EU Rejects Higher US Tariffs After Supreme Court Ruling
Synopsis
The US Supreme Court ruled 6-3, that the International Emergency Economic Powers Act does not authorize presidential tariff powers, invalidating more than $160 billion in collected duties. Trump responded with a new 15% global surcharge under Section 122 of the Trade Act of 1974. The European Commission demanded Washington fully honor the July 2025 Turnberry trade framework, which caps tariffs on EU pharmaceuticals, autos, and semiconductors at 15%.
The US Supreme Court ruled 6-3, that IEEPA does not authorize tariff powers, invalidating over $160 billion in collected duties. Trump responded with a 15% global tariff under Section 122 of the Trade Act of 1974. The European Commission demanded Washington fully honor the July 2025 Turnberry trade agreement.
Key Highlights
- The Supreme Court ruled 6-3 on February 20 that IEEPA does not authorize presidential tariff powers, wiping out a projected $1.4 trillion in revenue and leaving $160 billion in refunds unresolved, per the Tax Foundation.
- Trump replaced the struck-down duties with a 15% global surcharge under Section 122 of the Trade Act of 1974, effective February 24, 2026, valid for up to 150 days without congressional approval.
- The July 2025 Turnberry Deal set a 15% all-inclusive ceiling on EU autos, pharma, and semiconductors; steel and aluminum remain at 50% under Section 232.
The US Supreme Court handed President Donald Trump a significant legal defeat on February 20, 2026, ruling 6-3 that he did not have the authority to impose tariffs under the International Emergency Economic Powers Act, a 1977 emergency law that had never been used to levy trade duties before Trump's presidency.
Chief Justice John Roberts, writing for the majority in Learning Resources Inc. v. Trump, was direct: the power to tax imports belongs to Congress, not the executive branch. The decision voided all tariffs imposed under IEEPA, including the sweeping "Liberation Day" reciprocal duties that had been at the core of Trump's second-term trade agenda.
$160 Billion Collected, $1.4 Trillion Projection Gone
The financial fallout from the ruling is substantial. According to the Tax Foundation, IEEPA-based tariffs had collected more than $160 billion since early 2025 and were expected to bring in $1.4 trillion through 2035. Whether importers who paid those duties will receive refunds remains unresolved. That question is now headed back to the US Court of International Trade for further proceedings.
Trump moved fast. Within hours of the ruling, he signed an executive order scrapping the IEEPA duties and announced a replacement 10% global tariff under Section 122 of the Trade Act of 1974, a separate law that allows the president to impose a temporary import surcharge of up to 15% for no more than 150 days, after which Congress must step in to renew it.
The next day, February 21, Trump raised the rate to the statutory ceiling of 15%, set to take effect at 12:01 a.m. on February 24. Treasury Secretary Scott Bessent said the new arrangement would deliver "virtually unchanged tariff revenue in 2026." Trump, visibly frustrated, called the ruling "deeply disappointing" and said he was "ashamed" of the justices who formed the majority.
What the Turnberry Deal Actually Says
At the center of the diplomatic friction is the Agreement on Reciprocal, Fair, and Balanced Trade, signed on July 27, 2025, at Trump's Turnberry golf resort in Scotland. Trump and European Commission President Ursula von der Leyen signed the framework, with full terms released on August 21, 2025.
The deal locks in a 15% all-inclusive tariff ceiling on most EU exports to the US, a major concession compared to rates Trump had previously threatened, including a 30% blanket tariff and levies of 250 to 300% on pharmaceuticals and semiconductors. EU auto tariffs were reduced from 27.5% to 15%, backdated to August 1, 2025, provided the EU passes legislation removing tariffs on American industrial goods.
Aircraft, generic pharmaceuticals, and critical raw materials were granted zero-tariff, most-favored-nation status from September 1, 2025. Steel and aluminum sit outside the deal entirely and continue to face 50% Section 232 tariffs.
The EU also agreed to buy $750 billion in US energy, covering oil, liquefied natural gas, and nuclear, along with at least $40 billion in US AI chips and $600 billion in broader US investments through 2028.
The Trade Relationship in Numbers
The stakes are significant on both sides. Eurostat data shows the EU exported €531.6 billion in goods to the US in 2024, up 5.5% from the previous year, while importing €333.4 billion, leaving a goods trade surplus of €198.2 billion in Europe's favor. Total EU-US goods and services trade stood at $1.5 trillion in 2024, a 5.7% increase from 2023, according to the US Office of the Trade Representative. The two economies together account for nearly 30% of global goods and services trade and 43% of world GDP, per EU Council data.
Pharmaceuticals are the most exposed sector on the EU side. They made up 22.5% of all EU goods exported to the US in 2024, followed by road vehicles at 9.6% and industrial machinery at 6.4%, according to Eurostat. Ongoing Section 232 investigations into pharmaceuticals and semiconductors mean both sectors face additional tariff risk, even if the 15% ceiling holds.
Brussels Holds Firm
The European Commission issued a pointed statement Sunday, saying EU products must continue to receive "the most competitive treatment, with no increases in tariffs beyond the clear and all-inclusive ceiling previously agreed." The message was unambiguous: a deal is a deal.
EU Trade Commissioner Maros Sefcovic held direct talks Saturday with US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick. Greer told CBS on Sunday that Washington would stand by its existing trade agreements and expected partners to do the same. European Central Bank President Christine Lagarde said the new tariff setup puts the Turnberry terms at risk and introduces measurable economic uncertainty across the bloc.
Bernd Lange, who chairs the European Parliament's trade committee, said he intends to propose suspending the formal ratification of the EU-US deal until Washington delivers a full legal assessment and clear guarantees on tariff continuity.
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Pooja Malik is a business journalist with over six years of experience covering startups, entrepreneurship, and emerging trends. She has previously worked with leading media platforms such as YourStory Media and BW BusinessWorld, where she reported on business, policy, and market developments. Currently, she serves as Editor at The Inspirepreneur Magazine, where she writes and edits stories across business, lifestyle, and travel, with a focus on clarity, accuracy, and reader relevance.
