US Supreme Court refers US President Donald Trump’s broad import duties to the wastebasket

Click HERE for the decision of the Court

The U.S. Supreme Court has struck down the bulk of President Donald Trump’s sweeping tariffs, delivering a major blow to his second-term economic strategy. In a 6–3 decision issued on February 20, 2026, the Court ruled that Trump exceeded his authority by using the International Emergency Economic Powers Act (IEEPA) to impose broad import duties on nearly every country.

Key Points from the Ruling

• Legal Basis Rejected: The Court found that IEEPA does not authorize the president to unilaterally impose tariffs of unlimited scope, duration, and amount. Chief Justice John Roberts emphasized that such expansive powers require clear congressional authorization.
• Majority Composition: The majority included Roberts, Barrett, and Gorsuch joining the three liberal justices, marking a rare rebuke from a conservative-led bench.
• Impact: The decision invalidates a cornerstone of Trump’s trade policy, which he had framed as essential to protecting U.S. industries and asserting economic sovereignty.

This ruling not only curtails the president’s use of emergency powers in trade but also sets a precedent for future executive actions involving economic policy.

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US Supreme Court invalidates IEEPA tariffs

• Supreme Court Decision: On February 20, 2023, the US Supreme Court ruled in a 6-3 decision that the International Emergency Economic Powers Act (IEEPA) does not grant the President the authority to impose tariffs. The Court emphasized that such power lies with Congress under the Constitution, which clearly assigns the authority to “lay and collect Taxes, Duties, Imposts and Excises.”
• Impact on Executive Authority: The ruling constrains the executive branch’s ability to impose tariffs based solely on IEEPA, effectively removing it as a standalone authority for tariff actions. This decision alters the legal framework for existing tariffs and limits future tariff-related actions by the administration, although it leaves some uncertainty regarding the retroactive implications and potential refund claims.
• Operational Considerations for Companies: Businesses now face challenges in navigating the implications of the ruling, particularly in assessing which IEEPA tariffs may be refundable and managing the complexities of the refund process. Companies must focus on robust modeling to understand eligibility, consider timing for potential refunds, and be aware of execution risks due to capacity constraints within customs and trade compliance teams, as well as customs brokers handling increased refund requests.

Source PwC

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• Supreme Court Ruling on IEEPA: The US Supreme Court ruled 6-3 that the International Emergency Economic Powers Act (IEEPA) does not grant the President authority to impose tariffs. This decision invalidates tariffs on goods from Canada, Mexico, and China, as well as global and country-specific tariffs related to Venezuela, Russia, Iran, Brazil, and Cuba, emphasizing that tariffs are considered taxes that fall under Congress’s authority.
• Impact on Tariff Recovery and Future Actions: The ruling does not provide guidance on how companies that paid these tariffs can recoup their costs, leaving them awaiting further developments. Although the Court’s decision affects tariffs imposed under IEEPA, it does not impact tariffs established under Section 232 or Section 301 of the Trade Expansion Act, and the Administration is expected to explore other authorities to maintain tariff policies.
• Implications for International Tax Discussions: In related discussions, US Treasury officials indicated that the two-Pillar solution for international tax, particularly Pillar One, is no longer viable. They expressed a need to reassess foundational principles for discussions surrounding the digital economy, emphasizing a fresh examination rather than continuing with previous frameworks. Upcoming events include President Trump’s State of the Union address and the release of a proposed 2026 budget.

Source EY

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