On February 20, the Supreme Court of the United States ruled 6–3 that the president lacks authority under the International Emergency Economic Power Act (IEEPA) to impose “trafficking” tariffs on Canada, China, and Mexico or broad reciprocal tariffs worldwide. The Court did not address whether importers are entitled to refunds, and its decision will not take effect until a formal mandate is issued. That same day, President Trump signed an executive order ending the IEEPA-based tariffs, including measures targeting fentanyl trafficking, Venezuelan oil imports, and certain actions involving Brazil, Russia, Cuba, and Iran.
President Trump also invoked Section 122 of the Trade Act of 1974 to impose a 10% surcharge on nearly all imports, effective February 24, 2026, through July 24, 2026. Although he later stated the rate would increase to 15%, no executive order has yet formalized that change. The surcharge includes exemptions listed in Annex I and Annex II, as well as goods qualifying under the U.S.-Mexico-Canada Agreement and certain in-transit shipments meeting specified deadlines.
Section 122 has never previously been used and permits temporary tariffs to address serious U.S. balance-of-payments issues. If Congress does not extend the measure, the president could rely on other trade authorities, including Sections 301 and 232, or Section 338 of the Smoot-Hawley Act, which allows tariffs of up to 50% on countries deemed to discriminate against U.S. commerce. These actions introduce additional uncertainty for businesses and may require renegotiation of existing trade agreements.