February 20, 2026, Storm Washington Supreme Court.
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The Supreme Court ruled Friday that President Donald Trump’s country-based “reciprocal” tariffs are unconstitutional, handing a victory to many consumer businesses facing rising import costs.
However, this judgment does not cover all areas.
The Supreme Court revisited tariffs enacted under the International Emergency Economic Powers Act of 1977 (IEEPA), which the Trump administration used to justify sweeping tariff policies. No president has previously used this law to impose tariffs.
In a 6-3 decision, the Supreme Court ruled that IEEPA “does not authorize the President to impose tariffs.”
Still, hours after the ruling, President Trump announced new 10% tariffs worldwide, although the Supreme Court’s decision does not cover tariffs enacted under Section 232 of the Trade Expansion Act of 1962. These tariffs target certain products that threaten national security and will remain in effect after Friday’s ruling.
In addition to his country’s own tax rates, President Trump increased import duties on steel, semiconductors, aluminum and other products deemed to undermine national security.
Areas that still face high levies after the Supreme Court ruling include:
car
It was not immediately clear how much the decision would affect the U.S. and global auto industry. The industry continues to face billions of dollars in customs costs, depending on the origin of imported auto parts or vehicles.
Last year, the Trump administration imposed widespread 25% tariffs on cars and some auto parts imported into the United States, citing national security risks. It has since struck its own agreements with countries such as the UK and Japan to lower the levy to 10-15%. Other countries, such as South Korea, have also struck deals to lower interest rates, but it is unclear whether those changes have actually had any effect.
“Given today’s decision and the aftermath, there are still many unknowns and important questions to answer. Now is not the time to relax,” said Lenny Larocca, head of U.S. automotive at consulting firm KPMG. “As the trade and tariff landscape continues to evolve, automakers must continue to plan for multiple scenarios and keep supply chain considerations top of mind.”
America’s largest automaker, general motorssaid last month that it expects tariff costs to be $3 billion to $4 billion this year. ford motor announced earlier this month that the net tariff impact is expected to be $2 billion in 2026, about the same as last year.
Ford told CNBC in a statement that it continues to work with the government on policies that “promote a strong and globally competitive U.S. auto sector.” GM did not respond to a request for comment on the Supreme Court ruling.
pharmaceuticals
The pharmaceutical industry faces a lot of uncertainty surrounding tariffs. President Trump has repeatedly threatened to impose tariffs on drug imports, but none have yet taken effect, in part because of multi-year agreements between his administration and drug companies.
However, even if this were to change, pharmaceutical tariffs would still be subject to Section 232.
The administration has indicated it will eventually impose tariffs on the industry that could reach up to 250%. Last July, President Trump threatened to impose 200% tariffs on pharmaceuticals, and his administration has already launched a Section 232 investigation into pharmaceuticals to examine the national security impact of imports.
The threat of tariffs is an effort to encourage drug companies to manufacture in the United States rather than overseas.
In December, several companies reached a deal with President Trump to voluntarily lower prices in exchange for a three-year exemption from drug tariffs in exchange for more investment in U.S. manufacturing. The deal included major companies such as: Merck, bristol myers squib, Novartis And so on.
furniture
The furniture industry received little relief from Friday’s Supreme Court ruling.
Last fall, items such as sofas, kitchen cabinets and bathroom vanities became subject to higher tariffs under Section 232. Even though the IEEPA tariffs have been deemed unconstitutional, the approximately 25% tariffs will remain in place.
The furniture industry already faces further uncertainty with 25% tariffs expected to rise to 50% in 2027 and broader pressures from rising interest rates and inflation.
While small businesses are being hit hardest and have fewer resources to cope, large companies are also facing bankruptcy, such as American Signature Furniture, the parent company of Value City Furniture, which went out of business late last year.
food and consumer goods
Under Section 232, steel and aluminum imports into the United States remain subject to tariffs.
Increased aluminum tariffs will cause companies to coca cola, pepsico, Keurig Dr Pepper and reynolds We will continue to experience increased costs associated with manufacturing our products.
President Trump raised aluminum tariffs to 50% last year.
Still, even before Friday’s ruling, some key tariffs in the sector had been lifted.
In November, President Trump issued an executive order exempting hundreds of agricultural products from tariffs, including bananas, coffee and spices. And in September, it similarly lifted a 10% tariff on Brazilian pulp, a key ingredient in paper towels, diapers and toilet paper.
—CNBC’s Mike Wayland, Annika Kim Constantino, Gabrielle Fonrouge and Amelia Lucas contributed to this report.
