The U.S. Supreme Court on Friday struck down President Donald Trump’s sweeping global tariffs, delivering a major blow to the cornerstone of his second-term economic agenda. The 6-3 decision, authored by Chief Justice John Roberts, declared that the President exceeded his authority by using a 1977 emergency law to unilaterally impose taxes on imported goods.
However, the victory for free-trade advocates and importers may be short-lived. Within hours of the ruling, a defiant President Trump railed against the “disloyal” court and announced a new 10% global tariff to take effect early next week, signaling that the global trade war is far from over.
The Ruling: Congress Holds the Power to Tax
The case, Learning Resources, Inc. v. Trump, centered on the President’s use of the International Emergency Economic Powers Act (IEEPA). Trump had invoked the law to justify broad “reciprocal” tariffs on nearly every trading partner, as well as specific 25% duties on Canada and Mexico, citing national emergencies related to trade deficits and fentanyl trafficking.
Writing for the majority, Chief Justice Roberts was blunt: “The Framers did not vest any part of the taxing power in the Executive Branch.” The court ruled that while IEEPA allows the President to “regulate” commerce during emergencies, it does not grant the power to impose tariffs—an authority the Constitution “very clearly” reserves for Congress.
The majority was comprised of the court’s three liberal justices and three conservatives: Roberts, Justice Neil Gorsuch, and Justice Amy Coney Barrett. In their dissent, Justices Brett Kavanaugh, Clarence Thomas, and Samuel Alito argued that the law’s text and historical precedent did indeed support the President’s actions.
Market Reaction and Economic Fallout
Financial markets initially surged on news of the ruling. The Dow Jones Industrial Average and the S&P 500 jumped as investors anticipated a rollback of the levies that have driven up the costs of furniture, electronics, and apparel. Economists at the Penn-Wharton Budget Model estimated that the ruling could force the government to refund more than $175 billion collected from importers over the past year—a process Justice Kavanaugh warned would be a “legal mess.”
For many small businesses and retailers, the ruling provided a moment of relief. “This is a reaffirmation of the idea that Congress, not any one man, controls the power to tax the American people,” said a representative for the National Retail Federation.
Trump’s “Plan B”: The 150-Day Tariff
The President did not take the defeat quietly. During a press conference at the White House, Trump called the six justices who ruled against him a “disgrace to the nation” and “unpatriotic.”
“Their decision is incorrect,” Trump said. “But it doesn’t matter because we have very powerful alternatives.”
Leveraging Section 122 of the Trade Act of 1974, Trump signed a proclamation imposing a new 10% global tariff on all imports, effective Tuesday, February 24. While Section 122 allows a president to impose duties to address balance-of-payment deficits, the authority is strictly limited to 150 days unless extended by Congress.
What’s Next?
The legal battle is expected to pivot immediately to the new 10% levy. While it rests on a different legal foundation than the struck-down IEEPA tariffs, trade experts suggest it will face similar challenges regarding whether a president can use “temporary” authorities to maintain a permanent tariff regime.
For now, the global economy remains in a state of high uncertainty. While the Supreme Court has reasserted the constitutional role of Congress, the administration’s rapid-fire “Plan B” suggests that the White House remains committed to its protectionist “America First” strategy, regardless of the judicial roadblocks.
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