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In a landmark decision on Friday, the Supreme Court dismantled a significant portion of former President Donald Trump’s economic strategy by ruling against the extensive tariffs he had implemented. The court found that Trump’s use of an emergency statute to alter global trade was not lawful.
This ruling effectively nullifies what the Trump administration had hailed as a cornerstone of his economic and foreign policy during his second term. Trump had previously warned that the removal of these tariffs could lead to severe financial consequences for the United States.
The Supreme Court specifically addressed Trump’s broad application of the International Emergency Economic Powers Act (IEEPA) to justify tariffs on nearly every nation. This statute, originating in the 1970s, grants the president the authority to “regulate” imports in response to national emergencies that constitute an “unusual and extraordinary” threat.
Chief Justice John Roberts commented, “We do not claim expertise in economic or foreign affairs. Our role, as defined by Article III of the Constitution, is limited. In fulfilling that role, we conclude that the IEEPA does not empower the President to impose tariffs.”
“We claim only, as we must, the limited role assigned to us by Article III of the Constitution. Fulfilling that role, we hold that IEEPA does not authorize the President to impose tariffs.”
Trump is the first president to attempt to invoke IEEPA to impose tariffs in its nearly 50-year history.
The decision does not provide guidance for how refunds will work, a battle that lays ahead in the lower courts.
Despite Trump’s string of victories before the high court over the past year, the justices expressed deep skepticism about his ability to justify his economic agenda with the string of emergencies he cited.
Starting in February, Trump declared an emergency over fentanyl to impose tariffs on Canada, China and Mexico. And more recently, he cited a trade deficit emergency in imposing his so-called reciprocal tariffs on dozens of trading partners across the globe.
Lower judges allowed the levies to continue until the Supreme Court resolved the case. Trump’s sector-specific tariffs that rely on separate legal authorities, like those on steel, aluminum and copper, were not at issue and remain in effect.
Trump has called the case one of the most important in American history, and as the court worked on its decision behind closed doors, the president repeatedly warned publicly that ruling against him would spell economic disaster.
The decision left three of the court’s conservatives in dissent.
Justice Brett Kavanaugh wrote in a dissenting opinion joined by Justices Clarence Thomas and Samuel Alito that, despite the “vigorous policy debates” spurred by Trump’s tariffs, those debates are not for the courts to resolve.
“The sole legal question here is whether, under IEEPA, tariffs are a means to ‘regulate…importation,’” Kavanaugh wrote. “Statutory text, history, and precedent demonstrate that the answer is clearly yes: Like quotas and embargoes, tariffs are a traditional and common tool to regulate importation.”
He said that “context and common sense” underpin that interpretation of the emergency powers law. However, Trump’s bid to impose tariffs may not be entirely foiled.
“In essence, the Court today concludes that the President checked the wrong statutory box by relying on IEEPA rather than another statute to impose these tariffs,” Kavanaugh added.
The decision is expected to spark a refund push from companies across the country to recover the billions in now-invalidated tariffs they’ve paid. The Supreme Court does not lay out a process for how they will be refunded.
The decision is expected to spark a refund push from companies across the country to recover the billions in now-invalidated tariffs they’ve paid. In the lead-up to the decision, Costco, parts of the Toyota Group, Revlon and hundreds of other companies had already filed lawsuits seeking to protect their claims.
None of those major corporations were part of the Supreme Court case, however.
The justices considered underlying lawsuits brought by Democratic-led states and two groups of small businesses. Those businesses were represented by a heavyweight legal team with lawyers across the political spectrum.
It’s a rare loss for the administration, which has regularly emerged victorious before the conservative-majority Supreme Court in a flood of emergency appeals the Justice Department has brought to fight lower judges’ injunctions.
But the tariffs decision marks the first time the Supreme Court has provided a final opinion on the underlying legality of one of Trump’s policies.
Though it marks a significant defeat for the president, he retains avenues to still push through his tariff agenda. Congress has constitutional authority to impose new tariffs, and Trump try to justify tariffs under another, existing law.
Updated 10:23 a.m. EST