US Supreme Court Strikes Down Most of Trump's Tariffs Imposed Under National Emergency Law

The US Supreme Court on Friday ruled that he exceeded his authority when imposing sweeping tariffs using a law reserved for a national emergency, striking down most of his tariffs. The justices, divided 6-3 held that Trump’s aggressive approach to tariffs on products entering the United States from across the world were ‘illegal’ as they were not permitted under a 1977 law called the International Emergency Economic Powers Act (IEEPA). Reacting to the apex court’s ruling, Trump called the ruling a “disgrace” during a White House breakfast with US governors. According to two people familiar with his remarks, as quoted by CNN , Trump told those present that he already had a backup plan in mind following the court’s decision. Administration officials had earlier prepared the president for the possibility of an adverse ruling, assuring him that alternative ways existed to pursue his trade agenda even if the tariffs were invalidated. A 6-3 Court tells Trump he lacks the power to impose tariffs under IEEPA pic.twitter.com/sFygXiggOx The decision does not affect all of Trump’s tariffs, leaving in place ones he imposed on steel and aluminum using different laws, for example. But it upends his tariffs in two categories. One is country-by-country or “reciprocal” tariffs, which range from 34% for China to a 10% baseline for the rest of the world. The other is a 25% tariff Trump imposed on some goods from Canada, China and Mexico for what the administration said was their failure to curb the flow of fentanyl, NBC reported. Tariffs are taxes on imports, and economists have said US consumers have paid most of the cost. In 2025, Trump’s tariffs made everyday items like furniture, clothing, food, electronics, and cars more expensive, costing the average household about $1,000. For 2026, that extra cost could rise to between $1,300 and $1,700 per household, as per a CNBC report citing Tax Foundation data. Despite widespread sceptism, however, Trump had defiantly defended his move to impose tariffs, calling it the “best thing to have happened to the US”. According to estimates from the Penn-Wharton Budget Model (PWBM), more than $175 billion in tariff collections can now be subject to refunds. The non-partisan research group at the University of Pennsylvania calculated that approximately $179 billion has been collected under IEEPA-based tariffs since their introduction. The estimate was prepared at Reuters’ request and is based on detailed product and country-level tariff data. Importers may now also seek refunds from US Customs and Border Protection for duties paid over the past year. Net collections could be slightly lower than assessed totals, as tariff assessments are often adjusted or corrected. The Trump administration will have to face a huge problem. It might have to return around $180 billion collected from these tariffs so far. However, the administration still has other legal options. Implementing these alternatives could cause short-term market fluctuations. Implementing these alternatives could cause short-term market fluctuations. For example, the government could use Section 122 to maintain a 15% tariff for 150 days. This would give officials time to set up longer-term tariff plans. “Replacing IEEPA tariffs with a blanket 15% rate could lead to a modest short-term reduction in the effective rate, but much will depend on whether current trade agreements and sector exemptions are upheld,” Nora Szentivanyi, senior global economist at JP Morgan stated. Trump had also suggested that he could convert IEEPA tariffs into import licenses. In an interview with the New York Times in January, he said, “I have the right to license.” The law allows the president to regulate imports “by means of instructions, licenses, or otherwise,” which was discussed during oral arguments before the Court. According to Bloomberg’s analysis, Trump has at least five alternative statutes he could use to impose tariffs now. According to a previous Reuters report, Trump Administration officials have indicated that if the Supreme Court strikes down the IEEPA-based tariffs, the White House may pursue alternative legal authorities to reimpose similar duties. Trump could seek to reimpose the tariffs, using other laws. The Constitution states the power to set tariffs is assigned to Congress. But Trump used IEEPA, which does not specifically mention tariffs but allows the president to “regulate” imports and exports when he deems there to be an emergency due to an “unusual and extraordinary threat” to the nation.