The Supreme Court ruled on February 20 that the Trump Administration cannot utilize the 1977 International Emergency Economic Powers Act (IEEPA) to impose tariffs, effectively striking down much of the president’s tariff policy. In the ruling, the majority stated the IEEPA “does not authorize the president to impose tariffs” and affirmed that the Constitution gives Congress that authority.
But that doesn’t mean tariffs are going away. Many existing tariffs, including those on steel, aluminum, auto parts, wood, and copper parts are not affected by the ruling. And the president has indicated he will pursue other legal authorities to continue to wield tariffs as an economic and foreign policy tool.
Nor does it mean that all of the estimated $175 billion1 in tariff revenue collected under IEEPA will be refunded. Says Greg Lowman, vice president of advocacy and policy communications at Fidelity: “There is still a lot of uncertainty.”
Here’s what investors need to know about the Supreme Court’s tariff decision.
Supreme Court strikes down tariffs
In the 6-3 ruling authored by Chief Justice Roberts, the Supreme Court stated, “The president asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope. In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorization to exercise it.” Essentially, this means that the Trump administration cannot use IEEPA to implement tariffs.
The SCOTUS ruling did not address whether tariffs that have already been paid would need to be refunded. Thousands of companies around the world have filed lawsuits seeking tariff refunds. In his dissenting opinion, Justice Kavanaugh said the refund process may be a “mess” and that, even if importers are refunded, those savings may not trickle down to customers.
Likewise, it’s unclear how the administration will use other statutes to pursue its trade policy goals, or the status of existing trade deals made under IEPPA. For instance, the Trump administration could attempt to use Section 122 of the Trade Act of 1974, which enables a president to impose up to 15% tariffs on countries with trade deficits for up to 150 days. Says Lowman: “This could be used as a short-term bridge as the administration explores other legal options (see table) to implement its tariff policy.”
An overview of U.S. laws governing trade and tariffs policy
| Law | Focus | Purpose | Maximum rate/ duration | Utilization requirement | Notable limits/history |
|---|---|---|---|---|---|
| IEEPA | Any country or global | National security | Not specified | Not specified | Struck down by SCOTUS |
| Section 122 of the Trade Act of 1974 | Any country or global | Balance of payments deficit | Up to 15%, 150 days | No agency required | Used in response to trade deficits; 150-day limit |
| Section 301 of the Trade Act of 1974 | Any country | Unfair trade practices | Discretionary (President/USTR) | Formal investigation required | Used for China tariffs; 4-year review |
| Section 338 of the Tariff Act of 1930 | Any country | Discrimination against U.S. trade | Up to 50% | At discretion of president | Used in 1930s/1940s; 30-day limit |
| Section 232 of the Trade Expansion Act of 1962 | Any country or global | National security (commerce) | President’s discretion | Based on commerce report | Not affected by SCOTUS decision |
Source: Fidelity Investments, as of 1/14/26.
There is also the matter of importers who were required by the US Customs and Border Protection to lay out bonds and collateral to guarantee payment of trade duties. Many US importers have had to scramble to meet these requirements and those costs may be folded into subsequent tariff refund lawsuits.
Stock market reaction to Supreme Court tariff ruling
US markets initially rebounded in the wake of the ruling, after softer-than-expected fourth quarter GDP data pressured stocks at the market open. Markets closed higher, although many investors continue to wonder about the extent to which the ruling will impact markets. Meanwhile, US Treasury yields ticked up slightly.
Jurrien Timmer, director of global macro at Fidelity, categorized the market’s response as sanguine. “Investors were broadly expecting this ruling,” Timmer says. “Moreover, there’s an expectation that the administration will attempt to use other tools to impose its tariff policy. In sum, I don’t think today’s ruling is much of a market moving event.”
To the extent that there is some short-term market impact, there may be a mild net positive for consumer stocks, such as apparel makers. “If we assume that roughly 60% of tariffs are paid by the consumer, that could benefit consumer stocks to some degree,” Timmer says. “But I don’t think the inflationary burden of tariffs on the consumer has been as significant as we may have thought a year ago. So any unwinding may also have a minimal impact on prices as well as interest rates.”
What about profits for other parts of the market? “The effect of the ruling could improve margins across sectors and industries to some extent,” Timmer adds. “With that said, in addition to the administration potentially using other provisions to enact its intended policy, it may not be easy to see the extent of the SCOTUS decision's impact on earnings because there are so many other significant factors at play right now—like the artificial intelligence wave, geopolitical conflicts, inflation, rates, etc.”
What the tariff ruling means for investors
While the SCOTUS ruling may have implications for many businesses, the overall impact to the economy, consumers, and investors may be marginal. Of course, any future changes to tariffs, trade deals, and other related policies are worth monitoring. But for now, investors should feel confident that today’s SCOTUS ruling should not significantly alter their long-term plans.