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Trump Blasts Supreme Court; Supreme Court Rules Trump Tariffs Illegal. Aired 1-1:30p ET

Aired February 20, 2026 - 13:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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ANNOUNCER: This is CNN breaking news.

BORIS SANCHEZ, CNN HOST: We're following breaking news.

At any moment now, President Trump is expected to give his first public response to what's arguably the biggest legal defeat so far of his second term, the Supreme Court striking down the sweeping tariffs that he imposed under an emergency powers act.

Two Trump-appointed justices, Neil Gorsuch and Amy Coney Barrett, joined the chief justice and the liberal justices in declaring his tariffs illegal and improper use of the law.

BRIANNA KEILAR, CNN HOST: The president called the decision a disgrace, according to sources, and now at least $134 billion in tariff revenue hang in the balance, with the Supreme Court giving no clarity on how to return the money.

We begin the hour with CNN chief legal affairs correspondent Paula Reid.

All right, Paula, first off, just give us the details on this decision.

PAULA REID, CNN CHIEF LEGAL AFFAIRS CORRESPONDENT: This is a decision that has enormous ramifications, not just for President Trump and the extent of the executive power, but also a global economy.

So, here in a 6-3 opinion, the chief justice, John Roberts, wrote that here, the president, by using this law to impose these tariffs, exceeded his power. He wrote that: "No president has invoked the statute to impose any tariff, let alone tariffs of this magnitude and scope. The lack of historical precedent coupled with the breadth of his authority and that the president now claims and suggests that they extend beyond the president's legitimate reach."

Now, this is really significant because here you have really for the first time this conservative court rejecting one of the president's arguments about how far his executive power can go. So that really is significant.

And, as we see here, we're waiting for the president to come into the Briefing Room and give an impromptu press conference. In my experience covering the White House and covering his legal wins and losses, it would be surprising if this was a calm acceptance of this decision.

It is likely that he is going to be quite upset and want to speak his mind, because, again, he appointed two of the justices in the majority.

SANCHEZ: Our reporting indicates that during that dinner -- breakfast, I should say, with governors, he talked about the courts in a frustrating way, even using an expletive, so you can imagine what may come from the podium in the press room.

As part of his dissent, Paula, Justice Kavanaugh pointed to the fact that this decision could lead to a mess when it comes to what to do with the funds that the government has gathered based on these tariffs. Where do they go now?

REID: That's what's so interesting about Kavanaugh's dissent, that he really focuses on the logistics going forward. They knew in arguments this was going to be a natural consequence of rejecting Trump's use of this particular law.

But he says, look, our role right now is just to decide the law. So they really don't lay out the specifics on how exactly you're supposed to issue these refunds. This will likely be litigated. Now, of course, the speaker of the House has said that they're going to work with the White House to try to figure this out.

But this is something that will be a lawyer full employment act. You're going to have litigation, and the lower courts will be deciding this. And as Justice Barrett said in arguments, as Kavanaugh quoted her in his decision, this is going to be a mess. It's going to be messy.

KEILAR: All right, Paula, stay with us, if you will.

Let's go now to the White House, where CNN's Kevin Liptak is standing by.

And, Kevin, as we're waiting here for the president to speak there in the Briefing Room, what more are you learning about how he's responding to this major legal blow?

KEVIN LIPTAK, CNN SENIOR WHITE HOUSE REPORTER: Yes, and we do understand that the president was informed of this during that breakfast with governors at the White House.

He called it a disgrace, although he noted that he had backup options. He essentially cut the meeting short, went back to the West Wing to prepare for this briefing. And I know we're looking at the pictures here. As two former White House correspondents, I think you will recognize that the lighting in that room seems a little off. The president seems to have advised the lights be dimmed in order to

come out and to present what he wants to say about these tariffs. It is true -- and the president mentioned that backup plan. It is true that the White House has been considering for quite some time how they might respond to a negative ruling from the Supreme Court.

They do believe that they have a number of other authorities that they can use to implement some of these tariffs. And I wouldn't be surprised if, when we hear from the president from the podium here, that he lists some of those other authorities that he plans to now go to try and resurrect some of his tariff regime.

There are various issues with each of those authorities. Some of them require an investigation, for example, by the Commerce Department. Others of them have limits in how long tariffs can go into effect or limits on what the percentage of that tariff will be.

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So none of them seem as easy, essentially, as this emergency provision that the White House (sic) has now ruled is illegal. I think the other thing that we will want to hear from the president is how exactly he plans to make up for the revenue losses that could be an effect because of this ruling.

He had essentially been describing these revenues as something of a slush fund to pay for a whole host of policy priorities, whether it was that $12 billion bailout for farmers that he announced last year. He also talked about $2,000 rebate checks that would go out to all Americans paid for using these tariff revenues.

You know, the Cato Institute has a whole list. I think there's 12 policy items that the president has said would be paid for by the tariffs. Now, it was always something in question whether that would be enough money or whether he actually had the authority to do that.

But it does leave an open question without the president plans to move forward with his policy objectives now that this authority has been stripped away. And it's not just his trade objective.

It's also his foreign policy objectives, because he has used tariffs as leverage to advance all manner of foreign policy initiatives, whether it's trying to get countries to wean themselves off of Russian oil, whether it's trying to get countries to tamp down and shipments of fentanyl precursor chemicals. All of these areas that have nothing ostensibly to do with trade also will be affected by this ruling.

And so I think a lot that the president will be questioned on, but I do think, just given how long the court has been weighing this and how long behind the scenes that the White House, they have been developing some of these plan B's, I wouldn't be surprised if the president did come out here to have some answers about how he plans to move forward.

KEILAR: Yes, it'll be really interesting to hear him potentially lay that out.

Kevin, stay with us. Paula, stand by as well, as we are awaiting the president here.

And we're also seeing reaction from Wall Street here. So far, markets, you see them there. There's been some mix following this news.

SANCHEZ: Let's dive deeper into what this all means with Douglas Holtz-Eakin. He's the former director of the Congressional Budget Office, now the president of the American Action Forum.

Doug, thanks so much for being with us.

First, your reaction to this ruling here by the Supreme Court.

DOUGLAS HOLTZ-EAKIN, FORMER CONGRESSIONAL BUDGET OFFICE DIRECTOR: Well, I think this is what a plain reading of the Constitution, which gave the authority to level the tariffs to the Congress, and a plain reading of the statute, where the Congress never explicitly delegates tariffs to the president, this is what I would have expected.

But I'm an economist, not a constitutional lawyer, but this is what I expected all along on sort of a plain reading. It's a really important decision for the economy. If you think about it, we just heard this morning that, in the fourth quarter, the economy expanded at a fairly slow pace, about 1.4 percent, probably in the mid-2s, if you take out the government shutdown.

But that's down substantially from the third quarter, when it was humming along at 4.4 percent. Getting rid of the tariff headwinds is good news for the business community, good news for the households, whose incomes aren't growing. Disposable incomes didn't grow in the second half of last year.

So this is a good news story for the economy, but it's also going to produce the sort of earthquakes we have seen before. There's now a fire sale, no tariffs. We're going to see the imports rush in, just as we did before liberation day last year. That will affect the timing of things in the economy and make it hard to figure out what's going on.

It's going to put the Fed on hold. We're going to have to figure out what to do with the refunds that you heard about. And what comes next? What will the president do to replace these tariffs? He's committed to doing something different.

So, as we lived through in 2025, this decision means we live through the same kind of uncertainty day in, day out in 2026.

KEILAR: And, Doug, I just want to remind our viewers we are watching the White House Briefing Room for President Trump to come out any moment. It is packed today on really a momentous day, where there's been this big legal blow to the president and his tariff policy.

HOLTZ-EAKIN: Yes.

KEILAR: And, Doug, this -- obviously, this comes down to this use of what's called IEEPA, the acronym for International Emergency Economic Powers Act...

HOLTZ-EAKIN: Yes.

KEILAR: ... and the president regulating commerce during a national emergency. This has to do with a foreign threat. And it's the court saying, no, that doesn't -- you can't do that. You're not operating constitutionally under that authority.

Remind us which tariffs this is sort of the basis for.

HOLTZ-EAKIN: Sure.

There are really three flavors of tariffs out there. There are national security tariffs, iron, steel, autos and a list of other things. There's so-called Section 301 bad actor tariffs. That's the fentanyl -- or not fentanyl -- some of the tariffs on China from his first term, and then these.

These are the International Economic Emergency Powers Act. He declared having a trade deficit an economic emergency, an international emergency, and levied the so-called liberation day tariffs, the across-the-board 10 percent tariff-plus, tariffs of up to 50 percent on countries around the globe.

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Those are the ones that are now struck down, plus the fentanyl tariffs on Canada, Mexico and China. So it's a sweeping chunk of the tariffs, about $230 billion at current pace. And it will have a big impact on the lives of small businesses in the U.S. and households as they go to the stores.

SANCHEZ: Doug, this is going to be a tough question to answer, but I wonder, as an economist, what you think should happen to that money that the government took in from these tariffs? I mean, should there be checks sent to the importers who paid that money or should it just be a wash?

Should checks be sent out to the American people? It's a lot of money. It's in the billions.

HOLTZ-EAKIN: Taxes were paid by Americans, businesses and households, to Customs and Immigration Services inappropriately. Those money should be refunded to them in the amounts that they paid in.

Now, there's been a lot of talk about how this is going to be complicated and a mess, but if you thumb your nose at the Constitution, you have to clean up the mess. I don't have a lot of sympathy for the idea that somehow you can take money from a taxpayer inappropriately and then not owe it back to them.

That's what should happen. It should happen as quickly as possible.

KEILAR: If that money is repaid, as you say it should be in that way...

HOLTZ-EAKIN: Yes.

KEILAR: ... I mean, then it's very clear actually, and this is important, but obvious, who then paid for these tariffs, right?

HOLTZ-EAKIN: Yes. Yes.

KEILAR: And what does that say to what the president has long said about who's actually paying the tariffs?

HOLTZ-EAKIN: Well, for a year, we have heard this argument that somehow Americans don't bear the burden of the tariffs, foreigners are paying them. It's never been true.

Tariffs are taxes on imports paid for by the importer, a household or a firm in the United States. They write checks to Customs and Immigration. There's a narrow, highly improbable world in which every foreign producer cuts their price by enough to offset the tariff and taxes -- or prices, plus tariffs, don't go up in the U.S.

But that's never been plausible, and those studies have never found anything close to that. Americans have paid those tariffs for a year. And it's been a substantial headwind to the economy. There's no question about it. And so to have that tariff relief, I think, is legally appropriate and economically beneficial right now.

SANCHEZ: At any moment, we are anticipating President Trump will address the room at the White House, the press room at the White House, and give his first public remarks on the Supreme Court decision regarding tariffs.

Doug, I thought it was notable that, as part of the opinion, Neil Gorsuch, who sided with the majority, talked about the process of legislation and why it's important for this kind of trade policy to go through a mediated process with different voices, representatives of the people.

In Mike Johnson, the speaker of the House's response to this news, he talked about potentially exploring options in Congress to allow the president to enact a different tariff policy than history has shown, one perhaps that gives the president more power.

Is there an appetite for that generally, would you say?

HOLTZ-EAKIN: I'd say two things about that.

Number one, I think the point about the process is really important. If this had been legislation, we would have known the date at which any tariff started, the date it would sunset if it was going to go away, who was liable for paying that tariff, what goods, what services, and it would all have been decided in a mutual fashion by the House, the Senate with input from the business community, households in America.

They would have been taxes taken from the Americans economy because we had chosen to do that. That's not at all close to what happened. So you have got the chaos of what's the tariff going to be today, it goes up, it goes down, we're going to suspend it for 90 days, put it back in. That doesn't happen if you legislate. So if they want to do tariffs, Congress can do them and you get a

better process. I will then say, the second thing, there's no appetite that I can identify for Congress to legislate these kinds of tariffs. Congress has been loath to raise taxes on anyone under the top 1 percent, and these tariffs are among the most regressive taxes that we could imagine.

They are taxes on exactly the people both parties have been trying to avoid taxing for decades now. So I don't see any real future for that.

KEILAR: Yes, they have the numbers, but not the will, as you say. And it is an election year, a very pivotal one, right?

HOLTZ-EAKIN: Right.

KEILAR: So as the president comes out and he is perhaps, as Kevin was reporting, going to talk about the path forward, what does that look like to you?

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HOLTZ-EAKIN: They have a number of routes to impose tariffs, which Congress has given the president.

They involve more process usually, like a national security designation. You do an investigation. You find out that steel represents a national security vulnerability. And in light of that, you levy tariffs on imports of steel. That's happened already. We can do more things like that.

Congress has given the president authority to do that. You can identify bad actors in international trade and impose tariffs on them. Congress has given the president the authority to do that. Again, it requires an investigation. It takes a little longer. You get to pick the tariff and put it in place.

It's not like these unilateral tariffs where he raises them and lowers them and cuts a deal with the country and backs the tariff down. So it really limits his flexibility, which we know he enjoys enormously, and it limits his leveraging in international negotiations.

But he can replicate the tariff wall that he's put up around the United States.

SANCHEZ: Doug, please stand by for us as we await President Trump's entrance into the Briefing Room.

Let's go back to the White House with Kevin Liptak, because, Kevin, when we talk about potential plan B options, your reporting, the reporting from our team at the White House indicates that the White House was anticipating this decision and had already started working on some alternatives.

LIPTAK: Yes, and this has been the subject of meetings, many, many meetings behind the scenes at the White House for months and months, really ever since the oral arguments and when it seemed clear that this may have been the direction of travel for the Supreme Court.

A lot of these authorities that the president may come to rely upon, he has in fact used. Not every tariff that the president has imposed in his term so far was using the emergency authorities. He's used, for example, the Section 232. And this is getting very in the weeds, but he's used the section 232 to imply tariffs on steel and aluminum, citing national security purposes.

But the issue with that is, it requires an investigation. The Commerce Department actually has to put down on paper what precisely the national security rationale is for applying these duties on whatever it is that the president wants to put them on.

The other sections include section -- this is very nitty-gritty, but Section 301, which allows it to put in if the president determines that there are unfair trade practices. That too requires an investigation. But the span of what an unfair trade practice is, if you're President Trump, could potentially be extended to include all of these other areas where the president sees issues with how other countries are conducting their business.

I think the real imperative for the White House is to try and get these stood up relatively quickly, because now that the court has deemed the emergency authorities illegal, they are going to be under pressure to provide these refunds.

You know, countries are going to start coming and asking, essentially, for their money back. And that is something that the justices acknowledged would be a messy process in their ruling. And it's something the president himself has talked about in public over the last several months about how difficult that would be if that was the ultimate ruling from the court.

And so I think there will be an imperative to try and get these in place fairly quickly, because that refund process is going to send, I think, shockwaves through the economy about how the president plans to go about doing that.

I think the other sort of target date that the White House will want to have in order for these tariffs to be replaced is the president's trip to China, which is coming up in April. And then we just got the dates for that today. It's starting on March 31.

The president has relied on these tariffs really for the entirety of his relationship with the president, Xi Jinping, which is very, very tense, in the early months of last year, the president slapping a huge amount of tariffs on China, eventually easing up as they reached a trade truce, but still something of a point of leverage with Xi as he worked to secure a deal that was advantageous to the U.S.

Now, when he goes to Beijing on March 31 and sits across the table from President Xi, that power and that leverage will essentially be sapped. And, certainly, the Chinese have been watching very, very closely these legal proceedings that have to do with the tariffs.

And so I think that the White House, as they were observing the court and as they were preparing for this decision, certainly recognized that, once the ruling came, it would be of the essence to get something in place very, very quickly that could replace the emergency tariffs if the ruling was negative.

KEILAR: All right, Kevin Liptak, thank you so much.

Again, we are awaiting President Trump, who is going to be speaking any moment after this big upset, anticipated, yes, but huge nonetheless, the Supreme Court saying the authority that he was using for much of his tariffs, he's not able to do that.

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And now there's a lot of money collected by the federal government and an obligation to pay that back.

We're going to keep an eye on this. We will bring this live to you as soon as it gets going.

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SANCHEZ: Let's go straight to the White House and President Trump reacting to news that the Supreme Court has deemed his tariffs illegal.

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DONALD TRUMP, PRESIDENT OF THE UNITED STATES: ... a new record. We set a record every time.

Well, thank you very much for being here.

The Supreme Court's ruling on tariffs is deeply disappointing, and I'm ashamed of certain members of the court, absolutely ashamed, for not having the courage to do what's right for our country.

I'd like to thank and congratulate Justices Thomas, Alito and Kavanaugh for their strength and wisdom and love of our country, which is -- right now very proud of those justices.

When you read the dissenting opinions, there's no way that anyone can argue against them. There's no way. Foreign countries that have been ripping us off for years are ecstatic. They're so happy. And they're dancing in the streets, but they won't be dancing for long. That, I can assure you.

The Democrats on the court are thrilled, but they will automatically vote no. They're an automatic no, now just like in Congress. They're an automatic no. They're against anything that makes America strong, healthy, and great again.

They also are a, frankly, disgrace to our nation, those justices. They are an automatic no, no matter how good a case you have. It's a no. But you can't knock their loyalty. It's one thing you can do with some of our people. Others think they're being politically correct, which has happened

before far too often with certain members of this court. And it's happened so often with this court. What a shame, having to do with voting in particular, when in fact they're just being fools and lapdogs for the RINOs and the radical left Democrats, and not that this should have anything at all to do with it.

They're very unpatriotic and disloyal to our Constitution. It's my opinion that the court has been swayed by foreign interests and a political movement that is far smaller than people would ever think. It's a small movement.

I won by millions of votes. We won in a landslide. With all the cheating that went on, there was a lot of it, we still won in a landslide. Too big to rig. But these people are obnoxious, ignorant, and loud. They're very loud.

And I think certain justices are afraid of that. They don't want to do the right thing. They're afraid of it.

This was an important case to me, more as a symbol of economic national security and also, I would say, just for our country itself, so important, because we're doing so well as a country. We have never done so well.

The good news is that there are methods, practices, statutes, and authorities, as recognized by the entire court in this terrible decision and also as recognized by Congress, which they refer to, that are even stronger than the IEEPA tariffs available to me as president of the United States.

And, in actuality, I was very modest in my ask of other countries and businesses, because I wanted to do -- and it's very important. I wanted to be very well behaved because I wanted to do anything -- I didn't want to do anything that would affect the decision of the court, because I understand the court. I understand how they're very easily swayed. I wanted to be a good boy.

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I have very effectively utilized tariffs over the past year to make America great again. Our stock market has just recently broken 50000 on the Dow, and, simultaneously and even more amazingly, broken 70 -- broken 7000 on the S&P, two numbers that everybody thought upon our landslide election victory could not be attained.

Think of that. Nobody thought it was possible to do it within four years, and we did it in one year. They said, you will never be able -- you will go back and you read the geniuses, read their statements, all of the Nobel Prize winners in economics. They said, no, you couldn't do it in four years.

Well, we didn't do it in four years. We did it in one year. We broke every record in the book, and we're continuing to do so. Tariffs have likewise been used to end five of the eight wars that I settled. I settled eight wars, whether you like it or not, including India, Pakistan, big ones, nuclear. Could have been nuclear.

The prime minister of Pakistan said yesterday at the great meeting that we had, the Peace Board, he said yesterday that President Trump could have saved 35 million lives by getting us to stop fighting. They were getting ready to do some bad things.

But they have given us great national security, these tariffs have and together with our strong borders reduced fentanyl coming into our country by 30 percent when I use them as a penalty against countries illegally sending this poison into our country, poison our youth. All of those tariffs remain. They all remain.

I don't know if you know that or not. They all remain. We're still getting them. And we will after the decision, because there's nobody left to appeal to, but, again, those three people, such respect. I have had a lot of respect for them anyway, but such great respect.

But other alternatives will now be used to replace the ones that the court incorrectly rejected. We have alternatives, great alternatives. Could be more money. We will take in more money and we will be a lot stronger for it. We're taking in hundreds of billions of dollars. We will continue to do so.

To show you how ridiculous the opinion is, however, the court said that I'm not allowed to charge even $1. I can't charge $1. Can't charge a dollar. I would have used one penny, but we don't make the pennies anymore. We save money. Can't charge $1 to any country under IEEPA, not $1, I assume to protect other countries.

This must have been done to protect those other countries, certainly not the United States of America, which they should be interested in protecting. That's what they're supposed to be protecting.

But I am allowed to cut off any and all trade or business with that same country. In other words, I can destroy the trade. I can destroy the country. I'm even allowed to impose a foreign country-destroying embargo. I can embargo. I can do anything I want, but I can't charge $1, because that's not what it says and that's not the way it even reads.

I can do anything I want to do to them, but I can't charge any money. So I'm allowed to destroy the country, but I can't charge them a little fee. I could give them a little 2 cent fee, but I cannot charge under any circumstances. I cannot charge them anything.

Think of that. How ridiculous is that? I'm allowed to embargo them. I'm allowed to tell them you can't do business in the United States anymore. We want you out of here. But if I want to charge them $10, I can't do that. It's incorrect. Their decision is incorrect.

But it doesn't matter, because we have very powerful alternatives that have been approved by this decision. They have been approved by the decision, for those that thought they had us. And they're saying that I have the absolute right to license, but not the right to charge a license fee. So think of that. I have the right to license, which is a very

powerful word -- in many ways, licenses more powerful than tariffs. In fact, I was thinking about using it. But they came up with the idea that I can license, just like the people that were opposing me told them to do, but not the right to charge a license fee.

Think of that. Whoever heard of such a thing. What license has ever been issued without the right to charge a fee? You get a license, you charge a fee. It's automatic, but not with this court.

But now the court has given me the unquestioned right to ban all sorts of things from coming into our country, to destroy foreign countries, but a much more powerful right than many people ever thought we even had, but not the right to charge a fee. How crazy is that?