US Supreme Court Deals Blow To Trump's Tariffs, Strikes Down Economic Agenda

Washington: The US Supreme Court has dealt a massive blow to Donald Trump's sweeping tariffs by striking them down, shattering his central economic policy. The court's 6-3 ruling invalidated US President Trump's use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs on most US trading partners, citing concerns over executive overreach.

The tariffs, imposed in April 2025, were part of Trump's ‘Liberation Day’ agenda, which was claimed to address the US trade deficit and protect domestic industries. However, the Top Court ruled that Trump's actions exceeded his authority, with justices questioning whether the IEEPA allows for such massive tariff powers.

According to foreign media reports, Chief Justice John Roberts noted, "The Framers did not vest any part of the taxing power in the Executive Branch."

Apart from John Roberts, Justices Samuel Alito, Clarence Thomas, and Brett Kavanaugh dissented, with Kavanaugh stating, "The tariffs at issue here may or may not be wise policy. But as a matter of text, history, and precedent, they are clearly lawful.”

Earlier, Trump had argued that the tariffs were necessary to address national security concerns and promote American interests. However, the analysts called out the tariffs, contending that the tariffs were unconstitutional and would harm the economy.

How Will Supreme Court’s Ruling Impact

The decision by the US Supreme Court has left the investors and businesses awaiting clarity on the implications. Importantly, the court's ruling could lead to refunds of over $175 billion in tariffs already collected, possibly impacting government revenue and the economy.

The Supreme Court's decision is expected to have huge implications for Trump's trade policy and the US economy. Trump may face challenges in renegotiating trade deals, with the tariffs struck down, and could lose a key bargaining chip. The ruling also raised questions about the limits of executive power and the role of Congress in shaping trade policy.

Treasury Secretary Scott Bessent stated that the Treasury Department could cover possible refunds if required, expressing confidence that the Supreme Court would uphold the tariffs. However, with the ruling going against Trump, importers are expected to seek refunds from the US Customs and Border Protection for duties paid over the past year.

What Will Happen To Businesses

According to trade analysts, the decision is likely to bring relief to US importers and consumers, who have borne the brunt of the tariffs. The businesses may see improved cash flows, with tariffs possibly being refunded, and consumers could benefit from lower prices. However, the uncertainty surrounding the ruling has left many businesses and investors cautious.

According to estimates, over $175 billion in tariff collections may need to be refunded if the court rules against Trump. The amount exceeds the combined fiscal 2025 outlays from the Department of Transportation and the Department of Justice.

Trump Vows To Fight Back

Trump has denounced the court's decision, calling it "political" and vowing to explore alternative avenues for imposing tariffs, with his “backup plan”. "This is a disaster for the United States," Trump said, warning of economic repercussions.

The president has vowed to fight on, with Treasury Secretary Scott Bessent indicating that the administration will invoke other legal justifications to retain as many of the tariffs as possible. "The president loses flexibility to use tariffs, both for national security, for negotiating leverage," Bessent said, adding that the administration could switch to alternative tariff authorities to restore tariffs if the court declares IEEPA tariffs illegal.

What Are Alternative Routes

Following the Supreme Court’s decision, Trump's administration is likely to turn to other statutory provisions to justify the tariffs, including Section 232 of the Trade Expansion Act, which permits tariffs on imported goods that threaten US national security, and Section 301, which allows retaliatory actions against trading partners that have used unfair trade practices against American exporters.

The administration has also hinted at using other powers, such as Section 122 of the Trade Act of 1974, which allows the president to target countries with large balance-of-payments surpluses with the US. However, these alternatives come with their own set of challenges and limitations, and it's unclear whether they will be enough to salvage Trump's tariff policy.