Supreme Court Strikes Down Trump IEEPA Tariffs: Stock Market Today, Section 122 Response & What Comes Next

The Supreme Court just delivered the biggest legal rebuke of the Trump presidency's economic agenda. In a landmark 6-3 ruling, SCOTUS struck down the Trump tariffs imposed under the International Emergency Economic Powers Act (IEEPA) — sending shockwaves through the Dow Jones, S&P 500, and Nasdaq Composite, and forcing the White House to pivot immediately to new tariff authority.

The SCOTUS Tariff Ruling Explained: Learning Resources v. Trump

The Supreme Court ruled on February 20, 2026, that IEEPA does not authorize the president to impose tariffs, in the case Learning Resources Inc. v. Trump. Chief Justice John Roberts was joined by Justices Sotomayor, Kagan, Gorsuch, Barrett, and Jackson. Justices Thomas, Kavanaugh, and Alito dissented.

Chief Justice Roberts wrote that the two words IEEPA uses — "regulate" and "importation" — cannot bear the weight of granting the president independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time. "IEEPA," Roberts added, "contains no reference to tariffs or duties." Moreover, "until now no President has read IEEPA to confer such power."

IEEPA Tariffs Struck Down — How Much Money Was Collected?

The ruling means that Trump's IEEPA tariffs — including the "Liberation Day" tariffs — are illegal. Those tariffs had raised more than $160 billion for the federal government through February 20, 2026, and would have raised $1.4 trillion from 2026 through 2035.

The Supreme Court did not weigh in on whether or how the federal government should provide refunds to importers who paid the tariffs, estimated at more than $200 billion. Justice Brett Kavanaugh, in dissent, suggested the federal government "may be required to refund billions of dollars to importers."

Trump Responds: Section 122 Tariffs Replace IEEPA Tariffs

Trump did not wait. Hours after the SCOTUS tariff ruling, he moved to a new legal authority.

Trump announced he would impose tariffs under Section 122 of the Trade Act of 1974 to replace the IEEPA tariffs invalidated by the Supreme Court. The new global tariffs were set at 10 percent initially. Section 122 provides for tariffs of up to 15 percent and is time-limited to 150 days.

Trump then raised the rate further on Saturday, writing: "I will be, effective immediately, raising the 10% Worldwide Tariff... to the fully allowed, and legally tested, 15% level."

Who Voted How: Supreme Court Justices Breakdown

Stock Market Today: Dow Jones, S&P 500, Nasdaq React

Markets went on a rollercoaster. On Friday, February 20, the S&P 500 advanced 0.69% and closed at 6,909.51, the Nasdaq Composite gained 0.9% and settled at 22,886.07, and the Dow Jones Industrial Average added 230.81 points, or 0.47%, ending at 49,625.97.

The rally reversed sharply after Trump hiked tariffs to 15% over the weekend. The Dow dropped 771.92 points to 48,854.05, the Nasdaq fell 326.07 points to 22,560.79, and the S&P 500 declined 79.72 points to 6,829.79. Gold surged more than 2% to approximately $5,200 as investors fled to safe havens.

What Comes Next: Refunds, Trade Deals, and Uncertainty

U.S. Customs and Border Protection cannot cease collecting tariffs based solely on the Supreme Court's opinion — a directive from the executive branch is required. Trump has also announced plans to launch Section 301 Trade Act investigations during the 150-day Section 122 window, which could form the legal basis for new, uncapped tariffs after that period expires.

Evercore ISI analysts noted: "The process of sorting out refunds will likely take months and be a legal and bureaucratic morass in its own right." The EU rejected any hike in tariffs following Trump's 15% announcement, saying "a deal is a deal."