On February 20, 2026, the US Supreme Court delivered a landmark verdict that emphasised that the Constitution is supreme, that every action - even of the highest authority – must be supported by legislative sanction and that an act must be declared unconstitutional even if the financial consequences are grave.

The judgment in Learning Resources Inc v. Donald J Trump originated with a suit filed by this small business that imported educational toys from China. It filed a suit in the District Court of the District of Columbia to challenge the tariffs imposed by President Trump on Chinese imports.   Later, other small businesses and 12 States challenged the Presidential power to impose tariffs before the United States Court of International Trade (CIT).

The judgment runs to 170 pages and by a majority of 6:3, the tariffs imposed by President Trump were declared as unconstitutional.

President Trump’s tariffs on various countries, including India, was  founded on a declaration of national emergency under the National Emergency Act to deal with two foreign threats: first, large scale inflow of drugs into the US from Mexico, Canada and China; secondly, the huge trade deficit that had destroyed the American manufacturing base. Tariffs were imposed to meet the second threat arising because of the huge trade deficit. The tariffs were imposed at random on various countries and were increased or decreased several times by President Trump.

The President acted under the International Emergency Economic Powers Act, 1997 (IEEPA). Under Sections 1701 and 1702 of this Act, the President has wide powers to deal with foreign threats. The relevant statutory provision reads as follows: -

“investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest.” SS 1701(a), 1702(a)(1)(B). (emphasis supplied)

Chief Justice Roberts, speaking for the majority, ruled that the power to “regulate” did not include the power to levy tariffs, which were duties. The Supreme Court primarily relied on Article 1, Section 8 of the US Constitution which reads:

“The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.”

Relying on the doctrine of separation of powers, the majority held that the imposition of taxes could only be by the legislature i.e. the US Congress.

The US government pleaded that declaring tariffs unconstitutional would result in horrendous economic consequences. It would increase the trade deficit by USD 4 trillion, and affect trade arrangements to the extent of USD 15 trillion.

The majority applied the major questions doctrine to reject this argument. This doctrine requires that for significant economic and political changes, there must be proper authorisation by Congress. The greater the consequence, the greater is the need for legislative sanction.

The minority, led by Justice Kavanaugh, primarily held that the word “regulate” must be given a wide interpretation. It would include the power to impose duties to check the import of goods that seriously increased the trade deficit and to also impose quotas, embargoes and other acts to check import of goods. The minority pointed out that even if the President was not empowered to act under the IEEPA, he had the power to impose such tariffs under the Trade Expansion Act, 1962; the Trade Act, 1974 and the Tariff Act, 1930. The majority pointed out that these statutes permitted the exercise of imposing tariff only during times of war. It must be added that these tariffs are temporary and ultimately require legislative sanction.

In 1748, Montesquieu, a French nobleman, judge and historian famously stated that the  three limbs of a government are the legislature, the executive and the judiciary. These were branches dependent on each other, but no one branch must exceed or transgress its powers beyond permissible limits. This was a radical thought at that time. It became the basis of the US Constitution in 1789 and, later, it became the basis of our Constitution as well. The judgment of the US Supreme Court is a strong reminder that constitutional limits must not be breached and that the courts would strike them down even if the political or economic consequences are serious. This judgment will always be remembered as a verdict that upheld the constitutional principles and values.

Arvind P Datar is a Senior Advocate of the Supreme Court of India.