The US Supreme Court ruled against President Trump's use of the 1977 International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs. The decision delivers a major setback to his trade policy and raises questions over deals with South Korea and others. Trump responded by ordering a new 10 percent global tariff.
The US Supreme Court ruled on February 20, 2026 (US time) in a 6-3 decision that President Trump's use of the 1977 International Emergency Economic Powers Act (IEEPA) to impose tariffs was unlawful. Chief Justice John Roberts wrote in the opinion, "We hold that IEEPA does not authorize the president to impose tariffs." The law allows regulation of commerce during national emergencies but lacks explicit reference to tariffs or duties.
Trump announced the reciprocal tariffs on April 2, 2025, dubbing it "Liberation Day," citing trade deficits as a national security threat. Tariffs on South Korean products were reduced from 25 percent to 15 percent under a bilateral deal where Seoul pledged $350 billion in US investments, among other commitments.
The ruling spares other measures like Section 232 tariffs but opens the door to refunds exceeding $175 billion. Penn Wharton Budget Model economists estimated potential refunds at over $175 billion. Businesses have filed more than 1,800 lawsuits, and the process is expected to be lengthy.
South Korea's presidential office, Cheong Wa Dae, stated it will review the decision and US position to respond in the national interest. Industry Minister Kim Jung-kwan said, "The overall export conditions secured through the Korea-US tariff agreement will largely remain intact." Trump immediately invoked Section 122 of the 1974 Trade Act to impose a 10 percent global tariff for 150 days, on top of existing duties, with exemptions for certain goods.
The decision adds uncertainty to Trump's trade agenda amid midterm elections and affordability concerns. South Korean firms are unlikely to alter US investment plans but are preparing for further measures.
