Supreme Court Guts Trump's Tariffs
The U.S. Supreme Court has struck down President Trump's "reciprocal" tariffs, a cornerstone of his trade policy, in a decision seen as a major victory for China. While the ruling removes significant barriers for Chinese exporters, analysts warn the administration may still pursue protectionist measures through other legal channels, such as invoking national emergency powers.
The Supreme Court's 6-3 decision hinged on the constitutional separation of powers, with the majority opinion, authored by Chief Justice John Roberts, affirming that the power to "lay and collect Taxes, Duties, Imposts and Excises" rests with Congress. The ruling stated that the International Emergency Economic Powers Act (IEEPA) of 1977, which the administration used as its legal basis, does not grant the president the authority to impose tariffs. The now-illegal tariffs were first imposed in April 2025, starting with a 10% baseline on goods from most countries and higher "reciprocal" rates for nations with large trade surpluses with the U.S. At its peak, the effective tariff rate on many Chinese goods reached as high as 145% before being reduced as part of a temporary trade agreement. The invalidated tariffs had a significant economic impact, costing the average American household an estimated $1,000 in 2025. In total, the U.S. government collected approximately $133.5 billion in revenue from these tariffs, which may now be subject to refunds to importers. Within hours of the Court's decision, the administration invoked Section 122 of the Trade Act of 1974 to impose a new, temporary 10% tariff on most imports, effective for 150 days. This law allows for temporary import surcharges to address balance of payments deficits. While the Supreme Court has curtailed the use of IEEPA for tariffs, the administration retains other protectionist tools. These include Section 232 of the Trade Expansion Act of 1962, which allows for tariffs on national security grounds and has been used for steel and aluminum imports, and Section 301 of the Trade Act of 1974, which addresses unfair trade practices. Following the ruling, Democratic lawmakers have called for the federal government to issue full refunds with interest to the businesses that paid the illegal import duties. The total amount to be refunded is estimated at around $175 billion.
