Court Rules Tariffs Exceeded Executive Power
The Supreme Court of the United States struck down Donald Trump’s broad global tariffs on Friday, ruling that the president overstepped his authority by invoking emergency powers. The 6–3 decision focused on tariffs imposed under a 1977 law allowing the president to act during national emergencies. Chief Justice John Roberts wrote that the Constitution clearly grants Congress — not the executive — the power to levy taxes, including tariffs. Justices Samuel Alito, Clarence Thomas, and Brett Kavanaugh dissented, arguing the tariffs were lawful regardless of policy considerations.
Legal and Economic Background
Trump had used the International Emergency Economic Powers Act (IEEPA) to justify sweeping import taxes, claiming trade deficits and drug trafficking threats constituted national emergencies. He launched “reciprocal tariffs” on nearly all trading partners in April 2025, following earlier duties on Canada, China, and Mexico. This unprecedented use of emergency powers sparked lawsuits from a coalition of Democratic-leaning states and small businesses, which argued that the law does not authorize tariffs and that Trump’s actions failed established legal tests. The Congressional Budget Office estimated the tariffs could cost the economy $3 trillion over the next decade, while the Treasury has collected over $133 billion in revenue so far.
Market Impact and Future Uncertainty
The ruling raises the possibility of billions in refunds, with analysts estimating around $120 billion if businesses are reimbursed. Justice Kavanaugh cautioned that the process could become chaotic. The decision sent the S&P 500 briefly up 1% after the announcement, though gains later moderated. While Trump can still impose tariffs under other laws, the ruling curtails his ability to act quickly under emergency powers. Investors remain cautious, assuming Trump will continue to pursue his tariff agenda through alternative legal channels, even as the Supreme Court imposes new limits on executive authority in trade policy.
