Separation of Powers and the Impact of Commercial Uncertainty Following the SCOTUS Tariff Ruling

On the 20^th of February 2026, the Supreme Court of the United States of America (SCOTUS) delivered a landmark ruling in Learning Resources, Inc. v. Trump. This ruling strikes down the administration’s use of the International Emergency Economic Powers Act (IEEPA) to impose sweeping global tariffs since 2025.

In the 6 to 3 divided decision that broke the usual conservative-liberal divide, the SCOTUS ruled that President Trump had exceeded his constitutional authority as head of the executive branch in its use of the IEEPA. From a legal perspective, this landmark judgement had reasserted Congress’s executive “powers of the purse” whilst preventing executive overreach.

This headline judgement is not just merely a political earthquake for the executives in power, but it stems into a fundamental shift in the legal risk profile of international trade for the American commercial landscape.

The ruling was historical for its composition where Chief Justice Roberts and Trump appointees Justices Gorsuch and Barrett joined the three liberal justices to block the executive’s plans. The majority ruling applied the “Major Questions Doctrine”, which in short, is a legal principle stating that if an executive action has vast and significant economic changes, the President of the United States (POTUS) must have clear and explicit permission from the US legislative branch – Congress.

The SCOTUS held that “regulating” commerce under the IEEPA does not inherently or anyway directly include the power to “tax” it via global trade tariffs which President Trump’s administration imposed. The executive branch moved into territory the SCOTUS deemed constitutionally reserved for the legislative branch when it attempted to use an emergency national security law to reshape the nation’s trade regime.

From the perspective of businesses, the most immediate effect on the table is the refund potential. An estimated $175 billion in tariff revenue has been collected under IEEPA authorities over the past year of its implementation. The ruling provides an opportunity as importers of record are now scrambling to begin evaluating legal pathways to recoup these payments. As a result of this, a secondary market for “refund rights” has been created with hedge funds already moving up quickly to buy up claims from smaller businesses in exchange for immediate liquidity.

Some readers may think that this would be the end of it as the final ruling by the apex court has solidified this into precedent. But in reality, it did not and will not legally end the administration’s global trade offensive. Within just hours of the news, the White House has pivoted to Section 122 of the Trade Act of 1974 and announced a “temporary” 10% (which later increased to 15%) global import surcharge.

Looking at this from a business strategy’s perspective, these new measures will bring about three upfront challenges. Firstly, Section 122 tariffs are deemed as “sunset clauses” because they are limited to a maximum of 150 days unless Congress votes to extend them (which is unlikely to happen). This creates a high cliff for supply chain managers who are painfully trying to forecast costs beyond mid-2026. Secondly, the new regime allows for exemptions on “national interest” grounds such as critical minerals and pharmaceuticals imports. Business giants must now pivot their government affairs strategies to secure these potential carve-outs to secure their businesses’ interests. Thirdly, this creates a front running effect where companies immediately accelerate imports to build a strong and formidable inventory before the new Section 122 rates take full effect or before potential, and highly likely retaliatory measures from trading partners like the EU and the UK.

In conclusion, the historical ruling is a great reminder to all of us of the important role regulatory stability plays in the commercial world. For US businesses, the win of lower IEEPA tariffs is immediately balanced off with the loss of predictability following Section 122’s introduction.