On Friday, February 20, 2026, the Supreme Court finally announced their long-awaited “expedited” decision. In a six-to-three ruling with a majority opinion written by Chief Justice Roberts, the Court ruled against President Trump in his interpretation of IEEPA.
This means that the tariffs in question are deemed improper, and the government must stop collecting them.
What does this mean?
This ruling – and its effects on both politics and the economy – will provide material for many books, so this piece will only attempt to provide some preliminary information to those who may find the news coverage incomplete. So here are a few of the main points:
What’s Affected by the Ruling?
President Trump has made use of a number of different tariff measures, across his two terms.
The first major group was the broad swath of 25% and 7.5% tariffs issued against Chinese goods in his first term, across four long lists of products, under what is known as Section 301. These remain in force.
President Trump has also used Section 232 widely, a rule that requires focus on specific materials. We therefore have high Section 232 tariffs on a number of materials, with the most significant being steel, copper and aluminum. These can apply to both raw materials (pipe, tube, plate, sheet, wire, rod, etc.) and to some products and components made from them. These also remain in force.
This ruling only focused on President Trump’s expansive use of IEEPA, in two specific ways: his “fentanyl tariffs” against China, Canada and Mexico, and his “reciprocal tariffs” against virtually the entire world. These are the tariffs that have been struck down.
In this decision, SCOTUS confirmed the President’s ability to use these many other approaches and more; it only declared that he cannot use IEEPA this way.
Reporters who have jumped on this story to say “The Trump tariffs have been struck down!” are exaggerating. The fentanyl and reciprocal tariffs are the ones that have been rejected (and he is already working to replace some of these with other, similar programs).
What Exactly Are Tariffs?
A tariff is a tax on an import. Most countries start with a book of standard duty rates that every imported good receives, and then they stack other tariffs, taxes or fees on top of that one.
So, in the USA, all imported goods are first subject to a duty (which can range from zero to fifty percent, though most are under 5%). Then on top of that, there are various fees, anti-dumping duties, excise taxes and other punitive tariffs.
Most of these are “ad valorum” – that is, a percentage rate based on the total value that the importer paid for the goods. So for example, if an American importer paid a foreign vendor $100 for goods made in China, the shipment might be assessed a 5% duty, plus a 25% punitive Sec 301 tariff, plus almost a half percent in other fees, plus a 10% fentanyl tariff and a 10% reciprocal tariff, for a total Customs collection of just under $50.50 on that $100 importation. This $100 shipment therefore costs this importer $150.50 (not counting such other costs as international freight and Customs brokerage fees); the hope is that this higher price will drive the importer to find a different vendor in another country with a lower tariff rate, or, better yet, a supplier here in the U.S., so he’s entirely free of the tariff issue.
With the IEEPA tariffs struck down, that shipment is now free of the 10% reciprocal and 10% fentanyl tariff, but the rest of them remain, so this $100 example shipment will still result in $30.50 in payments to Customs (plus the new tariffs that the Administration is adding to replace the ones struck down).
Also worth noting – while most of the Customs valuation rules are standardized globally, we do have one important difference: the United States only assesses duties and tariffs on the value of the goods, while most other countries assess their duties and tariffs on the delivered price. This means that in the USA, the international transportation is not dutiable, but when the situation is reversed and we’re the exporter, our foreign customers usually pay their countries a figure based on the delivered price, thus taxing the freight charges as well as the goods themselves.
In short, the removal of the IEEPA tariffs will have an effect, but it’s not like we have suddenly become a duty-free country either. Some charges are removed, many others remain.
What Should Importers Do?
The majority decision did not settle the question of what would qualify for refunds, so it is assumed that importers will just act immediately, working with their Customs brokers, to immediately stop paying the IEEPA tariffs on current and future entries, and to file petitions and protests (two distinct processes, depending on whether Customs has liquidated a past import entry or not) for refunds on import shipments already paid. It is conceivable that some of these will end up in court; all the more reason to start the process immediately.
But it’s the long term changes that are most important. Some importers foolishly postponed prioritizing re-shoring or on-shoring projects, and now that these tariffs have been overturned, such procrastinators will likely think the crisis is over, and abandon the idea. That would be the worst mistake.
Importers should recognize that the replacements for the IEEPA tariffs will likely be far more painful than the IEEPA tariffs were, so they should double down on the effort to correct their sourcing strategies. Domestic vendors may be ten, twenty, thirty, even forty percent more expensive than Chinese vendors. Assume that the tariffs will more than equalize that difference. Step one is to get out of China; if low cost country (LCC) sourcing is imperative, find a different country. But step two, as soon as practical, as soon as possible, is to increase domestic sourcing. Most businesses just assume there’s no competitive domestic source, so they go straight to China; it’s time to stop that knee-jerk assuming, and start seeing what’s available at home.
The Path Forward
The Trump administration anticipated this result, and they were ready with a replacement. Other tariffs will swiftly take the place of the IEEPA tariffs, in an effort to protect the wide array of deals that have been struck with other countries over the past year.
Perhaps those who have been rooting for the IEEPA case to go this way didn’t see the value in the lowering of foreign duty rates to boost American exports; perhaps they didn’t see the value in lowering foreign trade barriers and increasing foreign support for the building of domestic plants here in the United States. But the Trump administration does see the value of these deals, and they will do everything they can to protect the many victories at the negotiation table that were in place before the Court struck down their foundation.
We should assume that the Trump administration will continue to try to write rules that increase domestic manufacturing and discourage importing. They will use tariffs, quotas, fees, whatever it takes to boost the American manufacturing community. So the faster the American manufacturing community can insulate itself from the problems and costs of importing, by building or finding cost-effective domestic sources, the better.
But it is also critical that the American public notes the limits of the federal government. The President can levy tariffs or set quotas on imported goods, the administration can slash the federal regulatory burden on American manufacturing, and Congress can cut federal tax rates – but there are also terrible costs set by the states, which the federal government can do nothing to lessen.
America needs our state governments to step up to the plate, quickly. Even as federal regulations and tax policy try to help make domestic products more competitive, there are too many industrial states that thwart the effort with their own destructive policies.
We need the corrupt, tax-and-spend state governments of California and New York, Illinois and Michigan, Massachusetts and New Jersey, and too many more, to join this effort as quickly as possible. If the industrial states copy the federal government, giving a break to their own manufacturing plants and laborers after too many years of shaking them down, then America will indeed be competitive on most products again.
We need the Pritzkers and Newsoms and Whitmers and Hochuls of the world – and their allies in their state houses, municipalities and counties – to see the light on tax and regulatory policy.
And if they don’t – we need them gone.
America can’t be rebuilt as long as there are so many anti-progress, anti-growth politicians at the state and local level, destroying the foundation every time Americans start building again.
Copyright 2026 John F. Di Leo
John F. Di Leo is a Chicagoland-based international transportation and trade compliance trainer and consultant. President of the Ethnic American Council in the 1980s and Chairman of the Milwaukee County Republican Party in the 1990s, his book on vote fraud (The Tales of Little Pavel), his political satires on the Biden-Harris administration (Evening Soup with Basement Joe, Volumes I, II, and III), and his first nonfiction book, “Current Events and the Issues of Our Age,” are all available in either eBook or paperback, only on Amazon. He’s recently begun an eponymous podcast, and his business consulting / trade compliance training practice is available either in person or by webinar.
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