The US Supreme Court on delivered a significant blow to former President Donald Trump’s trade policies, striking down his sweeping tariffs imposed on goods from around the globe. The 6-3 decision centers on the interpretation of the International Emergency Economic Powers Act (IEEPA), finding that the law does not authorize the president to impose tariffs, which the court classified as taxes.
The ruling potentially opens the door to more than $175 billion in refunds for American companies that paid tariffs under the challenged policies. Economists at Penn-Wharton Budget Model estimate What we have is the amount collected since under the IEEPA-authorized tariffs.
Trump’s tariffs, enacted starting in his second term, targeted a broad range of countries, and goods. These included the controversial “reciprocal tariffs” implemented in , which even extended to remote islands, reportedly including those populated solely by penguins, in an attempt to mirror tariff practices of other nations. The administration justified these tariffs under IEEPA, citing national security and economic emergency powers.
However, the Supreme Court found this application of IEEPA to be an overreach. Chief Justice John Roberts, writing for the majority, noted that in the statute’s half-century of existence, no president had previously used it to impose tariffs of this magnitude. The court emphasized that the president “must identify clear congressional authorization to exercise it,” when imposing taxes like tariffs.
The decision represents a rare rebuke of the Trump administration by the Supreme Court. Justices Clarence Thomas, Samuel Alito, and Brett Kavanaugh dissented from the majority opinion.
The White House’s response was swift and critical. According to CNN’s Kaitlan Collins, Trump reportedly called the ruling a “disgrace” during a breakfast with governors on morning, and indicated he had an alternative plan in place.
It’s important to note that not all of Trump’s tariffs are affected by this ruling. Tariffs on steel, aluminum, and copper, for example, were imposed under different authorities and remain in effect. This distinction highlights the complex web of trade policies enacted during the Trump administration.
The ruling is expected to trigger a wave of refund requests from companies that paid the now-invalidated tariffs. Major corporations, including Costco, Prada, BYD, and Goodyear, have already filed lawsuits seeking reimbursement. Financial services firm Cantor Fitzgerald even created investment products allowing clients to bet on the tariffs being overturned, anticipating this outcome as early as .
Dan Anthony, executive director of the small business coalition We Pay the Tariffs, expressed concern that the administration might attempt to reimpose the tariffs through alternative legal mechanisms. “Small businesses are rightfully worried that the administration will respond to this legal defeat by simply reimposing the same tariff policy through other means,” Anthony said in a statement. “Tariffs reimposed under different statutory approaches would have the same destructive effect.”
However, reimposing the tariffs won’t be straightforward. Other relevant policies often require extensive procedures and trade investigations before tariffs can be implemented, creating a significant hurdle for the administration. The process of refunding the collected tariffs also presents logistical challenges, as Trump himself acknowledged, stating it would be “a complete mess, and almost impossible for our country to pay.”
The legal challenge to the tariffs underscores the ongoing debate over presidential authority in trade policy. While presidents have historically enjoyed broad discretion in this area, the Supreme Court’s decision reaffirms the principle that such power is not unlimited and requires clear congressional authorization, particularly when it comes to levying taxes.
