The U.S. Supreme Court has struck down sweeping tariffs advanced by President Donald Trump under a law intended to apply to national emergencies, rejecting one of the most controversial assertions of presidential power in a decision with significant implications for the global economy.
Friday’s decision comes after President Trump used tariffs (taxes on imported goods) as a key economic and foreign policy tool.
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They are at the center of the global trade war that President Trump started after taking office for his second term, alienating trading partners, impacting financial markets, and creating uncertainty in the global economy.
In a 6-3 ruling written by conservative Chief Justice John Roberts, the justices upheld a lower court’s ruling that the Republican president’s use of the 1977 law exceeded his authority.
Citing previous Supreme Court decisions, Roberts wrote that “the president must ‘demonstrate clear Congressional approval’ to justify extraordinary claims of tariff-imposing authority,” adding, “The president cannot do that.”
The Supreme Court reached its conclusion after a legal challenge by businesses affected by the tariffs and 12 U.S. states, most of them Democratic, to President Trump’s unprecedented use of the law to unilaterally impose import taxes.
This is the first major issue in President Trump’s broader agenda to be brought squarely to the nation’s highest court, which he helped shape during his first term, along with the appointment of three conservative jurists.
The majority acknowledged that the Constitution “very clearly” gives Congress the power to levy taxes, including tariffs. Chief Justice John Roberts wrote that “the framers did not give the executive branch any portion of its taxing authority.”
Justices Samuel Alito, Clarence Thomas, and Brett Kavanaugh dissented.
“The tariffs at issue here may or may not be wise policy, but as a matter of language, history, and precedent, they are clearly legal,” Kavanaugh wrote in his dissent.
The majority did not address whether companies would receive refunds for the billions of dollars in tariffs they collectively paid. A number of companies, including major warehouse chain Costco, have already sought refunds in court, and Kavanaugh said the process could be complicated.
“The court today said nothing about whether or how the government should return the billions of dollars it has collected from importers. But, as oral argument acknowledged, the process is likely to be ‘chaotic.’
Rachel Ziemba, a nonresident senior fellow at the Center for a New American Security, told Al Jazeera that the court’s ruling is “clearly a major repudiation of President Trump’s tariff policy and will leave him relying more on other tools, most of which require more public comment periods and Congressional approval.”
Ziemba told Al Jazeera that Friday’s ruling specifically “curtails President Trump’s ability to threaten tariffs against any country for any reason.”
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President Trump’s tariffs were expected to generate trillions of dollars in revenue over the next decade for the world’s largest economy.
The Trump administration has not released tariff collection data since Dec. 14, but economists at Penn Wharton Budget Modeling estimated on Friday that the Trump administration collected more than $175 billion in tariffs under the International Emergency Economic Powers Act (IEEPA). Presumably, this amount will need to be returned due to the Supreme Court’s ruling against tariffs under IEEPA.
The U.S. Constitution gives Congress, not the president, the power to impose taxes and tariffs. But President Trump instead relied on statutory authority to invoke IEEPA, imposing tariffs on nearly all U.S. trading partners without Congressional approval, making him the first president to do so.
President Trump has imposed several additional tariffs under other laws, but they are not at issue here. Based on government data from October to mid-December, these represent about one-third of the revenue from the tariffs imposed by President Trump.
Ziemba said he expects Congress to support tariffs on China and possibly approve secondary tariffs, but that many other tariffs, such as fentanyl tariffs and broad reciprocal tariffs on Canada and Mexico, are “unlikely to pass.”
President Trump said tariffs are critical to America’s economic security, predicting that without them the country would be defenseless and doomed. In November, he told reporters that without tariffs, “other countries would laugh at us because they’ve been using tariffs against us and taking advantage of us for years.” President Trump said the United States is being mistreated by other countries, including China, the country’s second-largest economy.
After the Supreme Court heard arguments in the case in November, President Trump said he would consider alternatives if the tariffs were ruled against him, telling reporters: “We need to develop a ‘game two’ plan.”
Treasury Secretary Scott Bessent and other administration officials said the United States would use other legal justifications to keep President Trump’s tariffs in place for as long as possible.
Among other things, these include legal provisions that authorize tariffs on imports that threaten U.S. national security and retaliatory measures, including tariffs, against trading partners that the Office of the United States Trade Representative determines are using unfair trade practices against U.S. exporters.
None of these alternatives would provide the flexibility and bold dynamics that IEEPA provided Mr. Trump, and may not be able to replicate the full scope of his tariffs in a timely manner.
But Michael Pearce, chief U.S. economist at Oxford Economics, warned that “the administration is likely to restructure tariffs through other more durable measures, (and) overall tariffs could eventually settle near current levels.” However, the sectoral and country-by-country impacts could end up being very different, Pearce added, adding: “There will once again be trade policy uncertainty for businesses, investors and households. This uncertainty is a key downside risk that could detract from, rather than derail, growth this year.”
