The Supreme Court rules 6-3 on Friday morning that the president cannot impose tariffs under the International Emergency Economic Powers Act (IEEPA), as President Trump has done throughout much of 2025. This puts more than $175 billion in U.S. tariff collections at risk of having to be refunded, Penn-Wharton Budget Model economists calculated for Reuters.
Supreme Court Chief Justice John Roberts ruled that based on two words in IEEPA, “regulate” and “importation,” Trump has asserted the independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time. “Those words cannot bear such weight.” Dissenting were Justices Thomas, Alito and Kavanaugh, ScotusBlog reported. Justice Neil Gorsuch, a Trump appointee, concurred in a 46-page opinion.
The ruling strikes down portions of the tariffs in place on steel and aluminum, as well as those widely arrayed against imports from China, narrowing the scope of Trump’s unilateral tariff powers. Writing for the majority, the Court agreed that Congress never clearly authorized the president to rewrite the tariff schedule for most of the economy under IEEPA. The opinion stressed that tariffs function as taxes on U.S. importers and consumers—powers the Constitution assigns to Congress—and invoked the “major questions” doctrine to say that such a sweeping economic move requires unmistakable statutory language.
Opponents of the tariffs emphasized their economic toll. Duties on imported steel and aluminum raised costs for downstream industries, from autos to construction equipment, while tariffs on hundreds of billions of dollars in Chinese goods filtered into higher prices on everything from electronics to furniture. Research from investment banks and branches of the Federal Reserve have repeatedly shown that the financial burden overwhelmingly fell on U.S. companies and consumers, not foreign exporters, provoking furious responses from the Trump White House (Goldman Sachs and the New York Fed, in particular, were on the receiving end).
Retaliatory tariffs from China and other partners further hit U.S. agriculture and industrial exporters, with estimates of lost exports, forgone investment, and higher input costs collectively reaching into the hundreds of billions of dollars over the life of the measures.
The government defended the tariffs as legitimate responses to national security concerns and unfair trade practices, arguing that Congress had clearly intended to give presidents latitude to act swiftly. They warned that invalidating these actions could undermine U.S. leverage with China and weaken the country’s ability to respond to supply-chain vulnerabilities and geopolitical shocks.
The justices left IEEPA itself intact for traditional uses such as sanctions and targeted trade restrictions, but rejected the administration’s claim that an open‑ended “economic emergency” tied to trade deficits justified global, indefinite tariffs.
Blake Harden, who helps run EY’s global trade policy practice as a Managing Director in Washington DC, told Fortune in a statement that “this is far from the end of tariffs,” even with the IEEPA tariffs struck down. This ruling puts a limit on one specific tool, and the administration has several other tariff authorities available. Refunding these tariffs would be time-consuming and complex, she predicted, saying that “companies should start preparing supporting materials for that process now, while staying alert to which levers the administration pulls next to advance its trade agenda.” Notably, the Supreme Court said nothing about the refunding process in its decision, leaving that an open question.
Democratic National Committee Chairman Ken Martin, on the other hand, celebrated the Supreme Court’s decision. “Donald Trump has tanked America so bad in one year that even the Supreme Court thinks he’s gone too far. This historic decision is a step in the right direction to rein in Trump’s illegal tariff taxes.” He added that the Supreme Court has handed Trump an “off-ramp” with this decision, but Trump will probably double down, “even though it means screwing over everyday Americans, including his own voters.”
Other market watchers called this ruling, despite its $175 billion size, was so broadly expected by the market that it’s a nothingburger. The S&P 500, for instance, was up less than 1% after the ruling came down. David Wagner, Head of Equity and Portfolio Manager at Aptus Capital Advisors, with $16.5 billion of assets under management, said that “given the market’s reaction, the SCOTUS ruling appears to be a non-event — at least for now.”
Somehow, Wagner added, the $133.5 billion collected under IEEPA in 2025 and 2026 will have to be refunded. Probably the largest ramification, he added, is what happens to Trump’s “negotiating powers,” as other countries may believe that he’s “lost his leverage” on trade talks.
