The Supreme Court has struck down a significant portion of President Donald Trump’s signature economic agenda in a 6-3 vote that found tariffs were illegally imposed under the International Emergency Economic Powers Act (IEEPA).
IEEPA “does not authorize the President to impose tariffs,” reads the ruling, which upheld the decision of two previous courts. The Supreme Court heard the case in early November.
Chief Justice John Roberts delivered the opinion of the court, with Justices Clarence Thomas, Samuel Alito and Brett Kavanaugh dissenting.
Supreme Court: Tariffs in Peacetime Require ‘Clear Congressional Authorization’
Allowing tariffs to proceed in this manner “would represent a transformative expansion of the President’s authority over tariff policy,” the decision concluded.
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“It is also telling that in IEEPA’s half century of existence, no President has invoked the statute to impose any tariffs, let alone tariffs of this magnitude and scope,” the decision continued. “That lack of historical precedent, coupled with the breadth of authority that the President now claims, suggests that the tariffs extend beyond the President’s ‘legitimate reach.’”
To institute tariffs on this level, the court deemed that Trump must “point to clear congressional authorization,” which, it concluded, “he cannot.”
Businesses Call for Tariff Refunds
Business groups were quick to laud the decision. The National Retail Federation’s EVP of Government Relations, David French, said that the ruling “provides much-needed certainty for U.S. businesses and manufacturers, enabling global supply chains to operate without ambiguity,” and urged the administration to act swiftly in providing refunds. However, the court itself was silent on the issue of whether import fees that had already been collected under the overturned tariffs must now be refunded.
A number of companies already have preemptively sued for refunds, including Costco, EssilorLuxottica, Revlon and Kawasaki Motors, and We Pay the Tariffs, a coalition of over 800 small businesses, which also called for “full, fast and automatic” refunds.
“A legal victory is meaningless without actual relief for the businesses that paid these tariffs,” said We Pay the Tariffs’ Executive Director Dan Anthony in a statement. “The administration’s only responsible course of action now is to establish a fast, efficient and automatic refund process that returns tariff money to the businesses that paid it.”
Trump Has Other Means to Institute Tariffs
For his part, Trump attempted to use the mess that now appears to be underway as an argument for the court to uphold his tariffs: “I will tell you that’s one of the most important cases in the history of our country because if we don’t win that case, we will be a weakened, troubled, financial mess for many, many years to come,” Trump said at the White House on Oct. 15.
Beyond refunds, the bigger question now is whether the Trump administration will continue to pursue this economic policy through other means. Not all of the many tariffs set by the Trump administration in the last year were instituted under IEEPA, and even for those that have now been overturned, Trump has other avenues to pursue that don’t constitute a use of emergency powers, as his IEEPA tariffs did.
In advance of the Supreme Court hearing in November, cross-border shipping expert Rathna Sharad, CEO and Founder of logistics platform FlavorCloud, predicted that in the event of a negative decision “the Trump administration is going to be looking at alternate mechanisms [to impose these tariffs].
“There are other tariffs that Trump could impose on specific categories of goods; that is one way he could get around it,” she said in an interview with Retail TouchPoints. “We’ve already seen tariffs on steel and aluminum, so you could then see things like apparel tariffs. This would be through the tariff authority granted under Section 232 [of the Trade Expansion Act of 1962]. There’s also Section 122 [of the Trade Act of 1974, which allows the imposition of tariffs to address “international payment problems”], and they can enact tariffs specifically against China under Section 301 of the Trade Act.”
While there’s no indication yet as to how he’s leaning, the Supreme Court has clearly hit the ball back into Trump’s court. So far the only official word from the President has been to call the ruling a “disgrace,” according to CNN, which cited two people who heard the remarks.
This is a developing story and will be updated.
