The US Supreme Court on Friday struck down the Trump administration’s use of the International Emergency Economic Powers Act (IEEPA) to impose global tariffs, ruling 6–3 that the move exceeded presidential authority.
The decision is expected to have far-reaching effects on international trade and the fluctuating tariffs that have impacted a wide range of food and beverage products.
The US Treasury reports that $133 billion has been collected from the IEEPA tariffs, which were expected generate $3 trillion over the next decade, according to the Associated Press.
The court noted that the government’s argument that IEEPA gives the president unilateral power to “impose unbounded tariffs and change them at will” would represent a “transformative expansion of the President’s authority over tariff policy.”
“It is also telling that in IEEPA’s half century of existence, no President has invoked the statute to impose any tariffs, let alone tariffs of this magnitude and scope,” the court wrote in the majority opinion. “That ‘lack of historical precedent,’ coupled with the breadth of authority that the President now claims, suggests that the tariffs extend beyond the President’s ‘legitimate reach.’”
The framers of the US Constitution gave “Congress alone” the power to impose tariffs, according to the court.
“And the foreign affairs implications of tariffs do not make it any more likely that Congress would relinquish its tariff power through vague language, or without careful limits,” the court said. “Accordingly, the President must ‘point to clear congressional authorization’ to justify his extraordinary assertion of that power. He cannot.”
President Trump has imposed sweeping tariffs on countries across the globe, and just as quickly rescinded many of them, claiming the import taxes were imposed as a matter of national security, often claiming that trade deals against US interests posed a threat to the economy. The administration also tied tariffs to the illicit movement of fentanyl, a powerful opiate, into the US.
Industry responds to tariff decision
The decision was roundly celebrated by industry groups across the US whose members’ businesses and costs have been uprooted by the tariffs.
The National Retail Federation said the decision brings “much-needed certainty for US businesses and manufacturers, enabling global supply chains to operate without ambiguity.”
“Clear and consistent trade policy is essential for economic growth, creating jobs and opportunities for American families. We urge the lower court to ensure a seamless process to refund the tariffs to US importers. The refunds will serve as an economic boost and allow companies to reinvest in their operations, their employees and their customers,” the group said.
Up next: Tariff lawsuits
The decision is certain to spawn a wave of lawsuits from businesses in the US that argue the tariffs have been illegal from the start and cost US businesses billions in trade taxes.
A coalition of US business owners operating under the name We Pay the Tariffs released a statement on Friday saying the court’s decision is “meaningless without actual relief for the businesses that paid these tariffs.”
“The administration’s only responsible course of action now is to establish a fast, efficient and automatic refund process that returns tariff money to the businesses that paid it,” the group said in a press release. “Small businesses cannot afford to wait months or years while bureaucratic delays play out, nor can they afford expensive litigation just to recover money that was unlawfully collected from them in the first place. These businesses need their money back now.”
Is this the end of unilateral tariffs?
While the Supreme Court’s decision ends IEEPA as an avenue for imposing tariffs, it might not be the end of the Trump administration’s tariff policy.
National law firm Gibson Dunn, which represents food and beverage manufacturers, said in an October blog post that tariffs could be here to stay, even if IEEPA is struck down.
“Even if the Supreme Court ultimately invalidates or limits the scope of IEEPA-based tariffs, the administration can pursue more focused trade objectives through traditional statutory authorities, notably Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974, which rest on far firmer constitutional ground,” the law firm wrote.
These tariffs would “lack the immediacy and breadth of a Presidential decision imposed under IEEPA,” but these statutory authorities offer “a nimble instrument for President Trump to exert leverage in deal-making with both foreign governments and companies in affected industries, particularly given the judicially affirmed flexibility to modify such measures under both authorities,” according to Gibson Dunn.
