In a landmark ruling with profound implications for presidential authority and international trade, the United States Supreme Court has delivered a decisive verdict against the Trump administration’s controversial tariff regime. On February 20, 2026, the court determined by a 6-3 majority that the International Emergency Economic Powers Act (IEEPA) of 1977 does not grant the president authority to impose tariffs, striking down the so-called ‘Liberation Day’ emergency powers established through executive order in April 2025.
The legal challenge, Learning Resources Inc v Trump (2026), centered on whether the 1977 legislation authorized the president to implement sweeping tariffs under declared national emergencies. The court reaffirmed that constitutional authority for taxation and tariffs resides squarely with Congress, delivering a robust defense of separation of powers principles.
President Trump’s executive order had justified the tariffs by identifying two ‘unusual and extraordinary threats’: the flow of illegal drugs from Canada, Mexico, and China, and the United States’ persistent trade deficit which allegedly undermined domestic manufacturing and supply chains. The administration imposed a 10% ‘reciprocal tariff’ on nearly all countries globally, with additional rates targeting specific nations including Caribbean Community (CARICOM) members Trinidad & Tobago (15%) and Guyana (38%, later reduced to 15%).
The economic impact has been substantial. US importers bore the direct costs, with small and medium enterprises particularly affected. Learning Resources Inc reported losses amounting to millions of dollars, while the Penn-Wharton Budget Model projects total tariff payments at approximately $175 billion. American households faced an average tax increase of $1,000 in 2025, with projections reaching $1,300 for 2026.
Paradoxically, the tariffs failed to achieve their stated objectives. Despite increased tariff revenue, the US merchandise trade deficit reached record highs in 2025, partly due to importers rushing shipments ahead of implementation.
For Caribbean nations, which historically enjoyed non-reciprocal duty-free access to US markets under the Caribbean Basin Initiative, the ruling offers significant relief. The US remains the region’s largest trading partner and main export market, with the tariffs having reduced price competitiveness for Caribbean goods.
However, the trade policy battle continues. President Trump has announced intentions to implement a 10% global tariff using Section 122 of the Trade Act of 1974, which permits temporary tariffs up to 15% for 150 days unless extended by Congress. This development introduces renewed uncertainty for US importers and foreign exporters, including Caribbean businesses which must continue monitoring developments and adjusting strategies accordingly.
Regional organizations including CARICOM and the Caribbean Private Sector Organisation maintain active engagement with US trade policy developments, advocating for Caribbean interests through diplomatic channels as the situation evolves.