Mumbai : SBI Research Report - In a landmark 6-3 decision issued on February 20, 2026, the US Supreme Court invalidated the administration's use of the International Emergency Economic Powers Act (IEEPA) of 1977 to impose broad trade tariffs. The Court’s ruling emphasized that under the US Constitution, the power to lay and collect duties resides solely with Congress during peacetime. Legal experts noted that the decision could create significant uncertainty regarding trillions of dollars in existing trade deals with nations such as China, Japan, and the United Kingdom. Furthermore, the case has been referred back to the Court of International Trade to determine the extent of excess tariffs collected estimated between $\$160$ to $\$175$ billion which may now be subject to refund.
Despite this judicial setback, the US Executive branch has immediately pivoted to alternative statutory authorities to maintain its trade stance. Invoking Section 122 of the 1974 Trade Act for the first time in history, the administration has imposed a new 10% global tariff on all imports for a temporary period of 150 days, effective from February 24, 2026. This measure, intended to address US balance of payment issues, can be extended only through Congressional legislation. While goods from Canada and Mexico complying with the USMCA are exempt, other nations, including India, continue to face specific sector-based tariffs under Section 232 on commodities like steel and aluminum.
