The Supreme Court killed his tariffs. A judge ordered the refunds. US Customs said it cannot process them. And China is watching every second of it.
On February 20, 2026, the US Supreme Court ruled 6–3 that the International Emergency Economic Powers Act — the legal foundation Trump used to impose sweeping tariffs on virtually every trading partner since 2025 — does not grant the president authority to impose tariffs. The ruling struck down the IEEPA-based levies on China, Canada, Mexico, and nearly every other nation, terminating them effective February 24. Penn Wharton Budget Model estimated the potential refund liability at up to $175 billion.
On March 4, Judge Richard Eaton of the US Court of International Trade went further — ruling that every importer of record who paid IEEPA tariffs is entitled to refunds. US Customs and Border Protection confirmed in a court filing on March 6 that it has collected approximately $166 billion in IEEPA tariffs. It also admitted, without apparent embarrassment, that its systems were "not designed for a mass refund" of this scale and it does not yet have the ability to implement the order. The process could take years, trade lawyers warned.
Trump called the Supreme Court ruling "deeply disappointing" and pivoted immediately. On the same day as the decision, his administration invoked Section 122 of the Trade Act of 1974, imposing a 15% blanket tariff — the statutory maximum — for up to 150 days without congressional approval. It simultaneously launched Section 301 investigations against China and Section 232 national security reviews, laying the legal groundwork for a new, more durable tariff architecture. Trump also kept China tariffs related to the fentanyl-trafficking executive order in a legally ambiguous state, and his US Trade Representative confirmed that an active Section 301 investigation into China's compliance with the Phase One trade agreement remains ongoing.
The court did not end the trade war. It simply forced Washington to fight it with better paperwork.
China's Commerce Ministry called the Supreme Court ruling a vindication — stating that US tariff measures "violate both international trade rules and US domestic law." Chinese state media declared it a win. But Beijing's trade experts were measured in their response, noting that Trump still holds formidable legal tools and that his planned visit to Beijing from March 31 to April 2 to meet President Xi Jinping presents the best near-term opportunity for a more durable agreement. The overall tariff rate on Chinese imports will fall modestly under the Section 122 replacement, but the broader trade rivalry — over technology, rare earths, Taiwan, and strategic supply chains — remains entirely intact.
My Take
This is a significant institutional moment — the US Supreme Court reining in a president's unilateral trade powers is not trivial. But let us be precise about what it actually means: it forced Trump to fight the same trade war through slower, more legally defensible channels. Section 301, Section 232, and bilateral negotiation are all still on the table. The tariff war with China is not over. It has been professionalised. For India, which had its own 25% IEEPA penalty tariff on Russian oil purchases struck down as part of this ruling, there is modest relief. But Washington still has every legal tool it needs to pressure New Delhi on trade if it chooses to. The court ruled on the method, not the intent.
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