On Feb. 20, 2026, the United States Supreme Court struck down the President’s authority to levy taxes under an emergency powers law, upending ten months of a chaotic tax environment. The decision is welcome, correctly recognizing the Founders’ intent to vest Congress—and Congress alone—with the power of taxation, but the fight for consistency in American trade policy isn’t over yet. Below, MRA unpacks how we got here, and what could come next for Michigan’s retail community.
In April 2025, President Trump announced a suite of “Liberation Day” tariffs aimed at lessening American reliance on foreign markets. To do so, he pointed to authority given to him by various laws, but based most of the tariff impositions on powers found in the International Emergency Economic Powers Act (IEEPA). Over the next ten months, the Administration argued it could use IEEPA to impose tariffs on imports “from any country, of any product, at any rate, for any amount of time” as long as the President declared a national security emergency to justify the move. The definition of “national security emergency” was subsequently stretched so that it included everything from the existence of a trade deficit between America and another country (a common and natural economic occurrence) to perceived personal insults from representatives of foreign countries. These were not arguments attributed to the Administration by partisan critics—these were the arguments made by Administration officials themselves. To be sure, not every threatened tariff saw the same level of follow-through. The Administration wisely backed off on tariffs on commonly-imported goods that have little domestic production, such as coffee and bananas. But the volatile nature of the tariffs created massive uncertainty in the economy, with businesses scrambling to keep up with a tax regime that could change by the day and announced over social media.
MRA sent a snapshot survey to our membership in May 2025, measuring the immediate impacts to retailers. At the time 69% of respondents reported that the tariffs (and the threat of new tariffs) would negatively impact their business in the next 6-12 months. We repeatedly heard from members that the tariffs were a burden, but that the worst impact came from the uncertainty; with retailers trying to plan for the year ahead, it was quickly becoming difficult to guess what the potential costs would be two weeks out, never mind two quarters.
Because larger businesses generally had more flexible resources to navigate the uncertainty, it was smaller businesses who felt the pinch the hardest. Learning Resources, an educational toy business in Illinois, faced a tariff bill of $14 million in 2025, prompting them to sue the federal government over its use of IEEPA.
The Supreme Court ruled 6-3 in favor of Learning Resources, finding that “IEEPA does not authorize the President to impose tariffs” and that “the Framers gave ‘Congress alone’ the power to impose tariffs during peacetime.” As noted in Bill’s column on page 2, the Court did not directly address the possibility of refunds to retailers and other businesses who paid tens of millions in import duties under IEEPA. The legal process is often long and frustrating, and the Court recognized that some would be disappointed in the decision.
In his concurrence, Justice Gorsuch wrote:
“All I can offer them is that most major decisions affecting the rights and responsibilities of the American people (including the duty to pay taxes and tariffs) are funneled through the legislative process for a reason. Yes, legislating can be hard and take time. And, yes, it can be tempting to bypass Congress when some pressing problem arises. But the deliberative nature of the legislative process was the whole point of its design. Through that process, the Nation can tap the combined wisdom of the people’s elected representatives, not just that of one faction or individual. There, deliberation tempers impulse, and compromise hammers disagreements into workable solutions.”
In other words, if you want clarity in U.S. trade policy—a preference MRA members of all sizes have expressed—you won’t find it in the current and future skirmishes between the executive and judicial branches; you’ll have to look to Congress. The Supreme Court plugged one leak in the separation of powers, but another has sprung up in its place. The uncertainty will continue until Congress reclaims its proper role, and not before.
Following the United States Supreme Court ruling, MRA conducted another poll to measure the impact tariffs had on retailers since April 2025. Nearly 75% of respondents reported a negative or strongly negative impact, and more than half (56.1%) said uncertainty surrounding tariffs had affected their business.
Increases in inventory prices top the list of tariff impacts for retailers. One member business surveyed shared, “Tariffs have raised my cost of goods by $50,000 this year.” But impacts to pricing aren’t the only direct impact of tariffs, as retailers have had to make adjustments in other areas of their businesses as well.
When asked about the direct impact of tariffs and the threat of tariffs on their business, 62% of retailers surveyed shared impacts on operational expenses, 51.5% have experienced impacts on future planning, and 48.5% have seen changes to sales volumes.
Another member surveyed stated, “Many of the items we are known for carrying have been discontinued for the short term due to excessive tariff cost increases. Customers are wondering why pricing is changing regularly and why certain items are no longer stocked or subbed to different items.”
To combat tariffs, more than 83% of retailers have had to make adjustments to their normal business plans and operations. Over 62% have changed item pricing, nearly 29% have found new inventory or suppliers, and 24% have delayed, modified, or canceled pre-planned projects because of tariffs. Only 16.7% of retailers surveyed reported no changes to their current strategies to combat the impacts of tariffs.
The survey response demographic represents primarily small businesses, with more than 80% of retailers who responded to the survey being single-location retail businesses, and 85% of respondents employing fewer than 25 people.