U.S. stocks rise as Supreme Court blocks Trump tariffs

Supreme Court limits IEEPA tariffs; parts of Trump’s tariffs remain

On February 20, 2026, the U.S. Supreme Court struck down most of President Trump’s 2025 tariffs that relied on the International Emergency Economic Powers Act (IEEPA), ruling 6–3 that the statute does not authorize broad, peacetime import taxes, as reported by Investopedia. Tariff measures tethered to other laws, including actions tied to autos and steel, were not invalidated. The decision narrows the executive’s emergency trade powers while leaving space for targeted actions under separate authorities.

The ruling also raises the prospect of significant tariff refunds to importers; JPMorgan has estimated potential repayments in the $150–$200 billion range, as reported by the New York Post. Any reimbursement would depend on administrative and legal processes, and not all products or transactions will be treated the same. Businesses now face a period of recalculating landed costs and contracts as agencies and courts sort through implementation.

Why it matters: prices, inflation, CBO deficit and IMF outlook

Even if duties are rolled back or refunded, consumer prices may not adjust right away. Retailers and manufacturers typically work through existing inventories and contracts before lowering shelf prices, and some cost relief may be absorbed in margins rather than fully passed through.

According to the Congressional Budget Office, if the tariffs had remained in force they were projected to reduce the federal deficit by roughly $2.7–$3.3 trillion over ten years, with total savings potentially near $4 trillion when lower interest costs are included. The same analysis indicates longer-run economic costs, including slower real GDP growth (up to about 0.6%), higher consumer prices by roughly 1 percentage point by 2026, and a disproportionate burden on lower‑income households. Those trade‑offs frame the budget and inflation stakes around any replacement policy.

As reported by The Washington Post, global growth was projected near 2.8% in 2025 and about 3.0% in 2026, below historical norms, with the U.S. near 1.8% in 2025. Economists warn that tit‑for‑tat trade actions could further chill investment, strain supply chains, and unsettle financial conditions if uncertainty persists. “We all know there are no winners in a trade war,” said Pierre‑Olivier Gourinchas, chief economist at the International Monetary Fund.

Near-term effects: prices may lag, markets react, policy recalibration

Near term, price signals are likely to lag the ruling. Importers may see cash‑flow relief sooner than households as refund claims are processed, while consumer price indexes capture any pass‑through gradually and only to the extent competition forces it.

Financial markets responded quickly to the legal clarity, with a stock market rally following the decision even as broader conditions remained challenging, according to Investor’s Business Daily. Market focus also stayed on other catalysts, including geopolitical headlines and major earnings reports.

Policy is already recalibrating. In practice, administrations reassess tariff programs after major court decisions and may evaluate which actions can be sustained under existing trade statutes or through legislation.

What legal paths remain: Sections 232/301 and congressional action

As reported by Notus, advisers are weighing next steps that could rely on Section 232 (national security) and Section 301 (unfair trade practices), alongside consultations on Capitol Hill. Those avenues can support narrower, case‑specific actions compared with the broad powers the Court curtailed under IEEPA.

Some trade‑law experts caution that expansive use of emergency or catch‑all authorities invites legal and business uncertainty. “It risks giving the executive too much unrestrained power to alter trade policy daily,” said Scott Lincicome of the Cato Institute.