On February 20, 2026, the Supreme Court of the United States struck down a wide range of the reciprocal tariffs introduced by President Trump in 2025. The decision has been argued to be the most important loss Trump has faced during his second presidential term, and the decision's impacts on international trade remain in many respects uncertain. A few days later, an action for annulment of EU safeguard measures on ferroalloys was brought before the General Court of the European Union.

In this Tariff and Trade Alert, we discuss the Supreme Court's ruling on Trump's reciprocal tariffs and its potential implications for international trade. We also highlight the EU's postponement of the vote on the trade deal between the EU and the U.S., as well as the trade agreements the EU has recently concluded with India and Mercosur. Finally, we discuss the recent action for annulment of the EU safeguard measures on ferroalloys.

The SCOTUS ruling in Learning Resources v. Trump

On February 20, 2026, the Supreme Court of the United States rendered its decision in Learning Resources v. Trump ("the Ruling"), concluding that the International Emergency Economic Powers Act ("IEEPA") does not authorise the Trump administration to impose tariffs.

The IEEPA authorises the President to, amongst other things, "investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit […] importation or exportation" in response to a "national emergency" which has been declared following an "unusual and extraordinary threat […] to the national security, foreign policy, or economy of the United States" (50 U. S. C. §1701). In its Ruling, the Supreme Court decided that IEEPA does not empower the President to impose tariffs, as tariffs constitute a form of tax, the imposition of which falls within the powers of Congress.

Thus, the Supreme Court has effectively struck down the 10% baseline tariff previously imposed on nearly all countries, as well as country-specific top-ups and other tariffs imposed under the IEEPA.

The Ruling does not affect tariffs imposed under other legal bases. This includes tariffs on various products imposed under Section 232 of the Trade Expansion Act of 1962, including a 25% tariff on steel, aluminium, cars and car parts as well as certain other products. As opposed to IEEPA tariffs, such Section 232 tariffs may only be used to target specific industries following an investigation by the U.S. Department of Commerce. Thus, Section 232 cannot serve as a legal basis for the "across the board" tariffs imposed under the IEEPA. Other tariffs which remain in place despite the Ruling are tariffs on Chinese goods under Section 301 of the Trade Act of 1974, which were introduced during the trade tensions between the U.S. and China in 2018-2019.

The issue of repayments

Before the Supreme Court deemed the IEEPA tariffs illegal, an estimated USD 175 billion had already been collected in IEEPA tariffs. The Supreme Court did not address the issue of whether these already collected tariffs must be refunded. Dissenting Justice Kavanaugh did emphasize the issue of repayments as one of several "serious practical consequences" of the majority's Ruling, which he suggested is likely to be a "mess", but did not assess whether such refunds are legally required and, if so, how they should be handled in practice.

Many commentators have pointed out that the issue of repayments will likely need to be resolved by lower courts in the U.S. Over 1000 companies, including major companies such as Reebok, have already filed lawsuits claiming refunds in the U.S. Court of International Trade. Trump, on the other hand, has not shown any interest in refunding paid tariffs and has stated that he "guess[es] it has to get litigated for the next two years". The issue of repayments is thus unlikely to be resolved on a voluntary basis by U.S. authorities absent a binding decision from U.S. courts requiring the tariffs to be refunded.

New tariffs imposed by Trump

Shortly after the Supreme Court's Ruling, President Trump announced that he would impose a 10% global tariff under Section 122 of the Trade Act of 1974. On the following day, the tariff rate was raised to 15%.

Section 122 is the only legal basis similar to the IEEPA in the sense that the tariffs are broadly designed and not sector-specific, unlike Section 232 tariffs. The key difference from IEEPA tariffs is that Section 122 tariffs are limited to addressing "large and serious United States balance-of-payments deficits" (and certain other related scenarios). In other words, the purpose of such tariffs is macroeconomic stabilization, not the protection of national security, foreign policy, or the U.S. economy as under the IEEPA. Additionally, unlike IEEPA tariffs, Section 122 tariffs may only be imposed on a temporary basis for a maximum of 150 days, after which they require approval by Congress.

The justification of President Trump's new Section 122 tariffs is doubtful. Several have already argued that these tariffs are, like the IEEPA tariffs, illegal, as the U.S. does not actually face an international payments problem. Given the Supreme Court's Ruling concerning the IEEPA tariffs, it is likely that the new Section 122 tariffs will be subject to similar legal challenges.

It should also be noted that President Trump has signalled that the U.S. will initiate additional investigations into specific industries which may result in additional industry- or product-specific tariffs under Section 232 of the Trade Expansion Act of 1962 and/or Section 301 of the Trade Act of 1974. Which additional industries may be subject to such investigations, and whether any such investigations will ultimately lead to additional tariffs being imposed, remains to be seen.

Suspension of the EU-U.S. trade deal

On February 23, 2026, following the Supreme Court's Ruling and the imposition of a new 15% tariff, European Parliament negotiators decided to suspend the trade deal between the EU and the U.S. which was announced in August 2025. The deal, which essentially locks in a 15% tariff rate on EU exports to the U.S. and grants duty-free access to the EU for many U.S. goods, has been discussed in one of our previous Tariff and Trade Alerts.

In relation to the suspension, EU Trade Chief Maroš Šefčovič said that they had requested the U.S. to provide clarity on how the trade deal would be respected, including the 15% all-inclusive tariff rate which had previously been agreed upon. Whether the uncertainty from the U.S. will actually lead to non-adoption or other adverse consequences for the trade deal between the EU and the U.S., or whether the U.S. manages to provide sufficient assurances for the EU to be satisfied, remains to be seen. The European Parliament is expected to vote on the implementation of the deal during a plenary session in March.

EU trade agreements with India and Mercosur

The geopolitical and trade-related uncertainty stemming from the U.S. has led several countries to shift their focus towards markets other than the U.S. On January 27, 2026, the EU and India concluded a Free Trade Agreement. The agreement, which European Commission president Ursula von der Leyen has called "the mother of all deals", includes tariff reductions on a variety of goods (e.g. cars, machinery, chemicals, pharmaceuticals and agricultural goods), the granting of privileged access to services markets and protected intellectual property, simplifies procedures, and enhances sustainability commitments. This agreement follows the trade agreement concluded between the EFTA states and India in March 2024, which grants exporters from Norway and the other EFTA states a number of similar advantages as EU exporters under the trade agreement between the EU and India.

Further, in January 2026, the EU and Mercosur (Argentina, Brazil, Uruguay and Paraguay) signed a trade agreement which, similar to the EU-India agreement, reduces tariffs on a wide range of goods and entails other reductions of trade barriers. Further details about the agreement are available on the European Commission's website. The trade agreement between EU and Mercosur also follows in the footsteps of the EFTA states, which concluded a trade agreement with Mercosur in July 2025.

Legal challenge to safeguard measures imposed on ferroalloys by the EU

Not only the U.S. has caused sparks in international trade. The safeguard measures introduced by the EU on ferroalloys on November 18, 2025, have been met with criticism from several industry actors. This is particularly the case in Norway, as Norway is not part of the EU's customs union and was not exempt from the safeguard measures. Grondmet, a German trading company specialising in special alloys, has recently announced that it has decided to challenge the safeguard measures before the General Court of the European Union through an action for annulment. Grondmet has argued that:

  • The increase in imports of ferroalloys has not been sufficiently recent, sudden, sharp and significant to substantiate the imposition of safeguard measures on such products.
  • The European Commission has failed to conduct a product-specific assessment, given that different grades and qualities of ferroalloys ought to be taken into account.
  • The European Commission has not adequately assessed the structural challenges facing European producers, in particular the impact of energy costs.
  • The minimum import prices on ferroalloys, which are part of the safeguard measures, are disconnected from actual market conditions and lack a clear economic or methodological basis.

For actions for annulment to be reviewed by the General Court, strong procedural requirements must be met. The regulatory act must be "addressed to" the natural or legal person who has brought the action for annulment or be of "direct and individual" concern to them ("the Plaumann test"), or the regulatory act must be of "direct concern" to the person and "not entail implementing measures" ("the Lisbon test"), as prescribed by Article 263(4) of the TFEU. Whether the General Court considers these thresholds to be met, remains to be seen.

Material grounds for annulment may be, inter alia, lack of competence or infringement of essential procedural requirements. A key issue in this regard will likely be whether the safeguard measures fulfil the requirements in Regulation (EU) 2015/478 on common rules for imports, in particular Article 15 ff. An alternative ground for annulment may be infringement of treaties concluded by the EU, such as the EEA agreement. As discussed in one of our previous Tariff and Trade Alerts, the interpretation of the provisions on safeguard measures in Articles 112 to 114 of the EEA Agreement is to a large extent unprecedented and has sparked much discussion among scholars following the implementation of the ferroalloy safeguards. It also raises questions relating to the relationship between these provisions and non-discrimination principles under WTO law.

If the General Court considers that the safeguard measures on ferroalloys must be annulled, the effect of annulment will generally be from the time of adoption of the measures (ex tunc), although in some cases the effect of annulment may instead be deemed to run from the date of the judgement declaring the act to be void (ex nunc). If the safeguard measures on ferroalloys are deemed void from the time of adoption, this may also raise questions regarding repayment of already collected duties, similar to the questions that have arisen following the U.S. Supreme Court's ruling in Learning Resources v. Trump.

Consequences for global trade and how businesses should adapt

Both the Supreme Court's Ruling in relation to Trump's reciprocal tariffs, and the action for annulment of the EU safeguard measures on ferroalloys, reflect how challenging it may be to navigate international trade in an ever-evolving geopolitical landscape. The measures that have led to these legal challenges are likely far from the last to cause a great deal of uncertainty in the weeks, months and years to come.

For businesses, the ongoing uncertainties should be constant reminders of the need to map their exposure to markets that may be affected by rapid shifts in trade policies and other geopolitical developments, either directly through business partners or indirectly through supply chains. This is, for example, relevant to companies who trade directly with the U.S. or with counterparties that have U.S. entities upstream or downstream in the supply chain.

The ongoing uncertainties also have impacts on a higher level, as illustrated by the European Parliament's postponement of the vote on the EU-US trade deal. Investments and other business activities are also likely to be even further shifted to other markets, such as India and Mercosur, but also countries such as China, which has seen a spike in both exports and imports in recent months. It will also be interesting to see whether Trump's defeat before the U.S. Supreme Court may give a boost to the ongoing discussions on WTO reform, as indicated by Norway's Foreign Minister Espen Barth Eide, who will lead the discussions on WTO reform during the WTO's Ministerial Conference in Cameroon in March 2026.