The U.S. Supreme Court delivered a landmark ruling on February 20, 2026, striking down the core framework of tariffs imposed on Canadian steel and aluminum during the Trump administration. The 6-3 decision declared that the executive branch overstepped its statutory authority by invoking Section 232 of the Trade Expansion Act of 1962 to impose broad tariffs on allies like Canada for national security reasons. Justice Elena Kagan, writing for the majority, stated the law required a clearer nexus to genuine defense emergencies.
The immediate market reaction was a sharp sell-off in the USD/CAD currency pair. The pair plummeted from near 1.3650 to 1.3520, marking one of its largest single-day drops of the year. Analysts attributed the Canadian dollar's surge to the removal of a major trade barrier, with nearly 75% of Canadian exports destined for the United States. Dr. Anya Sharma, Chief Economist at Global Forex Insights, noted, "The Canadian dollar is a commodity currency, and easier access to its largest export market is unequivocally positive."
Forex strategists revised forecasts, with Michael Chen of Polaris Capital lowering his year-end USD/CAD target to 1.34 from 1.37. The ruling's ripple effects were seen in correlated assets: the CAD/JPY pair gained, U.S. Steel (X) stock fell 4.2% on anticipated competition, and the Canadian TSX index saw gains in materials sectors.
Concurrently, Bitcoin (BTC) exhibited choppy, range-bound price action, largely ignoring the macro development. Trading around $67,000, BTC price action remained rooted in a firm range, with analysts consensus seeing bears "in control." The event was overshadowed for crypto traders by earlier U.S. macro data, which showed the Personal Consumption Expenditures (PCE) Index hitting 3%—its highest since late 2023—and Q4 2025 GDP growth coming in at a lower-than-expected 1.4%. This data further reduced market hopes for a Federal Reserve interest rate cut in March, with the CME FedWatch Tool showing a mere 4% probability.
Trader and analyst Rekt Capital emphasized the technical importance of Bitcoin's 200-week exponential moving average (EMA), warning that a weekly close below it followed by a bearish retest could spur "the next phase of Bearish Acceleration." The broader ruling sets a legal precedent that could affect other tariff actions and reasserts congressional authority over trade policy, with potential long-term implications for North American trade dynamics and input cost inflation.
