Construction’s Margin Squeeze Remains After Supreme Court Strikes Down Emergency Tariffs

KEY POINTS

• The Supreme Court invalidated IEEPA tariffs, removing over $133 billion in duties but leaving other tariff mechanisms intact.

• Refunds for previously paid IEEPA tariffs are possible but involve a lengthy, complex process, creating uncertainty for businesses.

• For the construction industry, material costs remain elevated as Section 232 tariffs on steel and aluminum continue to drive price increases and margin pressures.

Supreme Court Ruling on IEEPA Tariffs

In a landmark 6–3 decision on February 20, 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act (IEEPA) does not grant the president authority to impose tariffs.

This decision invalidates the “Liberation Day” tariff framework, which included a 10% baseline tariff on most imports and additional surcharges targeting countries like Canada, Mexico, and China.

However, tariffs imposed under other statutes, such as Section 232 of the Trade Expansion Act of 1962, remain unaffected.

Key Impacts of the Ruling

IEEPA Tariffs Invalidated

The Court reaffirmed that Congress holds exclusive taxing authority, eliminating tariffs that had generated over $133 billion in revenue.

Refund Uncertainty

While refunds for previously paid tariffs are possible, the process is expected to be complex and lengthy.

New Tariffs Announced

Following the Supreme Court’s decision striking down his earlier emergency‑based tariffs, President Trump imposed a new 10 percent global import surcharge under Section 122 of the Trade Act of 1974, effective February 24, 2026, for up to 150 days, with numerous product and country exemptions.

The statute allows the rate to rise as high as 15 percent, and Trump has already announced his intention to increase the surcharge to that maximum level, though implementing documents are still being clarified.

In parallel, the administration is launching new Section 301 investigations into potential unfair trade practices, which could lead to additional, targeted tariffs on specific countries or industries.

Construction Industry Outlook

For the construction sector, the ruling offers limited relief. Tariffs on steel, aluminum, copper, and lumber remain in place under Section 232.

These tariffs have driven significant cost increases, with aluminum prices rising 30.5 percent and steel prices up 12 percent year-over-year. The Producer Price Special Indexes of Construction Materials are up 6.2 percent year-over-year.

Contractors are advised to consider escalation clauses and price adjustment mechanisms when bidding to manage ongoing volatility.

Broader Economic Context

The drivers of U.S. economic growth continue to recalibrate, with 2025 economic readings shaped by shifting trade dynamics. Key contributors to GDP, including private investment, private consumption, net exports, and government consumption and investment, reflect the evolving landscape of global trade and domestic policy adjustments. 

The Supreme Court’s decision marks a pivotal moment in U.S. trade policy, reaffirming Congress’s exclusive authority over tariffs.

However, for construction professionals facing elevated material costs and tight margins, the ruling is unlikely to bring immediate relief. The industry must navigate continued uncertainty as new tariff mechanisms are implemented.

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