On Friday, February 20, the U.S. Supreme Court ruled that the administration cannot use the International Emergency Economic Powers Act (IEEPA) to impose tariffs. The statute had served as the legal foundation for the “reciprocal tariffs” that hit nearly every country in April 2025.
The ruling does not come as a surprise. During oral arguments last November, several justices signaled skepticism about stretching IEEPA — a law designed for emergency economic sanctions — into a broad tariff authority. The Court ultimately agreed.
Some observers may interpret the decision as the beginning of the end for the current tariff regime. That conclusion would be premature. This is a legal setback, not a policy reversal.
The administration retains multiple alternative pathways to sustain tariffs. IEEPA was the fastest and most direct tool available, which explains its use at the outset of the April tariff expansion. But it is not the only option. Authorities tied to national security, persistent trade deficits, violations of trade agreements, and discriminatory trade practices remain viable. These mechanisms have been used before, and while novel applications may again invite litigation, they extend — rather than eliminate — the timeline of tariff durability.
The Supreme Court has reshaped the legal route. It has not altered the destination.
Existing tariff agreements also carry inertia. Countries that negotiated tariff arrangements with the United States now face a choice: reopen negotiations in hopes of improved terms or preserve existing agreements to maintain certainty. Recent history suggests governments will favor stability over escalation. With limited appetite for retaliatory measures beyond a handful of major trading partners, and with alternative U.S. tariff authorities still available, the lower-risk path for most governments is to preserve the status quo.
Importantly, sector-specific tariffs remain untouched by this ruling. Measures imposed under national security justifications — including those affecting steel and aluminum — continue in force. For manufacturers, energy developers, and companies building AI infrastructure, these sectoral tariffs carry real cost implications. Future carve-outs will hinge on bilateral negotiations, including discussions surrounding the renewal of agreements such as the United States-Mexico-Canada Agreement.
Some observers may see the ruling as the beginning of the end for tariffs. That conclusion would be premature.
The Court’s decision also reopens a constitutional conversation about Congress’s role. Historically, tariffs involved more direct legislative participation. The ruling explicitly underscored Congress’s authority in determining whether IEEPA can authorize tariff action. Yet to date, Congress has largely deferred to the executive branch. Meaningful reversal would require members of the majority party to challenge the administration’s economic strategy — a step that has proven politically difficult.
Most significant, however, is the administration’s strategic posture. Tariffs are not a tactical instrument; they are a core element of economic policy. That posture has been consistent since the administration’s first term, and there are no indications of retreat. As long as tariffs remain central to the White House’s economic framework, alternative legal mechanisms will be pursued to sustain them.
For businesses and economic development leaders, the practical conclusion is straightforward. The ruling injects fresh uncertainty, but it does not remove tariffs from the operating environment. Trade uncertainty spiked sharply last April before settling into a “new normal” in which tariffs became embedded assumptions in capital planning. This decision disrupts that equilibrium but does not eliminate the policy direction.
The ruling injects fresh uncertainty, but it does not remove tariffs from the operating environment.
Scenario planning should remain active. Companies evaluating supply chains, foreign direct investment, and site selection strategies should stress-test projects against multiple tariff pathways. Economic development organizations should likewise assess how alternative tariff authorities could affect targeted sectors and investment pipelines.
The Supreme Court has reshaped the legal route. It has not altered the destination. Tariffs are likely to remain a defining feature of the trade landscape for the foreseeable future — and planning should proceed accordingly.
