New Delhi: The US Supreme Court on February 20 ruled that President Donald Trump overstepped his authority while imposing global tariffs last year. In a 6-3 decision, the court said the US president could not use the International Emergency Economic Powers Act (IEEPA) to impose tariffs on imports from nearly every country.
The judgment could lead to about $130 billion in tariff refunds, but getting the money back may take years in court. Hours after the court’s decision, Trump signed a declaration under another law (Section 122 of the Trade Act of 1974), allowing him to impose a new temporary 10 percent global tariff. On February 21, he announced that he would raise this tariff to 15 percent.
This raises questions about the future of tariffs and which goods and countries will be affected.
Which tariffs were declared illegal and why?
The Supreme Court decision applies only to tariffs imposed under the IEEPA. The law gives the president authority to control trade during emergencies. Trump first used this law in February 2025 to impose tariffs on goods from China, Mexico and Canada, citing fentanyl trafficking as an emergency.
Later, on what he called “Liberation Day”, he increased tariffs on almost all countries. The rates ranged from 10 to 50 percent, and he described the US trade deficit as an “extraordinary and unusual threat”. The court said the constitutional power to impose such tariffs lies with the US Congress, not the president, and that IEEPA’s purpose is not revenue generation.
However, some tariffs continue to be unaffected. Industry-specific duties on steel, aluminum, timber and automobiles imposed under Section 232 of the Trade Expansion Act of 1962 for national security reasons continue despite the court ruling.
Trump imposes new tariffs under Section 122
Following the court decision, Trump invoked the rarely used Section 122 to impose a 10 percent global tariff on all imports to the United States. On Truth Social, he later announced he would raise this tariff to 15 percent. “Yesterday’s Supreme Court decision on tariffs is null and extremely anti-American. As president, I am raising the 10 percent worldwide tariff to 15 percent,” he posted.
Section 122 allows the president to impose tariffs up to 15 percent for 150 days, after which Congressional approval is required. Some analysts say that Trump could try to reapply the tariff by declaring another emergency if the period ends.
According to the White House, the president is using Section 122 to address basic international payment issues and rebalance US trade.
Other laws, including Section 301 of the Trade Act of 1974, also give the US trade representative the authority to investigate foreign trade practices and impose tariffs if deemed discriminatory or unfair.
Tariffs under Section 232 also continue to be an option as they target imports considered a national security risk, though investigations take time. Economists say once tariffs are applied, challenging and removing them is a lengthy process.
US Treasury Secretary Scott Bessant has said combining tariffs under Sections 122, 232 and 301 will have “almost no impact on tariff revenue in 2026” and may offset losses from IEEPA tariffs.
Will tariff refunds be issued?
Trump argued that tariffs strengthen the US economy by adding revenue to the treasury. Reports indicate that the US government has already collected billions of dollars (around $130 billion) from importers.
The Supreme Court ruled the IEEPA tariffs illegal but did not specify how refunds will be issued. The US president said during media interactions that any refund could be tied up in years of legal disputes.
Secretary Bessant echoed the same, saying the refund issue could take years to resolve. The US International Trade Court is expected to handle these cases. Experts say that if refunds are granted, most will likely go to large corporations as small companies often lack resources to handle the complex process.
According to analysts, over 1,000 companies had already requested tariff refunds even before the ruling and that the number could increase. They called for the White House to issue $1,700 refund checks to every American household for illegal tariffs.
Trump has publicly discussed this possibility multiple times.
Which tariffs are presently in effect?
The White House has said that from February 24, the new 10 percent tariff will apply to almost all imports, regardless of the country of origin. Countries with trade agreements with the United States, including India, the United Kingdom and European Union members, will also face the Section 122 global tariff, not the previous rates.
The US administration expects these countries to continue following concessions agreed under their trade arrangements.
Some products will be exempted for US economic needs or administrative reasons. These include critical minerals, metals, energy products, natural resources, food crops, pharmaceuticals, electronics, cars and trucks and aerospace products. Books, donations and personal baggage will also stay untaxed. Exemptions are not clearly defined for many categories.
Products under the US-Mexico-Canada Agreement (USMCA) are also exempt. The United States has previously said that exemptions keep Canada’s tariffs relatively low. Similarly, textiles and apparel from Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua under the DR-CAFTA will be tariff-free.
Trump has said he will maintain tariffs on low-cost imports, having already ended the ‘de minimis’ exemption for items valued at $800 or less.
