SCOTUS limits presidential tariff authority, injecting new oil and gas industry uncertainty

Updated Feb. 20, 2026, to include a comment from Pres. Trump's live-streamed briefing following the decision, as well as a statement from American Petroleum Institute vice-president of corporate policy, Aaron Padilla.

The US Supreme Court ruled that President Donald Trump lacks authority to impose broad tariffs on US trading partners, deciding 6–3 that such powers rest with Congress. Justices Sonia Sotomayor, Elena Kagan, Neil Gorsuch, Amy Coney Barrett, Ketanji Brown Jackson, and Chief Justice John Roberts formed the majority. Justices Samuel Alito, Clarence Thomas, and Brett Kavanaugh dissented.

The decision voids most tariffs imposed over the past year under the International Emergency Economic Powers Act (IEEPA), including reciprocal tariffs used as leverage in trade talks. Steel and aluminum import fees enacted during Pres. Trump's first term and continued by former Pres. Joe Biden, remain in place under separate statutory authority.

At a Friday morning White House event with governors, Pres. Trump called the ruling "a disgrace," according to a CNN report that also noted sources citing the president's reference to a "backup plan."

In a press conference following the ruling, Pres. Trump said SCOTUS "incorrectly rejected" the authority, but that the administration will now go "in a different direction...that is even stronger."  

Trade policy mechanisms

Ken Medlock, III, PhD, Senior Director of the Center for Energy Studies at Rice University, said the ruling "will force the administration to seek other means to impose tariffs or regulate trade through other means to accomplish its various goals. It does not necessarily reset trade policy, just the mechanisms that can be used to implement it." In an email to OGJ he said he expects "additional uncertainty in the near term," which he characterized as disruptive for investment and planning by commercial actors.

Medlock noted that "some tariffs will likely remain if they were sector‑specific because they were not motivated by IEEPA," adding that "there are other sections of different Trade Acts that the president has used previously that could come into play to re‑implement certain tariffs," which introduces "a new type of uncertainty" across some sectors.

He also emphasized that tariff‑driven changes to energy trade deals—especially those involving US energy exports—are unlikely to be fully unwound where long‑term contracts are in place, though the ruling will affect how the administration approaches negotiations.

Costs, refunds, projects

Oil and gas operators, refiners, and petrochemical manufacturers—reliant on imported steel, specialty equipment, and global price parity for refined products—have closely watched IEEPA‑based tariffs. Companies in the supply chain that paid IEEPA tariffs may explore refund claims or adjustments "to the extent that they can," said Ed Hirs, UH Energy Fellow, in an email to OGJ.

If tariffs on steel and aluminum are indeed unaffected, the higher costs of drilling domestically due to the higher prices of steel will continue, Hirs said.  

"The higher costs of steel also factor into the nation’s expenditures for new power plants and electricity transmission facilities," Hirs said, noting the costs are passed along directly to consumers.

In a statement to OGJ, American Petroleum Institute vice-president of corporate policy Aaron Padilla said the decision "highlights the interconnected nature of global markets and the role predictable trade plays in reliability for American consumers.

Continuing, Padilla said "oil and gas industry products were recognized early on and largely excluded from these tariffs," and that the association "will continue working with the administration and other policymakers on trade policies that support US energy leadership." 

This is a developing story. OGJ has requests for comment out to various associations, including Independent Petroleum Association of America and American Fuel & Petrochemical Manufacturers.