The U.S. Supreme Court has ruled President Trump overstepped his authority by imposing sweeping global tariffs under the International Emergency Economic Powers Act (IEEPA). The court's 6-3 decision stated Trump could not use IEEPA to levy taxes on imports from nearly every country. This ruling leaves open the possibility of refunds for an estimated $130 billion generated by the tariffs, a matter likely headed for further legal battles.
Hours after the decision, Trump signed a proclamation utilizing an alternative law, Section 122 of the 1974 Trade Act, to enact a new, temporary 10% tariff on goods from all countries. This section allows tariffs up to 15% for 150 days, requiring Congressional action thereafter. However, potential workarounds exist, allowing for re-declaration of emergency tariffs.
The Supreme Court decision specifically addresses tariffs enacted under IEEPA, which Trump used to declare emergencies related to fentanyl trafficking and the U.S. trade deficit. These tariffs are now deemed unlawful. However, industry-specific tariffs on steel, aluminum, lumber, and automotive goods, imposed under Section 232 of the Trade Expansion Act of 1962 citing national security, remain unaffected.
US Treasury Secretary Scott Bessent indicated that combining Section 122 tariffs with enhanced Section 232 and Section 301 tariffs would ensure "virtually unchanged tariff revenue in 2026," offsetting losses from the IEEPA tariffs.
The issue of refunds for the $130 billion collected from the unlawful tariffs remains unresolved. The Supreme Court's ruling did not provide guidance on restitution, and legal experts anticipate years of litigation. While some larger companies may pursue refunds, smaller businesses may lack the resources.
Effective February 24th, the new 10% global tariffs apply to nearly all imports, including those from countries with existing trade deals. Exemptions are in place for critical minerals, energy products, food crops, pharmaceuticals, electronics, vehicles, and aerospace products, among others. Goods under the USMCA trade agreement and certain textiles from Central American countries are also exempt. Tariffs on low-cost goods previously exempted have been reinstated.