On February 20, 2026, the US Supreme Court ruled that the President of the United States of America had exceeded his authority by imposing “exorbitant tariffs” under the International Emergency Economic Powers Act (IEEPA) of 1977. The Supreme Court noted that this Act does not grant the president the authority to impose tariffs without congressional approval.
This stems from events that took place in early 2025, when President Donald J. Trump, as an emergency measure to reduce the country's trade deficit and as a measure aimed at countries that were unable to stop the flow of fentanyl, invoked the IEEPA and imposed tariffs on imports of goods from more than 100 countries (including trading partners such as Mexico, Canada, and China). This generated both national and international discontent in different sectors, as the tariffs imposed severely affected operations, resulting in excessively high costs for consumers.
In addition to discontent on both local industries and consumers, as well as court documents and social media posts, it was warned that continuing with this trade policy could lead to an economic tragedy similar to the Great Depression, prompting the Supreme Court to rule that the president lacks the authority to impose such measures without congressional approval. This could mean costly and high compensation for importers who have paid the tariffs derived from the IEEPA impositions.
It is also important to mention that the decision made on Friday, February 20, by the Supreme Court focuses solely on the IEEPA law, given that after a thorough review of Section 232 (steel and aluminum sector) of the Trade Expansion Act of 1962, it was determined that this section does have the legal basis and necessary language (explicitly referencing the tariffs in that section) to give the president a legal ground to impose tariffs.
During this period and in accordance with the final decision, the president's administration stated that they were acting, seeking new alternatives to replace those tariffs from the IEEPA law that the Congress had deemed invalid. However, these actions have been limited given that other laws are less flexible and more specific regarding the president's ability to impose taxes, unlike the Emergency Act.
Despite the attempts to find legal alternatives to replace the now illegal import tariffs, the vote against these tariffs represents a setback for the trade strategy and a limitation on Donald Trump's authority as president to impose tariffs, while reaffirming the role of Congress in the tariff imposition process.
President of United States of America announce a general 10% duty under section 232, coming into force before the end of February 2026.
At Baker Tilly, we are at your service to provide advice on the compliance of your foreign trade obligations, as well as to anticipate or seek alternatives for possible future scenarios.
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