Monday Market Minute | Feb 23, 2026

supreme court blocks ieepa tariffs — markets recalibrate as section 122 takes effect

What Moved

The biggest development for Canadian markets in months landed on February 20 when the US Supreme Court ruled that the president cannot use the International Emergency Economic Powers Act to impose tariffs. The ruling immediately invalidated the legal basis for the broad tariffs that have disrupted US-Canada trade since early 2025. Markets surged on the news — the TSX Composite gained over 2% in a single session and the Canadian dollar strengthened sharply. But the relief was tempered within hours. The administration pivoted to Section 122 of the Trade Act of 1974, imposing a 10% tariff effective February 24 with a statutory maximum duration of 150 days. The new rate is lower and time-limited, but it extends uncertainty into the summer. Private credit managers are reassessing borrower risk profiles, while private equity sponsors with pending exits are recalculating cross-border valuation multiples.

Why It Matters

The SCOTUS ruling is structurally significant — it removes the most aggressive tariff tool from the executive toolkit and establishes a precedent that limits future trade actions. For Canadian private market investors, the shift from open-ended IEEPA tariffs to a 150-day Section 122 window fundamentally changes the risk calculus. Deals that were frozen by indefinite trade uncertainty now have a visible horizon. Private credit underwriters can model a scenario where tariffs expire by late July, which makes bridge lending and short-duration strategies considerably more attractive. The ruling also signals to foreign capital that Canadian assets carry less geopolitical discount than markets had priced in over the past year.

Signal to Watch

Watch for early Section 122 exemption filings from major Canadian exporters. If the administration grants sector-specific carve-outs — particularly in energy and critical minerals — it would signal that the 150-day window may end with negotiation rather than escalation.

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