Justices Rein in Presidential Power
The Supreme Court of the United States has struck down sweeping global tariffs imposed by Donald Trump, ruling that the president overstepped his authority by relying on emergency powers to enact them.
In a 6–3 decision, the court found that the Constitution clearly assigns Congress — not the president — the power to levy taxes, including tariffs. Chief Justice John Roberts wrote that the framers did not grant any part of the taxing power to the executive branch.
Justices Samuel Alito, Clarence Thomas and Brett Kavanaugh dissented. Kavanaugh argued that whether the tariffs were wise policy was beside the point, maintaining that they were lawful under existing statutes.
The ruling marks the first major test of Trump’s economic agenda before a court he helped shape through three conservative appointments during his first term.
Emergency Powers at the Center of the Fight
At issue was Trump’s use of a 1977 law — the International Emergency Economic Powers Act (IEEPA) — to justify tariffs on nearly every US trading partner. The law allows a president to regulate economic transactions during a national emergency, typically through sanctions or asset freezes. Trump became the first president to use it to impose broad import taxes.
He argued that trade deficits and drug trafficking constituted national emergencies, using that rationale to place duties on countries including Canada, China and Mexico, before expanding the measures globally in what he dubbed “Liberation Day” in April 2025.
The decision does not entirely block Trump from imposing tariffs under other legal authorities, though those routes come with stricter limits. Administration officials have indicated they plan to preserve much of the tariff framework through alternative mechanisms.
Legal challenges came from across the political spectrum, including Democratic-leaning states, libertarian organizations and business groups. Critics argued the emergency law does not explicitly authorize tariffs and said Trump’s interpretation stretched the statute beyond recognition.
Economic Stakes and Market Reaction
The financial implications are significant. Since April 2025, the US Treasury has collected roughly $240 billion in tariff revenue. The Congressional Budget Office previously estimated the broader economic impact of the tariffs could reach $3 trillion over the next decade.
If courts ultimately require refunds, analysts at Capital Economics suggest repayments could total around $120 billion — roughly 0.5% of US GDP. Justice Kavanaugh, in his dissent, warned that sorting out potential refunds could become a logistical “mess.”
Markets initially responded positively to the ruling. The S&P 500 rose as much as 1% shortly after the decision was announced, though gains later eased. Investors have generally welcomed efforts to curb tariffs, but many still expect Trump to continue pursuing trade barriers through other means.
Earlier this year, Trump warned that a ruling against him could cost the country “hundreds of billions of dollars” and described the case as one of the most consequential in US history. Now, with the court’s decision, a central pillar of his economic strategy faces a serious setback — even as the broader fight over trade policy is far from over.
