The U.S. Supreme Court delivered a significant ruling on February 20, declaring that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful. Chief Justice John Roberts stated the 1977 law does not grant the president authority to impose taxes or tariffs, a power reserved for Congress.
Within hours, the administration pivoted. President Donald Trump invoked Section 122 of the Trade Act of 1974, introducing a temporary 10% tariff on imports effective February 24, with the option to raise it to the legal ceiling of 15%. This move largely restored the effective U.S. tariff rate to pre-ruling levels near 12%, limiting immediate trade disruption.
However, this provision acts only as a 150-day stopgap, set to expire on July 24, 2026, creating a looming deadline for markets. The policy uncertainty fueled a safe-haven rally in gold, which rose more than 2% to a three-week high near $5,257 per ounce.
President Trump later reacted strongly to the Supreme Court decision, expressing "extreme disappointment." He argued the ruling could lead to "hundreds of billions of dollars" being refunded to foreign countries and companies he claims have been "exploiting" the U.S., and questioned whether the case could be retried or reconsidered.
Equity markets reacted cautiously, with the S&P 500 slipping about 1%. The U.S. dollar index (DXY) softened slightly, hovering near 97.8 as markets juggle variables including potential tariff refund litigation, stalled trade frameworks, and the economic impact of a recent government shutdown. Investors are now watching the 150-day clock, as policy durability will shape positioning across asset classes.
