Supreme Court Kills Trump Tariffs, Leaving Congress to Sort It [US]

The US Supreme Court ruled 6-3 on 20 February 2026 that President Trump's sweeping global tariffs exceeded his authority under the International Emergency Economic Powers Act. The decision forces tariff policy back to Congress, where it belongs constitutionally, but probably won't go anywhere.

Republicans hold razor-thin majorities in both chambers. They need Democratic votes to pass trade legislation. Democrats have shown zero interest in helping, instead campaigning on tariffs as a "national sales tax" that raises costs for families and businesses. Some Republicans openly celebrated the court loss. Representative Don Bacon of Nebraska called broad tariffs "bad economics" in a social media post.

The House already passed legislation this month to end Trump's Canada tariffs. The Senate held symbolic votes disapproving several tariff decisions. House Speaker Mike Johnson said the White House and congressional leaders "will determine the best path forward in the coming weeks," which is politician-speak for "we have no idea."

What This Means for Your Clients

CFOs who built 2026 budgets around tariff-adjusted import costs now face uncertainty. Trump could invoke Section 232 national security authority or Section 301 industry-specific investigations, but both require lengthy processes and limit duty amounts. The White House said it will "quickly replace" the levies using other legal tools. That timeline is optimistic.

Accountants tracking customs compliance should monitor for hybrid bills that blend tariffs with offsetting tax credits. Democrats like Nancy Pelosi previously backed China tariffs for strategic leverage, so selective support remains possible. For now, assume legislative gridlock through midterms.

Accounting Implications

Under ASC 330, tariffs form part of inventory acquisition cost when probable and estimable. Fluctuating tariff regimes complicate valuation. If you're advising importers, model scenarios with and without duties. Goodwill impairment assessments (ASC 350) may require adjustment if tariff-driven margin compression persists.

The Supreme Court handed taxation power back to the branch that moves slowest. Plan accordingly.