Supreme Court Rules Trump's Tariffs Illegal: What Comes Next?

The United States Supreme Court delivered a major blow to Donald Trump's economic policies this Friday by declaring most of the global tariffs he imposed using emergency powers as illegal.

With a decision of six to three, the Court retroactively invalidated the executive orders that had introduced widespread tariffs on numerous countries. This outcome introduces a state of legal, economic, and budgetary uncertainty, according to press agencies.

This ruling represents a notable defeat for Trump, particularly in one of the core aspects of his agenda: leveraging tariffs as tools for commercial pressure, fiscal revenue, and political negotiation.

The Core of the Decision: Emergency Law Doesn't Sanction Tariffs

The crux of the case lies in the interpretation of the International Emergency Economic Powers Act (IEEPA), a 1977 statute that allows the president to "regulate" foreign commerce during national emergencies.

Trump invoked this law to impose so-called "reciprocal" tariffs, which included levies up to 34% for China and a base rate of 10% for most countries, in addition to a 25% surcharge on specific products from Canada, Mexico, and China, citing reasons related to fentanyl and economic security.

However, the Supreme Court majority was unequivocal. Their ruling emphasized: "The president claims extraordinary authority to unilaterally impose tariffs of unlimited amount, duration, and scope. The IEEPA's grant of authority to 'regulate... importation' is insufficient. The IEEPA does not mention tariffs. The Government points to no instance where Congress has used the word 'regulate' to authorize the imposition of duties. No president has interpreted the IEEPA as conferring such power."

The court insisted that their decision was based on constitutional grounds rather than economic or political reasoning: "We do not claim any special competence in economic or foreign affairs. We assert only, as is our duty, the limited role assigned to us by Article III of the Constitution. In fulfilling that role, we hold that the IEEPA does not empower the president to impose tariffs."

Furthermore, the Court noted that if Congress had intended to grant the president the "distinct and extraordinary power to impose tariffs" under this law, "it would have done so explicitly, as it has systematically done in other tariff statutes."

Which Tariffs Are Rescinded and Which Remain?

The ruling does not nullify all tariffs imposed by the Trump administration.

General country-by-country tariffs imposed under the IEEPA, including the broadly applied "reciprocal" tariffs, have been annulled.

However, sector-specific tariffs enacted under other laws, such as those on steel, aluminum, or certain automotive products, remain in effect.

These sector-specific tariffs must be applied uniformly to all countries, restricting one of Trump's signature strategies: negotiating "custom" tariffs with specific countries as a means of bilateral pressure, unless a formal trade agreement similar to the USMCA with Mexico and Canada is in place.

Economic Impact: $150 Billion at Stake

The most immediate concern is financial.

Over the past year, the federal government collected more than $150 billion from these tariffs. With their retroactive annulment, a flood of claims from businesses that paid these duties may ensue.

Over a thousand companies had already joined lawsuits to prevent the payments from becoming statute-barred.

The ruling doesn't specify the refund mechanism, but the scale of the issue is vast.

Justice Brett Kavanaugh, one of the three dissenting justices, warned: "Refunding the money to companies will be very complex and confusing."

He also reminded that much of the tariff costs were passed on to consumers through price increases, meaning that those receiving refunds would be importers or intermediaries, not necessarily the citizens who ultimately paid more.

The budgetary impact could be twofold: on one side, the refund of billions; on the other, the disappearance of a revenue source that the administration had incorporated into its fiscal strategy.

The deficit for 2025 could approach two trillion dollars, in a context where the U.S. public debt already hovers around 100% of GDP.

A Battle from the Lower Courts

The Supreme Court's ruling upholds previous lower court decisions.

In August of last year, a Washington appeals court already declared most tariffs imposed through executive orders illegal, finding that Trump overstepped by invoking emergency powers.

At that time, the White House argued that the tariffs were "a fundamental tool to reduce the fiscal deficit and protect the American economy."

Trump himself warned on Truth Social that removing them would be "a total disaster for the country," and that the judicial decision would "literally destroy the United States of America." Now, the Supreme Court has shut down that interpretation.

What Options Does Trump Have Now?

Following the ruling, Trump called the decision "a disgrace" and claimed to have a "Plan B" to maintain tariffs.

The options, however, are more constrained.

He could resort to Article 122 of the Trade Act of 1974, which allows for global tariffs of up to 15% but only for a maximum of 150 days.

Additionally, Trump can continue utilizing the "Section 232" of the Trade Expansion Act of 1962, which permits tariffs for national security reasons but only on specific sectors, not indiscriminately across all products from a country.

Other legal tools require demonstrating discriminatory or illegal practices—such as intellectual property theft—substantially raising the evidentiary threshold and restricting practical application to very specific cases, like China.

The Political Context: An Agenda Under Pressure

The decision arrives at a politically sensitive time.

Trump had proposed using tariff revenues to fund $2,000 checks for middle-class families and to increase military spending to $1.5 trillion, arguing it would be sustained "based on tariff money."

With the ruling, those funds are in jeopardy just as Congress debates the budget again to avoid a government shutdown.

Moreover, polls indicate that tariffs do not enjoy broad public support amidst concerns about rising living costs and affordability.