The Supreme Court’s February 20, 2026 decision limiting the president’s use of the International Emergency Economic Powers Act (IEEPA) rolled back a major portion of the 2025 tariff expansion. While the ruling removed a large set of tariffs, many others remain in place. These ongoing trade measures continue to influence prices, inflation, and economic performance across the United States.

What Tariffs Are and How They Affect the Economy

A tariff is a tax on imported goods. Although importers pay the tax at the border, the cost often moves through the supply chain. Some businesses absorb it through reduced margins, while others pass part of the cost on to consumers. Effects depend on competition, supply chain structure, and the availability of substitutes. In today’s globally interconnected economy, tariffs influence input costs, retail prices, corporate profits, and inflation trends.

Why the IEEPA Tariffs Mattered

The 2025 tariffs implemented under IEEPA were described as “reciprocal,” targeting trade barriers imposed by other nations. They aimed to support domestic manufacturing and rebalance trade relationships. These tariffs pushed the average effective tariff rate from historically low single digits into the mid-teens. Following the Court’s ruling, projections place the effective tariff rate near 9%—lower than its peak but still above pre-2025 levels.

Fiscal Impact and Revenue Changes

The IEEPA tariffs generated billions in federal revenue during 2025. Going forward, tariffs still in effect are expected to continue generating revenue over the next decade, though at a reduced scale compared to what would have occurred under the broader IEEPA framework. Dynamic economic models show that tariff-related reductions in economic growth can decrease tax revenue from other sources, resulting in smaller net fiscal gains than traditional projections suggest.

Effects on Prices, GDP, and Employment

Current tariffs are estimated to raise the overall price level by roughly 0.5%. For households, this amounts to several hundred dollars per year, with greater impacts on lower-income families who spend more of their income on goods. If the IEEPA tariffs had remained, these price pressures would have been significantly stronger.

Tariffs are also expected to slightly reduce long-run GDP, with estimates indicating a 0.1% decline relative to a no-tariff baseline. Though small in percentage terms, this represents tens of billions in lost economic activity. Labor markets may also feel the effects, with a modest projected increase in unemployment.

Sector-by-Sector Impacts

The tariff environment affects industries unevenly. Some manufacturing sectors could see small output gains due to reduced foreign competition. However, sectors like agriculture, construction, and parts of the services economy may face higher input costs that slow activity. These cross-industry ripple effects underscore the trade-offs inherent in broad tariff policies.

Potential Refunds and Their Economic Role

With the IEEPA tariffs invalidated, companies that paid those duties may be entitled to refunds. The timing and logistics remain uncertain, but refunds could temporarily boost business finances. How firms use these funds—whether reinvesting, reducing debt, paying dividends, or adjusting prices—will influence broader economic outcomes. These refunds could temporarily counteract some negative effects of remaining tariffs.

Looking Ahead: Policy Uncertainty Remains

Although the Court restricted the use of IEEPA for broad tariff actions, the administration still has access to other legal pathways for imposing new tariffs. Some require formal investigations, while others allow temporary measures. Future decisions will play a major role in shaping tariff rates, inflation expectations, business confidence, and investment trends.

Financial and Market Considerations

Despite tariff reductions, current trade policy remains more restrictive than before 2025. Tariff-related price changes tend to develop gradually, but shifts in policy can influence short-term volatility in equity and bond markets as investors reassess growth and earnings expectations. For individuals engaged in financial or retirement planning, understanding these trends helps clarify how trade policy may affect long-term economic conditions.

Overall, the Supreme Court’s ruling lowered tariff pressures from their 2025 peak but did not fully unwind the period’s trade-policy expansion. Tariffs remain a meaningful factor shaping fiscal outcomes, inflation, and economic growth. Future developments—particularly refunds and potential new tariff actions—will determine how trade policy influences the economy in the coming months and years.