Supreme Court rejects Trump's tariffs. Here's what the president could try to use instead.

By Robert Schroeder and Victor Reklaitis

 U.S. stocks rise as justices rule on Trump's signature economic policy 

 The Supreme Court has struck down a key segment of President Donald Trump's tariffs, forcing the White House to turn to other authorities to carry out its economic policies. 

 The U.S. Supreme Court on Friday dealt a blow to President Donald Trump's economic agenda, saying he exceeded his authority in using the International Emergency Economic Powers Act to justify a swath of his tariffs. 

 The majority opinion from the high court, written by Chief Justice John Roberts, the 1977 law gives the president a "lengthy list of specific powers," but there is not "any mention of tariffs or duties." 

 "Had Congress intended to convey the distinct and extraordinary power to impose tariffs, it would have done so expressly, as it consistently has in other tariff statutes," says the opinion, which was supported by a 6-3 majority of the court. Justices Samuel Alito, Brett Kavanaugh and Clarence Thomas dissented. 

 Yet the Supreme Court's decision does not mean that Trump is now entirely unable to slap tariffs on other countries' products. The president, for example, has at his disposal Section 232 of the Trade Expansion Act of 1962, the same tool he used to impose import taxes on steel, aluminum, lumber and furniture, and his sector-based tariffs were not getting addressed in the Supreme Court case. There is also Section 301 of the Trade Act of 1974, used during Trump's first term to put tariffs on Chinese goods. 

 U.S. Treasury Secretary Scott Bessent has said the Trump administration is ready to maintain its levies through those other avenues. 

 The ruling by the Supreme Court, which has a 6-3 conservative majority, has come after lower courts found that Trump exceeded his authority in using the International Emergency Economic Powers Act to justify his many country-specific tariffs. The court heard oral arguments in the case on Nov. 5, and the likelihood of a ruling in Trump's favor dropped at that time, as some conservative justices' questions for the president's attorney were perceived to be especially skeptical. 

 Opponents of the IEEPA tariffs have emphasized that the law doesn't explicitly mention tariffs in its text and say that no president has ever used IEEPA to impose tariffs. 

 Trump has vehemently defended his tariffs and claimed that the U.S. economy would be "immeasurably hurt" if the Supreme Court struck them down. He argued during a "60 Minutes" interview that aired in November that the tariffs helped push stocks to record highs and that the U.S. economy "will go to hell" if they are rejected by the court. 

 The Supreme Court's rejection of the IEEPA tariffs may now trigger a complicated process of refunding the billions of dollars paid to the U.S. government. 

 The rejection of the IEEPA tariffs, plus Trump's expected use of other tariff powers, could cause "a lot of uncertainty" and amount to a negative for the economy, according to a top Federal Reserve official. 

 "It will cause a lot of uncertainty about which tariffs are sticking and which aren't," Minneapolis Fed President Neel Kashkari told CNBC earlier this year. "I do think it could lead to a burst of uncertainty which could be a damper on activity," he said. 

 Market strategists have been divided on what the court's much-anticipated decision would mean for stocks, as MarketWatch has reported. Some forecasters have said tossing out the IEEPA tariffs would mean more uncertainty, which would weigh on stocks, while others have said eliminating the import taxes would boost both economic growth and equities. 

 U.S. stocks SPX jumped following the court's ruling, but then erased much of their gain and recently were up but off their session peak. The yield for the 10-year Treasury note BX:TMUBMUSD10Y also was higher. 

 Ahead of the decision by the Supreme Court, Raymond James analysts said if there were "a ruling striking down the tariffs, we will be watching for near-term reactions in tariff-exposed equities (e.g., retail XRT) that is ultimately tempered by the reality that tariffs are here to stay." 

 "We have consistently highlighted that other tariff authorities are available to the president, and the administration has confirmed its intent to use them," the analysts said in a note. 

 -Robert Schroeder -Victor Reklaitis 

 This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. 

(END) Dow Jones Newswires

02-20-26 1025ET

Copyright © 2026 Dow Jones & Company, Inc.