposed by President Donald Trump on imports from around the world, marking Trump's biggest legal setback since returning to the White House. The 6-3 ruling found that Trump exceeded his authority by using the International Emergency Economic Powers Act of 1977 (IEEPA) to impose sweeping 'reciprocal' tariffs, as well as duties linked to drug trafficking.

Chief Justice John Roberts, writing for the majority and joined by three liberal justices and conservatives Neil Gorsuch and Amy Coney Barrett, stated that the US Constitution explicitly grants Congress the power to levy taxes, including tariffs, emphasizing, 'The framers did not grant any part of the taxing power to the executive.' He added that the president did not cite any legal provision authorizing the use of emergency powers for tariffs of this scale or scope.

Trump's Response: Anger and a Substitute Tariff

Trump did not hide his anger, calling the ruling 'shameful and disappointing,' expressing 'embarrassment' over some justices, and stating that the decision is 'an embarrassment to their families.' In a press conference, he announced plans to issue an executive order imposing a temporary 10% global tariff, this time relying on the 1974 Trade Act, which was not addressed by the court. Treasury Secretary Scott Bisnett stated that the department's calculations show revenues from the new powers would be nearly equivalent in 2026.

Business Sector Welcomes Ruling, But Refunds Unlikely Soon

The business community warmly welcomed the decision, as the tariffs had heavily impacted supply chains and profit margins. David Levy, founder of MicroKits LLC, said he had lived in 'constant anxiety' since the tariffs were imposed, and could now 'start growing his business again.' However, recouping an estimated $175 billion collected under IEEPA, according to the Penn Wharton Budget Model, appears unlikely in the near term. Trump explicitly said he would not expedite refunds, noting that the Supreme Court did not address the issue, and suggesting the process 'could take two years of litigation.'

Limited Impact on Global Economy

Despite initial relief in financial markets, analysts see limited short-term effects on the global economy. Tariffs on steel and aluminum imposed under other laws remain in place, and the new 10% tariff narrows the relief. Rachel Ziemba, a researcher at the Center for a New American Security, said the ruling 'meaningfully restricts Trump's ability to threaten tariffs on any country for any reason,' forcing him to rely on tools requiring public comment and Congressional approval.

The European Union, America’s largest trading partner, announced it is 'carefully analyzing' the ruling, as the world watches Trump's next moves in a trade battle that is far from over.

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