The U.S. Supreme Court rejected President Donald Trump’s signature economic policy, ruling 6-3 on Friday that he illegally set tariffs on imports from nearly every country in the world, using a 1970s “emergency” statute called the International Emergency Economic Powers Act (IEEPA).
Chief Justice John Roberts wrote in the ruling that the Trump administration had asserted “extraordinary power to unilaterally impose tariffs of unlimited amount, duration and scope.” Roberts pointed to no statute that said the IEEPA could apply to tariffs.
Writing for the court’s majority, Roberts said Trump lacked the peacetime authority to use IEPPA to pose tariffs.
“In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorization to exercise it,” Robert wrote, concluding Trump had not.
Justices Brett Kavanaugh, Clarence Thomas, and Samuel Alito dissented.
Ruling Blocks Most of Trump’s Tariffs
The court’s ruling blocks Trump’s sweeping reciprocal tariffs and those the president imposed on Canada, China and Mexico in what he called an effort to stop the flow of illegal drugs.
Last year, Trump invoked the 1977 law to impose tariffs on dozens of U.S. trade partners, claiming that trade deficits and the flow of fentanyl and other illegal drugs into the U.S. constituted national emergencies.
Democrats in Congress applauded the ruling, saying the tariffs had impinged on Congress’ constitutional authority and hurt average Americans. NBC News reported that some major U.S. trading partners were muted, however, saying they were reviewing the decision and emphasized a need for stability in international trade.
NBC said that the president was informed of the Supreme Court’s decision while he was meeting with a bipartisan group of governors and called the ruling a “disgrace,” according to a person familiar with his reaction. Trump also told people in the room this morning that he had a backup plan.
Later Friday, the president announced plans to impose his global tariffs a different way after the Supreme Court struck down most of the levies as illegal — a decision he lambasted as “deeply disappointing.”
“We’re going forward,” Trump told reporters in the White House briefing room.
Trump also announced that he will impose a 10% global tariff on top of tariffs already in place. These new tariffs can only take effect for a maximum of 150 days, barring congressional approval for an extension, Trump claimed, “We have a right to do pretty much what we want to do.”
Republican strategist Doug Heye told the AP that it was immediately clear that the president “is not going to be happy” about the decision.
“We’re starting to hear about how this is a massive blow, a massive repudiation,” he said.
According to NPR, the federal government has been collecting roughly $30 billion in tariffs every month — or about four times as much as it took in before Trump returned to the White House. He has raised tariff rates to their highest level in nearly a century.
Still, import taxes are a small share of overall government revenue at just over 5% in January.
Administration: Tariffs Not Paid by U.S. Businesses, Customers
Most of the cost of tariffs is being paid for by U.S. businesses, and in some cases, their customers. The administration has consistently denied that is the case.
NPR reported that a working paper from Harvard professor and former IMF economist Gita Gopinath and Brent Neiman of the University of Chicago estimates that nearly all of the cost of Trump’s tariffs are being paid by U.S. importers, not foreign suppliers as the Trump administration has claimed.
Importers have absorbed that cost in some cases, settling for lower profits. In others, however, they’ve passed the additional cost on to customers in the form of higher prices.
IEEPA tariffs represent roughly half of all the import taxes the government is collecting each month. Other tariffs issued under different statutes are not being challenged.
During the Supreme Court’s oral argument, a lot of questions arose about how the government might refund money to importers, if the contested tariffs were found to be illegal.
“It seems to me like it could be a mess,” Justice Amy Coney Barrett said at the time.
Veteran tariff lawyer Robert Leo told NPR that while the process would be cumbersome, it’s not impossible.
President Trump has relied on IEEPA to order many of his tariffs.
CBS News reported that business owners said the ruling could spell relief by lowering their costs and potentially leading to refunds.
CNN reported that during a time when the nation is short millions of homes, the tariffs have pushed building costs higher and that isn’t likely to change.
Some Tariffs Will Stay in Place
Many tariffs on the raw materials used to build new homes — such as those on lumber, steel and aluminum — will stay in place, despite the Supreme Court’s decision, CNN said.
Those tariffs were imposed under separate laws allowing tariffs on national security threats or unfairly dumped imports.
CNN noted that The National Association of Home Builders recently estimated that tariffs could add an average of $10,900 to the cost of building each new home.
“With the nation facing a housing affordability crisis, NAHB urges the president to exempt building materials as part of his tariff strategy because they raise construction costs, impede supply chains and result in market and business uncertainty that make it difficult for builders to price their homes,” NAHB chairman Bill Owens said in a statement after the Supreme Court’s decision.
Business Halted Imports Under Tariffs
Beth Benike, co-founder of Busy Baby, a maker of mealtime accessories for babies, said that uncertainty about the legal status of the IEEPA tariffs had forced her to halt all imports from China, where the Minnesota-based company’s products are made. Benike also has inventory in China that her manufacturer is holding for her overseas.
“I should have had it shipped last month, but I was waiting for the Supreme Court decision, because it was the difference between paying an extra $48,000 [in tariffs] or not,” she told CBS News before the Supreme Court issued its long-awaited decision on Friday.
Not all businesses opposed the emergency tariffs, however.
Before the ruling, Drew Greenblatt, owner of Maryland manufacturer Marlin Steel told CBS News on Friday that he supported higher levies on U.S. trade partners because they provided a “level playing field” that allowed Marlin Steel to better compete with overseas steelmakers.
The average tariff rate on all imports is around 17%, including levies the president imposed under IEEPA, according to the nonpartisan Tax Policy Center.
Some experts said they think the issue of tariff refunds could end up in court.
“[W]e think it’s reasonable to assume a few months would pass before refunds begin, and even longer if the distribution faces significant legal challenges,” Morgan Stanley analysts said in a report.
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