What the Supreme Court’s ruling on Trump tariffs could look like

Yahoo Finance Video

Fri, February 20, 2026 at 1:32 AM GMT+9

The US Supreme Court (SCOTUS) is reconvening on Friday, with justices possibly issuing a ruling on President Trump’s tariff policies as early as this week. SCOTUS officials will be assessing whether the administration’s trade tariffs, especially last year’s broad Liberation Day policies, fall under the International Emergency Economic Powers Act (IEEPA).

Yahoo Finance Washington Correspondent Ben Werschkul outlines the scenarios that could unfold depending on the SCOTUS ruling, going on to break down the latest US trade balance data.

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Video Transcript

00:00 Speaker A

Everybody, basically they’re bracing for a Supreme Court decision on the legality of President Trump’s tariffs. The court is set to reconvene this Friday and could issue a ruling on whether the a president, any president may use the International Emergency Economic Powers Act to impose sweeping tariffs on imports from countries around the world. Prediction markets show the odds for a ruling in Trump’s favor are at just 26%. Joining us from more Yahoo Finance Washington correspondent Ben Wershkul. We’ve been waiting for this ruling obviously, Ben, and there are, there’s sort of a range of different outcomes. It’s not a binary outcome. So, walk us through what the potential, um, outcomes could be in the potential rulings.

00:46 Ben

Yeah, so, so, so, so the time to watch tomorrow is at 10:00 a.m. Eastern. That’s when the justices will convene for the first time in in in a few weeks now. And so this is the first time we could get this opinion. I worth noting that we also have decision days announced for next Tuesday and Wednesday. So, this is a whole stretch in which we will get a few decisions. This tariff one obviously being the the real central one here. Um, as for the scenarios here, there’s a wide range. I think one, you know, the there is a there is a a level of legal thought that the longer the justice’s weight, the kind of less dramatic this ruling can be. The idea being if they’re if they’re really going to pull off the band aid and rule against Trump’s tariffs, they they would they would seek to move quickly and and this has already dragged on longer than we thought. These these these arguments happened back in November. So, we’re already three and a half months waiting for this decision, which was announced as being expedited in in the in, um, when it when it when when it came forward. As for the market reaction here, I think there is a growing sense here that there whatever this decision, whatever the decision is not going to be the final word on Trump’s tariffs. These are about his, as you noted at the top, the IEPA tariffs. So, it’s a limited, it’s a band of Trump’s tariffs, a big part of Trump’s tariffs, but it’s not all of the tariffs Trump has announced for the last year. And Trump and his team have already announced that they’re they’re going to seek to replace these if the ruling moves in their favor. I think one note that that I is worth kind of summarizing what the market reaction is expected here is a hype-based over reaction. This came from Pangea policy, a hype-based over reaction followed by a market comedown, which is notable because that kind of works in either scenario, either a scenario that is favorable for the White House or negative for the White House. So big market reaction in one direction, but in the end it kind of levels out in the end. That’s because as this goes forward, Trump can, Trump will be, there’ll be weeks of reaction to this in either way. It could be a messy scenario if if some of these tariffs are struck down, but Trump could ultimately replace them in a few months time using other authorities. This is just one of the many laws he has to impose tariffs.

02:44 Speaker A

And and Ben, in the meantime, we got trade balance data out this morning, um, and we saw, um, the trade deficit actually widening out, which is not at least what the president wants to see.

03:09 Ben

Right, exactly. So we had a real notable ruling for October’s data, which was the lowest trade deficit we’ve seen in a long time. But we’ve now had two months, October, November to December of the trade deficit kind of jumping right back up. This last one from November to December was a 33% increase, which is now above 70 billion annual trade deficit. This includes both goods and services between the US and all of its partners. Um, what also is notable about these numbers that came out this morning is we have annual numbers for the entirety of 2025 and what’s remarkable there is how little things have changed. It’s been a really up and down year. We had a lot of uh a lot of trade deficits at the beginning, down in the middle, up again in recent months, but the overall numbers are amazingly flat. So in 2024, the last year of Joe Biden’s presidency, the the trade deficit was 903.5 billion. For 2025, last year, even with all these ups and downs, it was 901.5. So a very small decrease there on these annual numbers from the from the Commerce department. But there are some interesting changes here under the hood in terms of how it’s shifting the trade landscape. The trade deficit with China is noticeably down, but trade the trade deficit with other Asian nations is also up. So it kind of changes under the hood, but it leads to kind of a flat number overall. And I think it’s going to be a lot of conversation in the coming weeks about whether this is changing the trade, US imports overall are kind of shifting from China to other countries, which is the evidence we have so far.

04:36 Speaker A

Right. Or is stuff from China going through those other countries in some cases, too. Ben, thank you so much. Appreciate it.

04:47 Speaker A

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