On February 20, 2026, the Supreme Court struck down all IEEPA tariffs in Learning Resources, Inc. v. Trump (6-3).[1]Chief Justice Roberts wrote that IEEPA does not authorize tariffs — that power belongs to Congress under Article I. Within hours, Trump invoked Section 122 of the Trade Act of 1974 as a replacement.[2] Here is where things stand.
The effective tariff rate sits at ~9.1% — down from the April 2025 peak of ~27% (highest since the 1930 Smoot-Hawley era), but still the highest since 1946.[3] The pre-Trump baseline was 2.3%. That 6.7 percentage point increase above baseline translates to $189.4 billion in new tariff revenue, offset by $45.7 billion in forgone revenue as importers changed behavior.[4]
What Was Struck Down vs. What Survived
Struck Down (IEEPA)
- • Reciprocal tariffs (10%-125%, country-specific)
- • Fentanyl surcharges (25% CA/MX, 20% China)
- • ~$175B in potential refund liability
- • $133.5B collected through Dec 14, 2025
Still Active
- • Section 232: Steel/aluminum/copper at 50%
- • Section 232: Autos at 25%, auto parts 25%
- • Section 232: Semiconductors at 25%
- • Section 301: China goods at 7.5%-25% (semis 50%)
- • Section 122: 10% global surcharge (expires Jul 24)
Effective Tariff Rates by Country
December 2025
Source: Penn Wharton Budget Model (Feb 23, 2026). USMCA compliance insulates CA/MX — 88.2% of imports claiming exemption.
The SCOTUS ruling cut China's effective rate by almost two-thirds while reducing Canada and Mexico rates much less — because ~88% of their goods already qualified for USMCA exemption.[3] USMCA compliance surged from ~50% pre-tariff to 88.2% by December 2025 as importers aggressively re-classified and documented compliance.[5]
Sector Exposure
Effective Tariff Rate by Product
Most exposed sectors: agriculture (targeted by retaliatory tariffs), mining (export-dependent), durable goods manufacturing (biggest employment drops), automotive (25% on vehicles/parts, complex cross-border supply chains), and metals (50% across the board). The US-EU deal at 15% applies broadly but steel, aluminum, and copper remain at 50%.
Revenue & Household Impact
Tariffs are regressive. The burden as a share of post-tax income on the bottom decile is about 3x that of the top (1.1% vs 0.4%).[6]GDP growth is reduced by -0.23 pp (2025) and -0.62 pp (2026). Long-run GDP is permanently smaller by ~0.1% (~$30B/yr).[3]Unemployment increases by +0.3 pp by end of 2026. The Tax Foundation estimates a $1,500 average tax increase per household.[7]
Timeline
2025
Fentanyl emergency tariffs: Canada 25%, Mexico 25%, China +20%
Steel & aluminum tariffs restored at 25% (later raised to 50%)
Auto tariffs: 25% on vehicles
Reciprocal tariffs: country-specific rates 10%-125%
US-China 90-day reduction: both sides back to 10%
Steel/aluminum/copper doubled to 50%
US-EU framework deal: 15% ceiling
US-China reduction extended 1 year
2026
Section 232 tariff on semiconductors: 25%
SCOTUS strikes down all IEEPA tariffs (6-3)
Section 122 proclamation: 10% global surcharge
Section 122 takes effect. Expires July 24, 2026.
Retaliation
China targeted US agriculture — ~80% of retaliatory tariffs hit soybeans, grains, and cotton.[8]Escalation reached 125% bilateral before the May 2025 de-escalation. Extended for a year through November 2026.
Canada hit back immediately with 25% surtax on $20B of US goods, plus $86B more within 21 days. Partially rolled back in September — retained 25% on US steel, aluminum, and autos.
Mexico prepared 5-20% retaliatory tariffs on US pork, cheese, produce, steel. Then pivoted — proposed tariffs on non-FTA partners (especially China) across ~1,463 product categories, effectively aligning with the US on China containment.
EU published a list of $84B in retaliatory targets before the framework deal. In February 2026, froze ratification after Trump's 15% global tariff threat exceeded the agreed ceiling on ~EUR 4.2B of exports.
Sources
Related Reading