On February 20, 2026, the U.S. Supreme Court issued a split 6–3 decision in Learning Resources, Inc. v. Trump, ruling that the President does not have authority under the International Emergency Economic Powers Act (IEEPA) to impose tariffs. The IEEPA provides the president the authority to regulate commerce during national emergencies created by foreign threats, however the court held that this law does not give the president the authority to levy tariffs. The majority opinion emphasized that tariffs are a form of taxation, a power that belongs to Congress not the Executive Branch.
Because the ruling blocks the specific tariffs imposed under IEEPA, businesses may see reduced import costs, which in turn may help stabilize pricing, supply chains, and local economic activity. This may provide temporary fiscal breathing room for governments affected by higher import-related costs.
This decision does not prevent the President from using other existing statutory authorities to impose tariffs. The dissent explicitly noted that several other tariff-related statutes remain available, and these could justify many of the tariffs that were issued. The President could look to a different law to impose similar tariffs or Congress could also look to legislatively impose certain tariffs, meaning long-term stability is not guaranteed.
Additionally, since the Court ruled the tariffs were illegally imposed, businesses may seek refunds for tariffs already paid. This could launch additional litigation and create ripple effects in federal revenue streams and economic activity.
The economic impacts of tariffs can filter down to state and local governments, particularly as it relates to budget uncertainty (read more here). The impacts of the tariffs were more acutely felt by some jurisdictions more than others, particularly in port, manufacturing and trade-heavy jurisdictions. While the ruling in Learning Resources, Inc v. Trump will reduce the amount of tariffs currently being imposed, government finance officers should monitor policy developments and be aware that this ruling is not indicative of potential future federal tariff action.