When the U.S. Supreme Court strikes down a law, the problem isn’t the tariff that falls — it’s the one that comes next

On February 20, 2026, the U.S. Supreme Court ruled 6–3 in Learning Resources, Inc. v. Trump: the International Emergency Economic Powers Act (IEEPA), enacted in 1977, does not authorize the president to impose tariffs. In one stroke, the reciprocal tariffs of “Liberation Day,” the drug-trafficking tariffs applied to Canada, Mexico, and China, and the entire tariff architecture the Trump administration had built on that legal foundation over more than a year were invalidated.

Markets initially rallied; the euphoria was short-lived.

That same day, before markets closed, Trump proclaimed a global 10% tariff under Section 122 of the Trade Act of 1974, which U.S. Customs and Border Protection (CBP) implemented on February 24. A day later, the White House signaled it was considering raising the rate to 15% — the maximum that section allows — though CBP started at 10%. At the same time, the administration launched investigations under Section 301 that could support additional tariffs with no time limits or rate caps.

The thesis worth examining is not whether the ruling is a victory or defeat for free trade. It’s a more uncomfortable question: what happens to an Ecuadorian exporter when the legal framework governing their freight quote, their letter of credit, and their long-term contract changes three times in 96 hours?

The Mechanism That Generates Real Harm

The Court held that IEEPA authorizes the president to “regulate” commerce during national emergencies, but that this power does not equate to the authority to impose tariffs, which the Constitution expressly reserves for Congress. The legal reasoning is sound. The operational problem is what happens during the transition between one legal framework and the next.

CBP waited to issue guidance and deactivate codes, without publicly explaining the delay. The practical result: cargo in transit spent days not knowing under which regime it would be taxed upon arrival at port.

The second problem is the structural temporality of the new instrument. Section 122 allows tariffs of up to 15% for a maximum of 150 days without congressional approval, setting a new expiration date of July 24, 2026, unless Congress extends it. What this means in practice is that the cycle of uncertainty does not end with this ruling — it resets with another countdown. Meanwhile, the administration has already announced investigations under Section 301 that could support additional tariffs with no time limit or maximum rate.

Who Wins, Who Loses in Ecuador

Ecuador arrives at this moment in a peculiar contractual position. It had negotiated a Reciprocal Trade Agreement (RTA) with Washington that secured the elimination of the surcharge for 215 subheadings, including banana, cacao, plantain, pitahaya, and pineapple. However, that coverage reaches only 33% of Ecuadorian exports to the U.S. market. Shrimp, tuna, and broccoli were left out of the agreement, representing more than $2.2 billion in exports.

The ruling opens a window. Economic analyst Alberto Acosta noted that while Washington rebuilds its legal foundation, Ecuador’s negotiating leverage improves, and that signing the RTA hastily before the new legal framework is clarified would amount to surrendering structural market access in exchange for conditions that have yet to be defined.

The Minister of Production, Luis Alberto Jaramillo, confirmed that there is ongoing communication with the Office of the U.S. Trade Representative (USTR), and that the 10% proclamation included a new annex covering 215 Ecuadorian subheadings at a 0% surcharge. What remains to be negotiated is precisely the most valuable part: shrimp and the products that were left out of the first round.

Two Scenarios

Likely scenario — negotiation window seized: Ecuador pauses the RTA until the new U.S. legal framework stabilizes, uses that period to include shrimp, tuna, and broccoli in negotiations, and secures more favorable terms than those in the first agreement. Section 122 expires in July without congressional extension, forcing the Trump administration to negotiate with greater urgency. Indicator: formal activation of a deadline-extension mechanism in talks with the USTR before April.

Dangerous scenario — litigation freezes the board: The United States already faces more than 2,000 lawsuits from importers seeking to recover tariffs paid under IEEPA, and the reimbursement process could stretch for years. If that legal uncertainty paralyzes decision-making within the U.S. executive branch, Ecuador is left negotiating with a counterpart that doesn’t know what it can legally offer. Export contracts signed under the partial RTA regime are left in legal limbo. Trigger: absence of an official Trump administration position on reimbursements and a new tariff framework before the 150-day Section 122 window expires.

What Cannot Wait

The risk is no longer just in the tariff rate — it lies in the speed at which the criteria, the codes, and the exemptions change. For any Ecuadorian exporting company with long-term contracts to the U.S., the urgent question is not what it pays today, but what adjustment clauses those contracts contain for when the tax regime changes three times in a single week. Those that didn’t have them in January are finding out now.

Sources: SCOTUSblog; Tax Foundation; WilmerHale; Honigman; El Universo; Primicias.ec; Infobae; Analdex; The Budget Lab at Yale.