Supreme Court Kills Trump Tariffs
The U.S. Supreme Court has struck down President Trump’s “reciprocal” tariffs, a major blow to his administration's trade policy. The ruling is being hailed as a big win for China, potentially reopening the U.S. market to a flood of Chinese goods. Despite the legal setback, Trump is expected to seek alternative ways to implement protectionist measures.
The Supreme Court's 6-3 decision hinged on the International Emergency Economic Powers Act (IEEPA), a 1977 law. The majority, led by Chief Justice John Roberts, ruled that while IEEPA allows a president to "regulate" commerce during a national emergency, it does not grant the explicit power to tax, which is a power the Constitution vests in Congress. This ruling specifically invalidates the sweeping "reciprocal tariffs" first imposed in April 2025 and separate tariffs on goods from Canada, Mexico, and China related to a fentanyl trafficking emergency. It does not, however, affect other major tariffs levied under different statutes, such as the Section 232 duties on steel and aluminum or the Section 301 tariffs targeting Chinese intellectual property practices. The court's decision opens the door for companies that paid the illegal tariffs to seek massive refunds. While the Supreme Court did not rule on retroactive refunds, it left the issue open for lower courts, with potential claims estimated to be between $150 billion and $200 billion. Hours after the ruling, former President Trump invoked Section 122 of the Trade Act of 1974, a previously unused provision, to impose a new 15% global tariff. This law allows for temporary surcharges to address "serious balance-of-payments deficits." Unlike the invalidated tariffs, actions under Section 122 have strict limits. The tariffs cannot exceed 15% and automatically expire after 150 days unless Congress votes to extend them. The law also requires the measures to be applied broadly, not targeted at individual countries.
