The US Supreme Court struck down some of Donald Trump’s tariffs on foreign imports, which have become a hallmark of the chaos of the second Trump administration.
The court’s ruling deals specifically with duties levied using a law called the International Emergency Economic Powers Act (IEEPA), something no other president has done — the 1977 law was initially created to limit presidential ability to declare a national emergency only to times when the threat came from outside the US. The legality of using the IEEPA to tariff imports has been in question since the taxes were announced last year; the IEEPA was used to try to justify steep tariffs on Canada, Mexico, and China, as well as so-called “reciprocal” tariffs applied to goods coming into the US from just about every other country on Earth. The IEEPA was also invoked to end the de minimis exemption, which allowed for packages under a certain value to enter the US duty-free.
Other tariffs imposed outside of the IEEPA — like those on steel and aluminum and other industry-specific taxes — won’t find relief from Friday’s Supreme Court ruling. Additionally, the Trump administration is looking for other ways to impose tariffs: At a press briefing on Friday, Trump railed against the Supreme Court justices while praising dissenting Justice Brett Kavanaugh, and he vowed to levy additional blanket tariffs and open investigations into unfair trade practices in the future.
“Bottom line, industry should expect a continued high tariff environment for the foreseeable future.”
It’s still unclear what this will mean for importers, small businesses, and consumers who have paid billions in taxes as a result of Trump’s tariffs — the ruling does not directly address how refunds would work, if at all. In his dissent, Kavanaugh notes that the US Treasury may be required to refund importers who paid tariffs under the IEEPA, and that the process to return the money could be a “mess.” The New York Times reports that refund requests could total $120 billion, although consumers, who are often the party ultimately paying for tariffs, are unlikely to get that money back. Monica Gorman, managing director at Crowell Global Advisors who worked on manufacturing under Joe Biden, told The Verge in an email that the issue will now go to the Court of International Trade and could take months to sort out.
“The president has announced Section 122 tariffs effective almost immediately at a 10 percent rate. Although the 122 statute is limited to 150 days without a subsequent act of Congress, this will buy time for the administration to pursue additional tariff actions under Section 301 and other tariff statutes,” Gorman said. “Bottom line, industry should expect a continued high tariff environment for the foreseeable future.”
The National Retail Federation said the decision “provides much-needed certainty for US businesses and manufacturers,” and called for “a seamless process to refund the tariffs to U.S. importers.”
Small businesses were some of the first and most vocal opponents of Trump’s tariffs, and US-based companies relying on components and parts from abroad sounded the alarm early on. We Pay the Tariffs, a coalition of hundreds of small businesses, issued a statement celebrating the ruling but cautioned that “a legal victory is meaningless without actual relief for the businesses that paid these tariffs.
“The administration’s only responsible course of action now is to establish a fast, efficient, and automatic refund process that returns tariff money to the businesses that paid it. Small businesses cannot afford to wait months or years while bureaucratic delays play out, nor can they afford expensive litigation just to recover money that was unlawfully collected from them in the first place. These businesses need their money back now.”
From the beginning, Trump used tariffs as a cudgel for obedience from foreign governments and big corporations, meaning the taxes were both massively disruptive and subject to change at any moment, especially if a party rolled over for the administration. The rapidly changing nature of tariffs meant that businesses and consumers were reacting in real time. Now, we’re in a new era of uncertainty but with different questions — some consumers and businesses will want to once again stock up for an unclear future.
To be sure, the SCOTUS decision is a blow to Trump’s agenda, but businesses and consumers are still living in a trade nightmare of the president’s own making: The Port of Los Angeles told CNN it’s expecting an influx of cargo ships as American importers rush to bring inventory into the country. Kathryn Anne Edwards, economist and policy consultant, told The Verge in an email that there’s still uncertainty after the ruling.
“Taking control of tariffs out of [Trump’s] hands is unequivocally good for the economy,” she said. “That’s not to say the ruling won’t cause harm, but he was using the American consumer as leverage.”
As economists warned, the American consumer is likely to foot the bill — for future tariffs imposed by Trump, for refunds, and for a new normal of higher prices that companies have no reason to roll back.
“I think the political blowback could be incredible, given that companies are poised to see a refund, but consumers are not,” Edwards said. Approval rates and attitudes toward businesses had hit historic lows as it is, she said.
“Many people will view this as a payoff to companies at their expense.”
