The Supreme Court Rejected Trump's Emergency Tariffs. He Signed a 10 Percent Replacement the Same Day.

The Company in the Case Kept Paying

On February 20, 2026, the Supreme Court held that the emergency law President Donald J. Trump had used to tax imports did not authorize tariffs.¹ He signed a new 10 percent import tax the same day.² "But other alternatives will now be used to replace the ones that the Court incorrectly rejected," he told reporters.³

Learning Resources, a toy and educational-products company, was a party to that case.⁴¹ By September 8, it and hand2mind had paid more than $700,000 in new tariffs that began July 24, their chief executive, Richard Woldenberg, declared under penalty of perjury.⁴⁵ The two companies employed more than 450 U.S. workers and full-time equivalents, he declared.⁵

Those tariffs were the second replacement.²⁶ Trump committed to keeping his broad import tax before the investigations meant to justify it began.³⁷ He signed the 10 percent surcharge, and he directed the tariffs on 60 economies that began the minute it expired.²⁶⁸ Congress wrote each of those laws for a specific problem.⁹¹⁰ The charge is that Trump used them for another purpose: to keep collecting a tax he had already committed to keeping.³²⁶

A Tax With a Deadline

The replacement rested on Section 122 of the Trade Act of 1974, which caps a surcharge at 15 percent and limits it to 150 days unless Congress extends it by law.⁹ Trump invoked its provision for large and serious balance-of-payments deficits and set a 10 percent rate, ending at 12:01 a.m. on July 24, 2026.²⁹ The trade court later called this the first presidential invocation of Section 122(a) since its enactment roughly 50 years earlier.¹¹

On February 20, Trump said what the time was for: "And then, during that period of about 5 months, we are doing the various investigations necessary to put fair tariffs or tariffs, period, on other countries."³² His Trade Representative, Jamieson Greer, said alternative tools would address many of the issues at the heart of Trump's reciprocal tariff program and "ensure continuity in reaching these goals."¹² Greer promised an accelerated investigation consistent with statutory requirements and said tariffs were one possible tool if unfair practices were found.¹²

A Court Held It Invalid; Collection Continued

On May 7, the Court of International Trade held the surcharge invalid, two judges to one.¹¹ The majority held that the trade and current-account deficits the proclamation cited were related to, but distinct from, the balance-of-payments deficits Section 122 specifies.¹¹

Slip Op. 26-47¹¹

Proclamation No. 11012 is invalid, and the tariffs imposed on Plaintiffs are unauthorized by law.

The relief was narrow: the injunction covered Washington State and two companies, and the court dismissed the other states for lack of standing and declined a universal injunction.¹¹ The dissenting judge, Timothy Stanceu, disputed the majority's statutory interpretation and said the court lacked the expertise to reach its conclusion; he would have postponed a ruling rather than uphold the tariff.¹¹

On June 11, the Federal Circuit stayed the injunction, allowing collection to continue even from the three winning plaintiffs.¹³ It found most stay factors favored the government, including its likelihood of success, and expressly withheld a final conclusion about the correctness of the trade court's judgment.¹³ For the Section 122 plaintiffs, the appeals court also concluded that refunds with interest would reduce harm from the payments themselves or refund delays if the tariffs ultimately proved unlawful.¹³

Customs reported $31.06 billion in Section 122 duties assessed as of July 5; that is a preliminary assessment total, not final cash receipts.¹⁴ The surcharge expired July 24, and the appeal was still pending in mid-September.¹⁴¹⁵

Sixty Investigations, and a Prediction

On March 12, Greer opened Section 301 investigations of 60 economies for failing to prohibit imports made with forced labor or effectively enforce such a prohibition.⁷⁶ USTR said they were the top 60 trade partners, supplying 99.4 percent of U.S. imports.¹⁶ Section 301 permits duties against a foreign practice that is unreasonable or discriminatory and burdens or restricts U.S. commerce, subject to the President's specific direction.¹⁰ Unlike Section 122, it has no 150-day cutoff.¹⁰

On June 2, USTR found all 60 economies' conduct actionable and proposed duties of 10 percent and 12.5 percent.¹⁷⁶ Comments were due July 6. On June 24, while they were still open, Treasury Secretary Scott Bessent said on CNBC that the tariff program had been rebooted.¹⁷¹⁸

CNBC Squawk Box interview transcript¹⁸

And if those studies are successful and I have no reason to believe they won't be, but we don't know until they are, then the tariff rates are going to go back to exactly where they were.

His prediction was conditional, and the decision was not his: Section 301 assigns it to the Trade Representative under presidential direction.¹⁸¹⁷¹⁰ The final rates and exemptions do not establish that the replacement schedule equaled the old one.⁶ CBO estimated a 10 percent average tariff rate on July 31, down from 15 percent in November 2025, using fixed 2024 import weights.¹⁹

The Handoff at 12:01 a.m.

Trump's July 23 memorandum directed tariffs on all 60 economies, generally 10 percent or 12.5 percent, with product exemptions and rules reducing or eliminating the added duty for five partners.⁶ The duties began at 12:01 a.m. on July 24, the exact minute the Section 122 surcharge expired.⁸²

USTR gave reasons for rejecting commenters' alternatives and four times also said that because they were "inconsistent with the specific direction of the President, the Trade Representative cannot accommodate them."⁸

Learning Resources and other importers sued on July 24, the day the duties began, alleging that the forced-labor findings "were reverse engineered to resurrect the global tariff wall."⁴²⁰ Trump's memorandum says each tariff serves only to eliminate the particular practice USTR found actionable.⁶ After argument on September 30, the trade court ordered further briefing, due October 16, without deciding the merits.²¹ The Associated Press reported that experts considered this round potentially harder to challenge than the earlier tariffs.⁴

A Fourth Law, Aimed at Canada

Three days before he directed the 60-economy tariffs, Trump turned a fourth law on a single country.²²⁶ On July 20, he signed three proclamations imposing 50 percent duties on certain Canadian goods under Section 338 of the Tariff Act of 1930, its first express presidential use to impose tariffs according to CRS.^2223242526 That law permits duties on any of a country's products when the President finds discrimination against U.S. commerce and that acting serves the public interest, at a rate he determines will offset the burden or disadvantage, capped at 50 percent.²⁵

He cited Canada's 25 percent tariff on certain U.S. vehicles, provincial and territorial halts on American alcohol sales, and cheese-quota rules favoring European suppliers.²²²³²⁴ Prime Minister Carney acknowledged retaliatory auto tariffs and provincial alcohol restrictions; the White House described Canada as retaliating against Trump's tariffs.²⁷²⁸

Trump suspended the duties on August 18, citing a Canadian commitment to remove the measures; Carney reported progress without confirming that commitment.²⁹³⁰ Trump later accused Canada of reneging on August 21; Carney said he recalled negotiators because Canada could not accept the U.S. terms.³¹²⁷ The duties began August 22.²⁹³¹ On September 8, Canada imposed countertariffs on about US$20 billion in American goods, another barrier for American exporters, and Trump signed three import bans effective September 29.²⁶³¹³² Trump also removed products including rock salt and cement from the tariff lists, added others, and made the duties cumulative with Section 232 tariffs, replacing the earlier exemption for products covered by those tariffs; CRS reported combined additional tariffs of up to 100 percent on certain items.³²²⁶ Section 338 permits import exclusions when the President finds that discrimination continued or increased after an earlier proclamation and deems exclusion consistent with U.S. interests; Trump's alcohol proclamation expressly made those findings.²⁵³¹ CRS valued the banned goods at about $967 million in 2025 imports, 0.3 percent of U.S. imports from Canada that year.²⁶ The White House said Trump also directed the Trade Representative and the General Services Administration to remove Canadian-origin products from that agency's federal purchasing schedules, a step beyond import taxes and bans.³² CRS's September 14 report records no ruling on the Canada measures.²⁶

The Bill for a Toy Company

American importers pay these taxes: federal customs regulations make import duties a personal debt of the importer to the United States.³³

Woldenberg's companies develop products in the United States and manufacture most of them abroad, he said in a sworn declaration filed September 18.⁵ They could not absorb the new duties, he said, without radically changing prices or substituting cheaper, lower-quality products.⁵ Shifting the supply chain for more than 2,000 products would take years and cost millions, and years of searching for U.S. suppliers had been fruitless, he declared.⁵ He also said the companies were already incurring significant unrecoverable costs and losing time dealing with tariff changes and disruptions to supply chains, business relations and operations.⁵

Based on officials' promises to restore rates equivalent to the rejected emergency tariffs, he projected annual Section 301 duties of $10 million or more, including existing China duties and the July replacements.⁵ Without price increases and significant cost cuts, he said, the new duties would largely or entirely eliminate expected profits.⁵ The companies were considering further cuts to advertising, capital spending and hiring, and prolonged collection could force facility closures, layoffs or a sale, he warned.⁵ These are sworn forecasts, not announced closures or layoffs; the more than $700,000 paid by September 8 is an actual bill.⁵

The old tariffs, meanwhile, had not all come back. Woldenberg generally applauded Customs' refund work but said the government still owed the companies refunds on more than $1 million in emergency-law duties as of September 1, and that a later refund of the new duties would not cover lost profits.⁵

Customs refunds include interest and go to the importer of record or its designated recipient.³⁴ A shopper who paid a higher retail price does not receive a Customs refund simply for having bought the goods.³⁴

The Revenue Does Not Replace Income Taxes

On November 27, 2025, Trump said tariff receipts could let the government cut income taxes substantially over the next couple of years: "Could be almost completely cutting it because the money we're taking in is going to be so large."³⁵

From October 2025 through August 2026, the government kept $167.3 billion in customs duties after refunding $125.2 billion, Treasury reported.³⁶ Individual income taxes brought in $2.548 trillion over the same eleven months.³⁶ The government still raised substantial tariff revenue, but net customs receipts equaled about 6.6 percent of that income-tax revenue; even collections before refunds reached only about 11.5 percent, calculated from Treasury's table.³⁶ Both collections and refunds cover all customs duties.³⁶

CBO's August update projected that most of the $166 billion collected under the rejected emergency-law tariffs would be refunded in fiscal 2026 and that the replacements would raise less revenue.¹⁹ CBO cut its fiscal 2026 net customs revenue forecast by about $250 billion from its February projection.¹⁹

Prices Rose; Factory Employment Recovered

"Jobs and factories will come roaring back into our country," Trump had said on April 2, 2025, announcing his broad tariffs, and ultimately "more production at home will mean stronger competition and lower prices for consumers."³⁷

By the latest release prices had risen instead: the Bureau of Economic Analysis reported that its consumer spending price index rose 3.4 percent over the year to August 2026.³⁸ Factory jobs did recover: the Bureau of Labor Statistics reported that manufacturing employment in September was up 72,000 from its recent low in December 2025.³⁹ Neither figure separates the tariffs' effect from other causes: the price rise does not prove tariff harm, and the jobs recovery does not prove tariff success.³⁸³⁹

In its February 2026 outlook, modeling the tariff schedule of November 2025, not the July replacements, the Congressional Budget Office estimated that foreign exporters would absorb only 5 percent of tariff costs, leaving 95 percent borne domestically.⁴⁰ It predicted that higher tariffs would increase the consumer spending price index by about 0.8 percentage points by the end of 2026 and leave aggregate employment below what it would otherwise have been.⁴⁰ CBO credited increased demand for domestic goods and investment by businesses relocating production to the United States with offsetting part of the losses, but concluded that those gains were smaller.⁴⁰

The Strongest Defense

Congress authorized alternative tariff powers, and a President can lawfully use them when their conditions are met.⁹¹⁰²⁵ Justice Brett Kavanaugh, joined by Justices Clarence Thomas and Samuel Alito, wrote in dissent that the Court had in essence concluded that "the President checked the wrong statutory box," and that other laws, Sections 122, 301 and 338 among them, might justify most or all of the tariffs after additional procedural steps.¹ Comparable delegated trade authority survived Supreme Court review in 1976, and the challenged first-term China tariffs survived in 2025, in a case about modifying an existing action.⁴¹⁴²

Trump obeyed the orders: he ended the emergency-law duties, collected the surcharge with the injunction stayed, and let it expire.^4313214 The forced-labor process drew more than 2,000 written comments and more than 100 hearing witnesses.¹⁷⁶ Trump's memorandum records six additional economies adopting forced-labor import bans after consultations and the June findings, progress toward the stated goal.⁶

The Answer Is the Order of Events

Meeting each law's conditions would not answer the charge, which concerns the order in which Trump did things.¹⁰²⁵

The Constitution gives the power to tax to Congress, and the Framers, the Supreme Court said in February, "did not vest any part of the taxing power in the Executive Branch."⁴⁴¹ That ruling rejected one law, the International Emergency Economic Powers Act, as tariff authority; it did not declare tariffs themselves unconstitutional.¹ The other laws delegate tariffs as remedies for specified problems: balance-of-payments deficits, unfair foreign practices and discrimination against U.S. commerce.⁹¹⁰²⁵

On February 20, before any of the 60 investigations had opened, Trump said of the alternatives: "We were taking in hundreds of billions of dollars. We'll continue to do so."³⁷

The charge is that keeping the tax came first and each law was the means to keep collecting it.³¹⁸⁸ Used that way, a power Congress delegated to remedy a specific problem is misused.⁴⁴¹⁰²⁵ The importers' stronger claim, that the investigations were reverse engineered, awaits a court decision.²⁰²¹

Why This Is an Impeachment Argument

An unsuccessful policy is not an impeachable offense: Madison opposed making maladministration a ground for removal.⁴⁴⁴⁵ Andrew Johnson's lawyers defended a mistaken reading of law and an intended constitutional test, and the Senate acquitted him, one vote short of two-thirds.⁴⁶ Hamilton placed impeachable offenses in "the abuse or violation of some public trust."⁴⁷

The charge here belongs there. Told by the Supreme Court that one law did not authorize his tariffs, Trump made keeping his import tax the commitment and used successive laws to keep collecting it, a deliberate use of delegated powers rather than a legal mistake alone.¹³²⁶ American importers kept paying new tariffs while the government refunded the old ones, the toy company named in the Supreme Court case among them.⁵³⁶¹⁹¹ That use of entrusted power, with those costs, is the case for presidential abuse of public trust.⁴⁴⁴⁷³⁵