Supreme Court Blocks Trump's IEEPA Tariffs: Dollar Slides, Stocks Rally

On February 20, 2026, the U.S. Supreme Court ruled 6-3 in Learning Resources, Inc. v. Trump that President Trump exceeded his authority under the International Emergency Economic Powers Act (IEEPA). Chief Justice John Roberts wrote the opinion, holding that IEEPA’s power to “regulate… importation” does not include imposing tariffs—a taxing function reserved exclusively for Congress under Article I, Section 8. Invoking the major questions doctrine, the Court struck down major tariffs: 25% on most Canadian and Mexican goods, 10-145% on Chinese imports, and at least 10% reciprocal tariffs on all trading partners. Tariffs under other laws, such as Section 232, remain in place.

U.S. equities surged on the news as reduced import costs boosted tariff-sensitive sectors. The Nasdaq climbed 1%, S&P 500 rose 0.7%, and Dow gained 0.5%, with consumer discretionary, industrials, tech, and retail names (including Amazon and Apple) leading gains. Treasury yields rose, with the 10-year note hitting 4.09%, reflecting growth optimism, while gold and silver prices increased amid policy uncertainty. President Trump quickly announced new temporary 10-15% global tariffs under alternative authorities, adding short-term volatility to already uncertain global trade dynamics.

The U.S. dollar weakened sharply, with the Dollar Index (DXY) falling below 97.75—down 0.25% initially and up to an estimated 1.8% in some projections—reversing earlier strength against G10 currencies. The euro rose +1.5% on eased EU trade pressures, USD/CNY dropped -1.2% (aiding Chinese exporters), and the dollar softened versus the yen, Swiss franc, and pound. Asian FX markets registered early jitters, as the ruling fueled expectations of softer trade revenue, potential Fed easing signals, and prolonged near-term dollar vulnerability.