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Written by Gisela Grieger.

Background

Since his return to the White House in January 2025 until 20 February 2026, President Trump imposed unilateral tariffs on US trading partners after declaring several national emergencies under IEEPA on the grounds of the ‘influx of illegal aliens and illicit drugs‘ into the US and the persistent annual US trade in goods deficit. Trump declared Brazil’s actions against former Brazilian president Bolsonaro a national emergency under IEEPA to impose tariffs on Brazil. He also invoked IEEPA, on the grounds of Russian threats to the US, to impose tariffs against US imports from India because of India’s purchases of Russian oil.

The US Supreme Court tariff ruling

On 20 February 2026, a six to three majority of the nine US Supreme Court judges, including two Republican judges nominated during President Trump’s first term – in Learning Resources, Inc., versus Trump, President of the United States – ruled that, although IEEPA provides the US president with far-reaching powers, these do not include the authority to impose tariffs. They therefore ruled that President Trump’s use of IEEPA as an authority to levy tariffs on US trading partners is inconsistent with the US Constitution. The latter grants the power to impose tariffs solely to the US Congress, which, whenever it decided in the past to delegate tariff authority to the US president, stipulated that expressly in the respective legal act.

The Supreme Court ruling does not order the refunding of import tariffs already paid to the US government and thus does not impose an obligation on the US government to refund automatically the tariff revenue it has already collected. To be refunded, US importers will likely be compelled to take legal action individually against the US government at the US Court of International Trade. Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, stated that there is ‘no legal mechanism for consumers and many small businesses to recoup the money they have already paid’.

Implications of the US Supreme Court ruling for US tariff policy

As a result of the ruling, President Trump can no longer use IEEPA’s emergency authority to levy tariffs and is thus deprived of using the swiftest and most flexible tool in his tariff policy toolbox. IEEPA tariffs levied in 2025 are estimated at US$142 billion, with most of the tariff cost borne by US businesses and consumers.

However, the US Congress delegated the power to levy tariffs to the US president under alternative US legal bases, some of which President Trump has used during his first and second terms. The country-specific tariffs levied against China under Section 301 of the 1974 Trade Act and the national security-based sector-specific tariffs imposed on imports of aluminium, steel and other items under Section 232 of the 1962 Trade Expansion Act have not been challenged by the Court and will remain in place.

Section 301 of the 1974 Trade Act authorises the US president to take ‘all appropriate action’, including tariffs, against trading partners engaging in unfair trade practices that cause harm to US trade. While the imposition of Section 301 tariffs and new investigations have focused on China, in July 2025 the US initiated investigations against Brazil and the first Trump Administration used Section 301 to investigate the use of digital services taxes by a number of countries, including EU Member States.

Section 232 of the 1962 Trade Expansion Act authorises the President to impose tariffs or other restrictions on imports if they are considered a threat to national security. President Trump imposed steel and aluminium tariffs under Section 232 during his first term. In 2025, this legal basis was used for probes into items including cars, pharmaceuticals, trucks, robotics, drones, aircraft, medical equipment and chips.

The US strategy is to shift to the use of another untested legal basis under Section 122 of the 1974 Trade Act that allows the President to move fast to impose a blanket tariff of 15 % for a maximum of 150 days, unless Congress extends it or President Trump restarts the clock, to tackle a ‘large and serious’ US balance-of-payments deficit, that, experts argue, does not exist, and to a greater use of the tested legal bases above.

The Section 122 tariff of 15 %, effective from 24 February 2026, will allow the US government to bridge the time needed for more tariffs to be activated under legal bases that require several months of investigations. According to a Global Trade Alert estimate, the Section 122 tariff would lower the tariff burden on Brazil, China and India, but would increase it on the EU by 0.8 % to 12.5 % (US trade-weighted average: 13.2 %).

Table 1 – The shift in legal bases for US tariff policy in President Trump’s second term

2025 2026US legal basisIEEPASection 301Section 232Section 122Section 301Section 232Source: EPRS.

Another alternative legal basis, as untested as Section 122, is Section 338 of the 1930 Tariff Act (Smoot-Hawley Act) that allows the President to levy tariffs up to 50 % for discrimination against US commerce.

The change of the US legal basis is unlikely to alleviate the economic impact of the tariffs on businesses and consumers. US tariffs, uncertainty and unpredictability in trade with the US are here to stay.

Early reactions to the Supreme Court ruling

The Court ruling had been expected for a long time and the oral argument of 5 November 2025 already suggested scepticism among both Democratic and Republican Supreme Court judges as to whether President Trump’s use of IEEPA was consistent with the US Constitution. The Court decision was welcomed by Democrats, with California Governor Newsom, Illinois Governor Pritzker and Senator Cantwell calling for refunds, and by several Republicans who praised free trade or the separation of powers and had voted for bills to repeal tariffs. By contrast, it drew criticism from the US government and many other Republicans.

EU leaders have cautiously welcomed the ruling. A Commission spokesperson stated that the US Supreme Court ruling is being carefully analysed and that the EU remains in close contact with the US administration: ‘We therefore continue to advocate for low tariffs and to work towards reducing them.’ A later Commission statement called on the US to provide clarity on the next steps.

European businesses have reacted in a muted way, remaining clear-eyed that the ruling will merely lead to different US tools being applied and that it is unlikely to reduce the level of US import tariffs. It is seen as a new source of unpredictability, after European exporters had started to adjust to the US tariff policy before the judgment.

Several governments have signalled their interest in renegotiating past tariff arrangements with the Trump Administration, while the US has stated that the tariff deals negotiated under IEEPA remain in force.

Impact on the tariff provisions of the 2025 EU-US framework agreement

On 24 February 2026, Parliament’s Committee on International Trade (INTA) was set to adopt two legislative reports, drafted by the standing rapporteur for the US and INTA chair, Bernd Lange (S&D, Germany). These reports would feed into Parliament’s first reading position, which was originally due to be adopted during the March 2026 plenary, on two Commission proposals for implementing the EU’s tariff commitments under the 2025 EU-US framework agreement. Following the Supreme Court ruling, on 23 February 2026 Bernd Lange stated – after a meeting with the INTA shadow rapporteurs – that, given the new circumstances, a majority of political group representatives has agreed that the two legislative files ‘should be put on hold until clarity, stability and legal certainty in EU-US trade relations are re-established.’

Read this ‘at a glance’ note on ‘What to expect after the landmark United States Supreme Court tariff ruling?‘ in the Think Tank pages of the European Parliament.

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