Supreme Court Strikes Down Trump-Era Tariffs
The U.S. Supreme Court has struck down tariffs from the Trump administration, a move with significant implications for global markets and supply chains. The development was highlighted in the ITS Logistics February Supply Chain Report. The decision is expected to influence import behavior and ease some inflationary pressures.
The Supreme Court's 6-3 decision in *Learning Resources, Inc. v. Trump* centered on the 1977 International Emergency Economic Powers Act (IEEPA). The majority opinion, penned by Chief Justice John Roberts, affirmed that the Constitution grants the power to tax and levy tariffs exclusively to Congress, and IEEPA did not contain the explicit language required to delegate that authority to the President. This ruling specifically strikes down the broad "reciprocal tariffs" imposed on nearly all countries and punitive tariffs aimed at Canada, China, and Mexico, which were justified under declared national emergencies. These measures had caused the average U.S. tariff rate to surge from 2.5% to a peak of 27% in early 2025, the highest in over a century, before settling at 13.7% this month. The now-illegal tariffs generated more than $130 billion in revenue, collected from U.S. importers. Research indicates that American importers and consumers ultimately shouldered approximately 96% of this cost, effectively functioning as a widespread consumption tax. Industries like manufacturing, automotive, and consumer goods were among the hardest hit by the tariff regime. For instance, tariffs on steel and aluminum were increased to 50%, and a 25% tariff was applied to most imported cars, impacting complex international supply chains where parts often cross borders multiple times. The Court's decision does not impact tariffs implemented under other authorities, such as the Section 232 tariffs on steel and aluminum or the Section 301 tariffs targeting China. Those measures remain in effect as they rely on different statutory justifications related to national security and unfair trade practices. Immediately following the ruling, the administration invoked Section 122 of the Trade Act of 1974 to impose a new temporary global tariff of 15%. Meanwhile, the issue of refunding the billions of dollars already collected under the invalidated IEEPA tariffs has been sent to the U.S. Court of International Trade for resolution.
