The US Supreme Court declared Donald Trump’s broad global tariffs unlawful, a significant rejection of the president’s key economic policy that disrupted global trade. The high court, with a conservative majority, voted 6-3, stating that the International Emergency Economic Powers Act (IEEPA) of 1977, which Trump had used, does not grant the president the authority to impose tariffs.
In response to the ruling, Trump announced a 10 percent global tariff for 150 days to replace some of the emergency duties invalidated by the Supreme Court. The president stated that this action would be executed under Section 122 of the Trade Act of 1974, in addition to the existing tariffs in place.
Under the Trade Act of 1974, the president has the ability to impose duties of up to 15 percent for a maximum of 150 days concerning significant balance of payments issues without the need for investigations or other procedural constraints.
Trump mentioned that there are alternative options available, emphasizing the potential for increased revenue and strength through these tools. Furthermore, his administration is commencing various unfair trade practices investigations under Section 301 to safeguard the country from such practices by other nations and companies.
This ruling represents a major setback for Trump, marking his most significant defeat at the Supreme Court since his return to office. While tariffs have been a tool for Trump in diplomatic negotiations, he extensively used emergency economic powers in his second term to impose new duties on almost all US trading partners.
The Supreme Court decision highlighted that if Congress intended to grant the power to impose tariffs through IEEPA, it would have done so clearly, as it has done in other tariff statutes consistently. The ruling, with three liberal justices and three conservatives concurring, upheld lower court decisions that the tariffs imposed by Trump under IEEPA were unauthorized.
Despite the positive reaction from business groups, such as the National Retail Federation, caution remains regarding the refund process for importers affected by the tariffs. The impact of the loss of IEEPA tariff revenues on the US government could be substantial, estimated at around $140 billion by EY-Parthenon’s chief economist.
Democratic leaders celebrated the ruling, emphasizing the benefits for US consumers, although concerns were raised about the challenges consumers and small businesses might face in reclaiming previously paid tariffs. The ruling is expected to affect the effective tariff rate faced by consumers, potentially reducing it from 16.9 percent to 9.1 percent.
The European Union, Britain, and Canada all responded to the ruling, with each country assessing its implications on trade relationships. While the ruling may limit the president’s ability to impose broad tariffs without due process, other statutes remain available for tariff implementation, albeit with more specific limitations or requirements.
Overall, the Supreme Court’s decision dismantles the legal foundation of Trump’s tariff policies but leaves room for other avenues to implement tariffs, albeit with more constraints and procedures in place.