Supreme Court Overturns Emergency Tariffs
The Supreme Court has struck down tariffs imposed under the International Emergency Economic Powers Act. In response, President Trump invoked a different authority to impose a temporary 15% global tariff for 150 days. The ruling may subject up to $160 billion in previously paid tariffs to refund claims, potentially creating a budget hole estimated at $1 trillion over a decade.
- The International Emergency Economic Powers Act (IEEPA) of 1977 allows the president to regulate commerce during a national emergency, but until now, it has been used for financial sanctions like freezing assets, not for imposing broad tariffs. - In a 6-3 decision, the Supreme Court determined that the president does not have the authority to impose tariffs under IEEPA, as the power to tax is granted to Congress by the Constitution. Chief Justice John Roberts, in the majority opinion, stated that if Congress were to delegate a power of such "vast economic or political significance," it must do so clearly. - The ruling specifically strikes down the "Fentanyl Tariffs" on Canada, Mexico, and China, as well as the "Liberation Day" reciprocal tariffs that were applied to nearly every country starting in 2025. - The new 15% tariff relies on Section 122 of the Trade Act of 1974, which permits temporary import surcharges for up to 150 days to address a balance of payments deficit; unlike the IEEPA tariffs, these cannot be extended without approval from Congress. - This ruling does not affect all of the administration's tariffs. Levies on steel and aluminum, as well as certain tariffs on Chinese goods, remain in effect as they were imposed under different legal authorities, such as Section 232 and Section 301 of U.S. trade law. - The Supreme Court did not specify a process for refunding the illegally collected tariffs, sending the issue back to lower courts. It is anticipated that importers will need to file claims to recover these funds, a process that could be lengthy.
