High Court Limits Executive Authority
The US Supreme Court dealt a major blow to Donald Trump on Friday by striking down his sweeping global tariffs, ruling that he exceeded his authority by invoking emergency powers. In a 6–3 decision, the court emphasized that the Constitution clearly gives Congress, not the president, the power to levy taxes and tariffs. Chief Justice John Roberts wrote that the Framers never intended to vest any portion of taxing authority in the executive branch.
Justices Samuel Alito, Clarence Thomas, and Brett Kavanaugh dissented, arguing that while the tariffs may be controversial policy-wise, they were legally permissible under precedent. The ruling represents the first major challenge to Trump’s broader trade agenda to reach the nation’s highest court, which he helped shape through his three conservative appointments.
Emergency Powers Under Scrutiny
The tariffs had been justified under the International Emergency Economic Powers Act (IEEPA), a 1977 law that allows the president to declare a national emergency and take broad economic actions such as sanctions. Previous presidents had used IEEPA primarily for sanctions, but Trump was the first to apply it to impose tariffs.
Trump implemented so-called reciprocal tariffs on nearly all US trading partners in April 2025, following earlier duties on Canada, China, and Mexico. Legal challenges quickly followed, including cases from a dozen Democratic-leaning states and small businesses selling a wide range of goods. Opponents argued that the emergency powers law does not authorize tariffs and that Trump’s use of it violated constitutional limits, similar to legal challenges that blocked parts of then-President Biden’s student loan forgiveness program.
Economic Fallout and Market Response
The economic stakes are significant. Since April 2025, the US Treasury has collected roughly $240 billion in tariff revenue, with estimates suggesting potential refunds could reach around $120 billion, or 0.5% of GDP, if courts require repayment. Companies, including Costco, have already filed lawsuits seeking refunds.
The ruling initially sent the S&P 500 up as much as 1% before gains settled around 0.3%. Investors have generally welcomed moves to reduce tariff uncertainty, though many expect Trump to continue pushing his trade agenda through other legal avenues. Trump himself had warned in January that a Supreme Court ruling against his tariffs could lead to “hundreds of billions of dollars to pay back,” describing it as a major national economic issue.
