Supreme Court Strikes Down Most Trump Tariffs

This is a developing story and will be updated throughout the day.

10:40 a.m. (Eastern)

President Donald Trump doesn’t have the authority to enact broad tariffs on U.S. trading partners, the Supreme Court of the United States ruled Friday, saying that’s a power reserved for Congress.

Most manufacturers have opposed steep tariffs, saying they raise the cost of components and raw materials. However, smaller numbers of U.S.-based producers that have domestic supply chains had been cheering the actions.

The 6-3 ruling (Justices Clarence Thomas, Samuel Alito and Brett Kavanaugh dissented) impacts most of the tariffs Trump has enacted since last year, but not fees on steel and aluminum imports that he enacted in his first term and former President Joe Biden continued.

The ruling forbids the 10% baseline tariffs on all countries that Trump enacted citing the International Emergency Economic Powers Act (IEEPA). The president enacted larger tariffs on key countries and has been using the threat of reciprocal tariffs to get trading partners to the negotiating table.

In his rejection of Trump’s actions, Chief Justice John Roberts wrote (PDF dowonload):

The President asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope. In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorization to exercise it.

IEEPA’s grant of authority to “regulate . . . importation” falls short. IEEPA contains no reference to tariffs or duties. The Government points to no statute in which Congress used the word “regulate” to authorize taxation.  And until now no President has read IEEPA to confer such power.

We claim no special competence in matters of economics or foreign affairs. We claim only, as we must, the limited role assigned to us by Article III of the Constitution.  Fulfilling that role, we hold that IEEPA does not authorize the President to impose tariffs.

12 p.m. (Eastern)

The Agence France-Presse wire service writes:

U.S. business groups cheered the ruling, with the National Retail Federation saying this “provides much-needed certainty” for American firms and manufacturers. “We urge the lower court to ensure a seamless process to refund the tariffs to U.S. importers,” the federation said.

The justices did not address the degree to which importers can receive refunds. But dissenting Justice Brett Kavanaugh warned that this process—as acknowledged during oral arguments—could be a “mess.”

EY-Parthenon Chief Economist Gregory Daco told AFP that the loss of IEEPA tariff revenues for the U.S. government could amount to around $140 billion.

The ruling will likely bring the average tariff rate from 16.8% to around 9.5%, he added ahead of the ruling.

But lower levels will likely be temporary as the government seeks other ways to reimpose some of the sweeping duties, he added.

The Budget Lab at Yale University similarly estimates consumers face an average effective tariff rate of 9.1% with Friday's decision, down from 16.9%. But it said this "remains the highest since 1946," excluding 2025.

For now, the European Union said it was studying the court ruling and will remain in close contact with the Trump administration.

Britain plans to work with the United States on how this affects a trade deal between both countries, while Canada said the decision affirms that Trump's tariffs were “unjustified.”

Striking down the emergency tariffs “would constrain the president’s ambitions to impose across-the-board tariffs on a whim,” said Erica York of tax policy nonprofit the Tax Foundation.

But it still leaves him other statutes to use for tariffs, even if they tend to be more limited in scope—or require specific processes such as investigations—York told AFP.

Harry Moser, a regular IndsutryWeek contributor and founder of the Reshoring Initiative, says:

The Supreme Court decision is a setback for reindustrialization. President Trump should take this decision as an opportunity to pursue a better alternative.

President Trump’s tariffs and President Biden’s grants are tools to deal with U.S. manufacturing cost being 10 to 20% higher than most other developed countries and 50 to 100% higher than emerging market countries. That unlevel playing field is caused primarily by the U.S. dollar being overvalued vs. the other currencies due to our reserve currency status. The best solution is to allow the U.S. dollar to adjust as needed to eliminate the $1.2 trillion trade deficit. Currency’s advantages vs. tariffs include:

• Simple to design and implement. No exclusions
• Transparent
• No expensive trade lawyer help
• Also helps with:
• Goods exports due to lower USD and no retaliation
• Services imports and exports
• Less unintended consequences such as tariffs on steel and machine tools and alienating our allies
• Less avoidance and cheating
• Allows entry mfg. wages to move higher than service wages by raising the ceiling imposed by low priced imports
• Fix one distortion, the overvalued dollar. Let the market pick winners and losers

We support Dr. John Hansen’s Market Access Charge (MAC) as a tool to lower the dollar.

Regular IndustryWeek contributor Lauren Pittelli, a supply chain expert and principal of Baker Logistics:

This is wonderful news for importers, manufacturers, and the American consumer. I’m waiting for information on whether refunds will be available and look forward to helping our clients recoup every penny they’re entitled to.

The ruling will also return some needed stability and predictability to trade policy - no more use of tariffs as punishment for foreign policies Washington doesn’t like.

Neil Bradley, executive vice president and chief policy officer at the U.S. Chamber of Commerce:

The Supreme Court’s decision is welcome news for businesses and consumers. Over the past year, the Chamber has been working with small and midsize businesses around the country that have seen significant cost increases and supply chain disruptions as a result of these tariffs. Swift refunds of the impermissible tariffs will be meaningful for the more than 200,000 small business importers in this country and will help support stronger economic growth this year.

We encourage the administration to use this opportunity to reset overall tariff policy in a manner that will lead to greater economic growth, larger wage gains for workers, and lower costs for families.

Several of IndustryWeek parent company Endeavor B2B's brands are writing about the Supreme Court ruling. For more information, read:

• Trump's emergency tariffs ruled to be illegal: Plant Service's Tom Wilk summarizes the rulings and details how some manufacturers have been preparing for it. 
• Supreme Court strikes down Trump-era tariffs, raising implications for infrastructure costs: Wastewater Digest's Alex Cossin notes that the ruling had been closely watched by infrastructure groups as tariff costs impacted the price tags on big civic projects.
• Supreme Court Hands Trump Tariffs Plan a Setback: T&D World (transmission and distriubtion) editor Jeff Postelwait discusses the ruling's impact on power utilities.
• Tariffs Struck Down by Supreme Court: MH&L (material handling and logistics) editor Adrienne Selko shares the ruling and reactions from several supply chain groups. 
• Supreme Court Strips Trump's Emergency Tariff Authority: Chemical Processing's Traci Purdum details next steps for chemical producers.