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Court rules Trump exceeded authority with emergency tariffs
The US Supreme Court delivered a 6-3 decision on Friday, declaring that President Donald Trump overreached his constitutional powers by imposing sweeping global tariffs under a 1977 emergency law. The ruling invalidates billions in levies but leaves open the possibility of refunds for businesses and consumers.
What the decision means
The court determined that Trump could not use the International Emergency Economic Powers Act (IEEPA) to impose taxes on imports, as the law does not grant the president authority to raise revenue. The decision specifically targets tariffs Trump enacted in 2025, first on goods from China, Mexico, and Canada, and later expanded to nearly all countries, citing trade deficits and fentanyl trafficking as emergencies.
However, the ruling does not affect tariffs Trump imposed under other laws, such as Section 232 of the Trade Expansion Act of 1962, which allows levies on national security grounds. These include taxes on steel, aluminum, lumber, and automobiles.
Trump responds with new 10% global tariff
Within hours of the ruling, Trump signed a proclamation invoking Section 122 of the 1974 Trade Act to impose a 10% tariff on almost all imports starting at 12:01 EST on February 24. The law permits temporary tariffs of up to 15% for 150 days, after which Congress must intervene. Analysts suggest Trump could renew the tariffs by declaring a new emergency after the initial period lapses.
"The administration is using Section 122 to address fundamental international payments problems and rebalance American trade," the White House stated.
The White House also confirmed that countries with existing trade deals, including the UK, India, and the EU, will face the new 10% tariff rather than their previously negotiated rates. However, the administration expects these nations to continue honoring their trade concessions.
Exemptions and lingering questions
The new tariffs include broad exemptions for goods deemed critical to the US economy, such as certain minerals, metals, energy products, pharmaceuticals, electronics, vehicles, and aerospace components. Informational materials, donations, and accompanied baggage are also excluded. Additionally, products covered under the US-Mexico-Canada Agreement (USMCA) and the Dominican Republic-Central America Free Trade Agreement remain duty-free.
Despite these exemptions, the proclamation lacks specificity on which items within the broad categories will be excluded. Meanwhile, Trump has maintained tariffs on low-cost goods by ending the de minimis exemption, which previously allowed duty-free entry for items valued under $800.
Refunds and economic impact
The Supreme Court's decision did not address whether businesses or consumers are entitled to refunds for the estimated $130 billion collected under the now-invalidated tariffs. Treasury Secretary Scott Bessent indicated that the issue could remain tied up in litigation for years, with any refunds likely benefiting larger companies capable of navigating the legal process.
Over 1,000 businesses have already sought refunds, according to Alex Jacquez of the Groundwork Collective. Illinois Governor JB Pritzker has demanded the White House issue $1,700 refund checks to each American household, echoing Trump's past suggestions of distributing tariff revenue directly to citizens.
Bessent also noted that combining the new Section 122 tariffs with enhanced Section 232 and Section 301 levies would likely maintain tariff revenue at 2026 levels, offsetting the loss of the IEEPA tariffs.
Next steps and legal battles
The administration is exploring additional tariffs under Section 301 of the Trade Act of 1974, which allows the US Trade Representative to investigate and penalize countries for unfair trade practices. Jamieson Greer, the current USTR, could impose new levies if such practices are identified.
Experts warn that the legal requirements for investigations under Section 232 and Section 301 could make future tariffs harder to challenge once imposed. The US international trade court is expected to rule on the refund issue in the coming months.
