Breaking — February 20–21, 2026

Supreme Court Kills Trump's Emergency Tariffs

Trump Fires Back With a New 10% 15% Global Surcharge Under Section 122

In a 6–3 ruling, the Supreme Court held that the president cannot use the International Emergency Economic Powers Act (IEEPA) to impose tariffs — a landmark decision that invalidates billions in emergency duties. Within hours, Trump announced a temporary 10% global surcharge under Section 122, stacked on top of Section 232, Section 301, and other remaining duties. The next day (Feb. 21), he raised it to the statutory maximum of 15%.

Updated: February 21, 2026·Rate raised from 10% → 15%

Published: February 20, 2026 · Sources: Reuters, NYT, CNBC, Politico, Yale Budget Lab

Implementation Update — February 23, 2026

OFFCBP has confirmed that all IEEPA-based tariff codes will be deactivated at 12:01 a.m. EST on Feb 24; no new IEEPA duties will be collected after that time. [source]
ONThe new Section 122 global surcharge is set to 15%, also effective 12:01 a.m. EST on Feb 24 and limited by statute to 150 days (until ~July 24, 2026) unless Congress extends it. [source]

Section 122 · 15% Global Surcharge

Day – of 150

Statutory end date

July 24, 2026

Feb 24, 2026Jul 24, 2026

Rate: 15% · Stacks on top of MFN + Section 232 + Section 301 where applicable · Subject to congressional extension or court challenge

Quick Answers

1. What did the Supreme Court decide on Feb 20, 2026?: The Court ruled 6–3 that President Trump cannot use the International Emergency Economic Powers Act (IEEPA) of 1977 to impose tariffs, because that law does not clearly authorize tariff or tax powers.
2. Are all tariffs now paused or illegal?: NO. Only tariffs explicitly imposed under Trump's "emergency" IEEPA authority are invalidated.
3. Which big Trump tariffs stay in effect?: Section 232 national security tariffs (steel and aluminum), Section 301 tariffs (many China duties), Section 201 safeguard tariffs, ordinary MFN tariffs, and anti-dumping / countervailing duties are all unaffected by this ruling.
4. What about refunds?: Importers will likely have avenues to claim refunds of IEEPA-based duties — potentially totaling well over $100 billion — but the process and timing are not yet settled and will run through Treasury, CBP, and lower courts.
Basically, we don't know yet.
5. What is the new Section 122 tariff Trump just announced?: On the same day as the ruling, Trump announced a 10% global surcharge under Section 122 of the Trade Act of 1974, applied "over and above our normal tariffs already being charged." It is temporary — capped at 150 days by statute — and is expected to face immediate legal challenges.

After the Ruling: What Fell, What Stayed, What's New

⚖️

Struck Down

IEEPA-based (1977 emergency law)

✕"Liberation Day" blanket tariff — ~10% on most imports from 100+ countries
✕Reciprocal "penalty" tariffs — higher rates on dozens of partners
✕25% "fentanyl-related" tariffs — on selected goods from Canada, Mexico, and China

Any tariff whose sole legal basis is IEEPA is now unlawful.

🏭

Still in Force

Not affected by this ruling

✓Section 232 — national security tariffs (steel & aluminum, autos)
✓Section 301 — China tariffs for unfair trade practices
✓Section 201 — safeguard tariffs
✓Normal MFN schedule, anti-dumping & countervailing duties

Source: U.S. Supreme Court ruling on IEEPA tariffs, Feb 20, 2026

⚡

Newly Announced

Section 122 — Trade Act of 1974

!10% → 15% global surcharge under Section 122 — announced Feb. 20, raised to statutory max on Feb. 21
!Effective Feb. 24, 2026 — valid for up to 150 days (unless Congress extends)
!Stacks on top of existing tariffs — MFN + 232 + 301 + 15%

Likely to face immediate legal challenges; never used at this scale before.

1. What the Supreme Court Actually Decided

In a 6–3 decision, the Supreme Court held that the president overstepped his authority by using the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs on imports from nearly all U.S. trading partners. This is the first major Supreme Court loss for Trump's second-term trade agenda and a significant precedent on the limits of presidential power over tariffs.

IEEPA is a 1977 statute designed for national emergencies, historically used to freeze assets or impose narrow sanctions. It allows the president to "regulate" imports and exports in response to "unusual and extraordinary threats," but it never mentions tariffs, duties, or taxes. Trump's legal team argued that this "regulate importation" language implicitly included the power to impose broad tariffs, indefinitely and at any rate, without Congress.

The Court rejected that argument. Writing for the majority, Chief Justice John Roberts said that IEEPA's grant of authority to regulate importation does not include the power to levy tariffs. Because the Constitution assigns taxing and tariff powers primarily to Congress, any shift of that power to the president must be clearly and explicitly authorized by statute. The justices concluded that IEEPA does not provide that clear authorization.

2. Which Tariffs Are Struck Down?

The decision directly targets all tariffs imposed under IEEPA, sometimes referred to in the press as Trump's "emergency tariffs" or "blanket tariffs." Trade law experts note that the Court's reasoning is categorical: IEEPA simply does not authorize tariffs at all, meaning any tariff whose sole legal basis is IEEPA is now invalid — even if it was not explicitly named in the litigation.

Legal Authority: IEEPA (1977 emergency law)

▼

"Liberation Day" Tariff

~10% on most imports from 100+ countries

Reciprocal Tariffs

Higher rates on countries with "unfair" trade or large deficits

25% Fentanyl Tariffs

Targeted goods from Canada, Mexico & China

▼

All IEEPA-based tariffs now unlawful and non-collectible

Subject to implementation details from Treasury & CBP

3. Which Tariffs Remain in Place?

The Court's ruling is narrow in legal scope but broad in practical impact. It does not wipe out all U.S. tariffs, nor even all tariffs imposed during Trump's second term. It only removes tariffs grounded in IEEPA. Many tariffs your business deals with day-to-day — especially China Section 301 and steel/aluminum Section 232 — are still fully in force.

Section 232

National Security

✓ Steel and aluminum tariffs remain
✓ Other Section 232 cases (metals, autos) continue
✓ No country-specific exemptions — broad application

Section 301 & 201

Unfair Trade & Safeguards

✓ China Section 301 tariffs continue for now
✓ Safeguard measures (Section 201) unchanged
✓ Separate statutory authority — unaffected

Baseline & Trade Remedies

Standard Tariff Regime

✓ Normal MFN (Column 1) tariff schedule unaffected
✓ Anti-dumping (AD) orders continue
✓ Countervailing duty (CVD) orders continue

Only tariffs tied to IEEPA are struck down. All other tariff authorities remain.

4. What Happens to Collections and Refunds?

IEEPA Refund Pipeline

2025–2026: Importers pay IEEPA tariffs on entry

▼

Supreme Court (Feb 20, 2026): IEEPA tariffs unlawful

▼

Treasury & CBP: Stop collecting IEEPA duties on new entries

▼

Refunds via administrative process (automated or via claim)

Refunds via protests / litigation for disputed entries

Estimates of potential refunds range into the $100–175+ billion range; exact process still TBD

Immediate Effect on Collection

With IEEPA tariffs now declared unlawful, CBP will need to stop collecting those duties on future entries that were covered by Liberation Day, reciprocal, or fentanyl-related emergency tariffs. That shift will be implemented via instructions from the administration and CBP to ports, brokers, and filers.

Refund Exposure

Multiple estimates suggest that the U.S. government may owe well over $100 billion in refunds of IEEPA-based tariffs — some budget analysts put the figure in the roughly $130–175 billion range, depending on how broadly the ruling is applied. Expect months of regulatory and legal activity around refund eligibility, documentation requirements, and deadlines.

Important: The Supreme Court did not spell out a refund mechanism. It simply held that the tariffs lacked legal authority. Business groups are already demanding a "full, fast, and automatic" refund process, warning against long bureaucratic delays and expensive case-by-case litigation.

5. Trump's Countermove: A New 10% 15% Global Tariff Under Section 122

IEEPA tariffs struck down (SCOTUS)

Feb. 20, 2026

▼

Trump response — same day (Feb. 20):

→Signs Proclamation imposing 10% global tariff under Section 122 of the Trade Act of 1974, effective Feb. 24
→Claims it is "over and above our normal tariffs already being charged"

▼

Update — next day (Feb. 21):

→Trump posts on Truth Social: "I will immediately increase the 10% tariff to 15% for all countries"
→15% is the statutory maximum under Section 122 — Trump has maxed it out on day one

▼

Key constraints of Section 122:

— Max 15% surcharge (now fully invoked), max 150 days (through ~July 24, 2026); meant for balance-of-payments emergencies
— Non-discriminatory by statute — exemptions must be product-based, not country-by-country
— Has never been used for such broad global tariffs; immediate litigation expected

What Section 122 Actually Allows

Section 122 of the Trade Act of 1974 authorizes the president to impose temporary import surcharges up to 15% ad valorem or quantitative restrictions for no more than 150 days, when the U.S. faces "large and serious" balance-of-payments deficits or related international payments problems. No prior investigation is required — so the president can act quickly. However, the time limit is strict: after 150 days, Congress must act to extend or replace the measure, or it expires.

On Feb. 20, Trump signed the Proclamation at 10%, effective Feb. 24 at 12:01 a.m. Eastern. The very next day, he announced via Truth Social that he would raise it to 15% — the statutory ceiling — effective immediately. Treasury Secretary Scott Bessent confirmed publicly that combining Section 122 with remaining Section 232 and 301 tariffs, the administration expects "virtually unchanged tariff revenue in 2026" despite losing IEEPA duties.

The surcharge is global — applied across a wide swath of imports — and is additional to existing tariffs, including MFN, Section 232, and Section 301. However, the Proclamation includes a set of product-based exclusions (USMCA-qualifying goods, some energy products, pharmaceuticals, certain electronics, autos, aerospace, critical minerals, and fertilizers) that closely mirror the prior IEEPA exclusion list.

Note: By jumping straight from 10% to the 15% statutory cap, Trump has maxed out Section 122 on day one. Any further broad tariff increase would require a different statute (e.g., new Section 232 or 201 actions) or an explicit act of Congress. Legal challenges on balance-of-payments grounds are widely expected.

6. How the New 15% Stacks on Top of Section 232 & 301

The Section 122 surcharge does not replace the existing tariff structure — it stacks on top of it. Here is a concrete example using a stylized steel import. Note the column headings: the right-most column now reflects the 15% rate Trump raised to on Feb. 21:

Duty Component	Before SCOTUS (IEEPA in place)	After SCOTUS (before Section 122)	After SCOTUS + Section 122 (15% rate, eff. Feb. 24)
MFN base rate	~0–2%	~0–2%	~0–2%
IEEPA emergency tariff	+10%	struck down	struck down
Section 232 (steel)	+25%	+25%	+25%
Section 122 global surcharge (raised to 15% max on Feb. 21)	—	—	+15%
Total effective rate	~35–37%	~25–27%	~40–42%

IEEPA gone, but Section 122 at 15% actually exceeds the prior IEEPA burden for many goods — temporarily and subject to litigation.

Goods with Section 232 or Section 301 duties

Effective total rate becomes: MFN base + 232/301 + new 15% Section 122 surcharge. For steel, this actually exceeds the pre-ruling burden, at least for the 150-day window. Treasury Secretary Bessent expects "virtually unchanged tariff revenue in 2026" as a result.

Goods without any special tariffs (MFN only)

The new 15% functions like a temporary across-the-board surcharge on top of MFN — significantly raising landed costs on goods that previously paid only the base tariff, potentially more than the old IEEPA rate did.

7. Effective U.S. Tariff Levels: Before & After

Global Trade Alert estimates of the trade-weighted average U.S. tariff under each scenario. The Supreme Court cut the average nearly in half — but the new 15% Section 122 surcharge pulls it back close to pre-ruling levels. Source: Global Trade Alert

Pre-SCOTUS (IEEPA in force)15.3%

15.3%

Baseline before the ruling

Right after SCOTUS (IEEPA removed, before S.122)8.3%

8.3%

If nothing else changed

Section 122 at 10% (initial plan)11.6%

11.6%

Original announcement Feb 20

Section 122 at 15% (current)13.2%

13.2%

Rate raised to statutory max Feb 21

Trade-weighted average tariff estimates. Source: Global Trade Alert (Feb 2026).

“Supreme Court cut the average U.S. tariff almost in half — but the new 15% Section 122 surcharge pulls it back up close to pre-ruling levels.”

7. Why This Matters for Separation of Powers

This case is not only about trade — it is about who holds the power to tax.

The majority emphasized that tariffs, like other taxes, are a core legislative power. Allowing the president to effectively rewrite the tariff schedule via a vague emergency statute would have been a major shift of constitutional authority from Congress to the executive branch.

Several justices also invoked the "major questions" doctrine, arguing that when a policy has sweeping economic and political consequences — like blanket tariffs on most imported goods — Congress must speak clearly if it wishes to hand that power to the president. IEEPA's silence on tariffs was decisive.

For businesses, this signals a preference for stability and predictability: dramatic, economy-wide tariff changes should go through the slower but more deliberative congressional process, not appear overnight via emergency proclamations.

8. Dual-Track Action Plan for Importers

Two parallel tracks: reclaim IEEPA refunds and prepare for the new Section 122 surcharge.

Track 1: IEEPA (Past) — Refund Track

Identify where you paid IEEPA-based duties

–Pull all entries where Liberation Day blanket rates applied
–Flag reciprocal / penalty tariff entries
–Flag 25% fentanyl-related tariff entries

Quantify your IEEPA duty exposure

–Calculate total IEEPA duties paid by product line
–Prioritize high-value lanes where refunds would be most material

Preserve rights

–Consult trade counsel on protests, court actions, and documentation
–Assess entries in gray areas

Watch CBP / Treasury for refund procedures

–Monitor Federal Register notices and CBP CSMS messages
–Be ready to respond quickly if claim deadlines are announced

Track 2: Section 122 (Future) — Cost & Risk Track

Model a +15% surcharge across your import portfolio

–Trump raised the rate from 10% to 15% (statutory max) on Feb. 21
–Focus on lanes already hit by 232/301 where stacking is severe
–Update pricing and margin forecasts for the 150-day window (through ~July 24)

Re-run landed cost models

–Remove IEEPA tariffs from calculations
–Add 15% Section 122 surcharge on top of MFN + 232 + 301 rates
–Identify lanes where net cost improves or worsens vs. pre-ruling

Monitor litigation and congressional response

–Be ready for rapid change — surcharge may be narrowed or invalidated
–Plan contracts and pricing to reflect uncertainty

Coordinate with counsel on Section 122 rights

–Assess grounds to challenge if applicable
–Preserve refund rights if courts later strike it down
–Understand interaction with existing 232/301 suits

9. What This May Mean for You

The story now has three moving parts:

1. IEEPA Tariffs

Struck down. Significant refund exposure for the government — well over $100 billion. Process and timing are not yet clear.

2. Legacy Tariffs (232, 301, 201, AD/CVD, MFN)

Unchanged by the Court's ruling and still fully in force. These form the ongoing foundation of U.S. trade remedy policy.

3. New Section 122 Global Surcharge

Signed at 10% on Feb. 20; raised to the statutory maximum of 15% on Feb. 21. Effective Feb. 24, valid up to 150 days (~July 24). Stacks on all existing tariffs and is highly likely to be litigated.

Relief

The broadest, least predictable "emergency tariffs" have been struck down, and a large pool of duties is potentially refundable. For many importers, landed cost calculations will drop meaningfully — at least until Section 122 takes effect.

Warning

The administration pivoted to a new global surcharge via Section 122 — starting at 10%, then raised to the statutory maximum of 15% the very next day. If it survives litigation, this would actually exceed the prior IEEPA burden for many goods, stacked on top of 232, 301, and MFN rates.

The Supreme Court killed Trump's IEEPA "emergency tariffs," but it did not end the tariff era. Instead, the administration pivoted to a new global surcharge under Section 122 — starting at 10% and immediately raised to 15% (the statutory maximum) the very next day, stacked on top of Section 232, Section 301, and other existing duties. The clock is now running: 150 days, through around July 24, 2026.

⚠️ Legal Risk Watch: Section 122

Multiple trade law experts and economists argue that Section 122 is not a good legal fit for the current situation. The statute was designed for a genuine balance-of-payments crisis — where U.S. dollar outflows are threatening currency reserves or causing a severe payments imbalance. The U.S. does not currently face that kind of emergency; it runs a capital-account surplus, which offsets the trade-account deficit that the administration is citing. [Fortune]

Court challenges are widely expected and may follow the same fast track as the IEEPA litigation. If Section 122 is also struck down, importers who paid the 15% surcharge would likely have similar refund rights to those now applicable for IEEPA duties. [JD Supra]

Importer tip: Track Section 122 court filings carefully. If the surcharge is enjoined or struck down, preserving documentation of duties paid will be critical — just as with IEEPA refund claims now.

‼️ BREAKING ‼️