‘Trump will no longer be able to honor many of the “deals” he has negotiated’: How the Supreme Court crippled America’s negotiator in chief

Fortune

by Nick Lichtenberg

February 20, 2026

AI-Generated Deep Dive Summary

The U.S. Supreme Court has dealt a significant blow to President Donald Trump’s use of emergency powers to impose tariffs, declaring his actions under the International Emergency Economic Powers Act (IEEPA) fundamentally illegal. This ruling undermines a key component of Trump’s economic strategy and leaves him with fewer tools to negotiate trade deals. The court found that Trump had overstepped by using IEEPA to justify tariffs aimed at addressing issues like the balance of payments deficit and drug trafficking, which were not tied to genuine emergencies. The decision directly impacts Trump’s “Liberation Day” tariffs, which were implemented in April 2025 and generated $240 billion in revenue for the U.S. Treasury—a $180 billion increase compared to 2024. However, nine percentage points of the 14% effective tariff rate hike are now deemed illegal, leaving the government vulnerable to massive refund demands totaling approximately $120 billion, or 0.5% of U.S. GDP. While the court did not outline a repayment process, dissenting Justice Brett Kavanaugh warned that resolving this issue would likely be an administrative nightmare. The ruling significantly weakens Trump’s ability to enforce his trade policies. Previously, he used IEEPA to impose targeted, reciprocal tariffs on various trading partners, including Canada, China, and Mexico. Moving forward, Trump will need to rely on more restrictive legal frameworks like Section 122 of the 1974 Trade Act, which limits tariffs to a maximum of 15% and requires non-discriminatory rates for all trade partners. This means Trump’s previous strategy of negotiating individual deals with nations is no longer viable. The court’s decision also highlights the challenges Trump faces in recreating his prior tariff policies. While he could theoretically turn to older statutes like Section 232 of the 1962 Trade Expansion Act, which allows tariffs based on national security concerns, these

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Originally published on Fortune on 2/20/2026