The Supreme Court dealt a significant blow to former President Donald Trump on Friday, ruling that the president does not have the authority to use emergency powers to impose tariffs. The 6-3 decision curtails a key element of Trump’s presidency, marking a rare instance of the court limiting executive power after years of the former president testing the boundaries of his authority through executive orders and the invocation of seldom-used laws.
Trump had relied on emergency powers outlined in the International Emergency Economic Powers Act (IEEPA) to impose tariffs on countries worldwide. However, the majority of justices found that the law does not authorize the president to levy tariffs. Chief Justice John Roberts wrote for the court: “The President insists on possessing an extraordinary power to impose tariffs unilaterally, unlimited in value, duration, and scope,” adding that Trump needed “clear legislative authorization” to exercise such power.
Roberts emphasized that IEEPA, which “contains no mention of tariffs or duties,” is limited in scope, and that no previous president had used the law to impose such fees. Trump responded to the ruling by calling the justices “unfair” and alleging they were influenced by foreign interests.
The court’s decision split along ideological lines. Liberal Justices Sonia Sotomayor, Elena Kagan, and Ketanji Brown Jackson joined conservative Justices Roberts, Neil Gorsuch, and Amy Coney Barrett in the majority. Justice Brett Kavanaugh authored the dissenting opinion, joined by conservative Justices Clarence Thomas and Samuel Alito. Kavanaugh argued that the national emergencies cited by Trump – relating to drug trafficking and trade imbalances – did authorize the use of IEEPA to impose tariffs, stating that the tariffs “may be wise policy, and perhaps are, but they are clearly lawful.”
The Supreme Court focused specifically on whether the president was authorized to use emergency powers to impose tariffs, and remanded other issues to lower courts, upholding a ruling from an appeals court in one case challenging Trump’s tariffs. The original case was brought by a group of companies and 12 U.S. States challenging Trump’s “reciprocity” tariffs, as well as those imposed on China, Canada, and Mexico in response to alleged involvement in the trade of fentanyl.
The Federal Circuit Court of Appeals had previously ruled that Trump had overstepped his authority in using IEEPA to impose the tariffs, but declined to issue a blanket injunction blocking all tariffs, instead directing the Court of International Trade to re-evaluate the possibility of remedies and how they might be applied. The Court of International Trade is now likely to accept up the case, though a timeline has not yet been established. The court consists of three judges, two appointed by Republican presidents, including Trump, and one appointed by Barack Obama.
According to legal expert Stephen Engel, a partner at the law firm Dechert, the Supreme Court “rarely weighs in at the first instance on issues that haven’t been addressed by lower courts.” He added that if complex legal questions or disagreements arise, they could be appealed back to the Supreme Court.
The ruling forces the Trump administration to pursue alternative tools for imposing tariffs. However, none of these can be deployed as quickly or easily as IEEPA, increasing the likelihood of delays in tariff collection, as other U.S. Trade laws typically require review periods before tariffs on foreign goods can be imposed. Trump stated on Friday that he would sign an order imposing a 10% global tariff under Section 122 of the Trade Act of 1974, in addition to currently imposed tariffs. He also announced plans to initiate new trade investigations, which could lead to further tariffs.
The Cato Institute, a research organization, pointed to Section 338 of the Tariff Act of 1930, which allows the president to impose tariffs of up to 50% on countries that engage in discriminatory trade practices, as another likely path for the administration. Section 122 allows Trump to impose tariffs of up to 15% immediately for up to 150 days, without the lengthy investigations required for other tariffs on products like steel and aluminum under Section 232 of the Trade Expansion Act. The Cato Institute noted that this immediate option is likely to be “attractive” to Trump, but cautioned about a “significant caveat”: the 15% tariffs expire after 150 days unless Congress votes to extend them.
However, trade analysts warn that even with alternative legal pathways, including Section 122, these routes are less comprehensive than the tariffs Trump imposed based on IEEPA, which the Supreme Court has now invalidated. Sam Lowe, head of trade at the consultancy Flint Global, wrote in a memo to clients: “These tools are not as broad-reaching as IEEPA, and there is potential for gaps in both the timing and scope of newly imposed tariffs compared to those struck down by IEEPA.”
The fate of the billions of dollars in tariff revenue collected under IEEPA, estimated to be at least $160 billion over the past year, remains unclear. The Supreme Court did not address whether the government should refund tariff revenue associated with IEEPA. Justice Kavanaugh noted in his dissenting opinion that the U.S. “may be required to refund billions of dollars to importers who paid IEEPA tariffs, even if those importers have already passed the costs on to consumers or others.” He added that the process of refunding the tariffs would likely be “extremely complex.”
The International Chamber of Commerce stated that while some companies would welcome the possibility of tariff refunds, the process would likely be complicated. The court’s ruling was “conspicuously silent” on this issue. Experts anticipate that the issue of refunds will be addressed by the Court of International Trade, which has already received a surge of cases from tariff payers seeking to recover their funds. It remains unclear whether these cases will be consolidated with the original case considered by the Supreme Court.
Matthew West, head of international trade at Baker Botts, said Friday’s ruling leaves companies in a state of uncertainty regarding how lower courts will handle the process of refunding tariffs. Stephen Engel added: “There will be a period of uncertainty,” noting that key questions include potential alternative tariff tools, the process for refunds, and “whether some of these new tariffs could be applied retroactively.” Kavanaugh cautioned that tariffs imposed under emergency powers “helped facilitate billions of dollars in trade agreements, including agreements with foreign countries from China to the United Kingdom to Japan, so the Court’s decision may create uncertainty regarding various trade agreements. This process could also be challenging.”