What’s Happening with Trump’s Tariffs in 2026?
On February 20, 2026, the Supreme Court ruled against President Trump’s use of the International Emergency Economic Powers Act (IEEPA) to authorize tariffs that he announced on April 2, 2025 – a day he declared ‘Liberation Day.’ In a 6-3 decision, the Court stated that the “IEEPA does not authorize the President to impose tariffs” without congressional approval, and concluded that the President overstepped his authority.
What Led to the ‘Liberation Day’ Tariffs?
On February 1, 2025, President Trump introduced a set of tariffs under the International Emergency Economic Powers Act (IEEPA). Also referred to as ‘duties’ or ‘customs duties,’ a tariff is a tax that the government places on goods that are imported into the country. Tariffs are intended to support American business by incentivizing the consumption and production of goods made within the U.S. However, exporters to the United States typically make up for the cost of the tariff by increasing the price of the product, material or labor, which can also negatively impact domestic companies and consumers who want to purchase imported goods.
The February 2025 tariffs were levied against Canada, China and Mexico due to the “national emergency” that President Trump said was created by the three countries’ pushing the “flow of contraband drugs like fentanyl to the United States.” Canadian imports faced a 25% tariff but Canadian energy sources faced a lower 10% tariff. Mexico also faced a 25% tariff, and Chinese imports faced a 10% additional tariff on top of pre-existing duties.
On ‘Liberation Day’ in April 2025, President Trump unveiled a 10% minimum tariff on all foreign-imported goods that would take effect on April 5, 2025. Additionally, he introduced reciprocal tariffs with rates that would be determined on a country-by-country basis to go into effect on April 9, 2025. With these two tariffs, some countries faced significant duties. China in particular faced a major tariff build-up: on top of a pre-2025 10% tariff, the 10% February tariff and 34% Liberation Day tariff brought the total to a 54% cumulative tariff on goods imported from China. with China experiencing a cumulative 54% tariff after the new 34% Liberation Day tariff on top of 10% February tariff plus the 10% pre-2025 tariff.
Why Did Three Justices Disagree?
Dissenters of the Supreme Court decision to strike down the Liberation Day tariffs were Justices Brett Kavanaugh, Samuel Alito and Clarence Thomas. Justice Kavanaugh wrote in his 63-paged dissent that “the tariffs at issue here may or may not be wise policy. But as a matter of text, history, and precedent, they are clearly lawful.”
How are Democrats Responding to the Decision?
Democrats are calling for government refunds for American businesses due to the negative impacts on domestic industries. Shortly after the decision was public, Senator Elizabeth Warren posted on X in favor of “American people [getting] their money back.” On Monday, March 2nd, Senator Ron Wyden of Oregon, Ed Markey of Massachusetts and Jeanne Shaheen of New Hampshire will introduce a bill requiring American businesses to receive refunds for the $175 billion collectively paid in tariffs that were collected by the U.S. Customs and Border Protection.
As a note, the Supreme Court’s decision did not address whether refunds to businesses could or should be required. According to Treasury Scott Bessent, “[refunds] are not up to the administration – it is up to the lower court.”
What is the Trump Administration Saying and Doing?
On February 20, President Trump publicly disagreed with the court’s decision and expressed his “[shame] for certain members of the court […] for not having the courage to do what’s right for our country.” He went on to call the court “fools and lapdogs” who are “swayed by foreign interests” and “sleazeballs,” and praised the three dissenting justices. The Trump Administration issued an executive order to end the previous tariffs that were invalidated by the Court’s decision.
However, on February 21, President Trump invoked section 122 of the Trade Act of 1974 to “address fundamental international payment problems.” This law authorized the President to apply a new and temporary 10% worldwide tariff in order to “help […] rebalance the nation’s trade relationships.” The tariff was activated on February 24th and will remain for 150 days unless an extension is granted through Congressional legislation. Some goods are exempt from the February 24 tariff, including particular “critical minerals,” “passenger vehicles” and “informational materials.”
What Happens Next?
The Supreme Court’s decision invalidated Trump’s 2025 tariffs by determining that the IEEPA does not authorize the President to impose tariffs without congressional approval. This resulted in a slew of responses from both sides of the aisle and an immediate rollback of Liberation Day customs. However, President Trump quickly introduced a new set of worldwide tariffs under the Trade Act of 1974. It remains to be seen whether these new tariffs will remain in place after their designated 150-day lifecycle.
On March 5, 2026, 20 states began suing to challenge President Donald Trump’s recent global tariffs. The lawsuit was filed by eighteen Democratic attorneys general and two governors and was brought forth on the basis that imposing tariffs to shrink the national trade deficit is not authorized under Section 122 of the Trade Act.