US Supreme Court rules Trump’s emergency tariffs unlawful under IEEPA

The US Supreme Court struck down the legality of President Donald Trump’s sweeping trade tariffs on Firday (20 Feb), ruling that a key emergency powers law does not allow the White House to impose import duties without Congress.

In a 6–3 decision, the court held that the International Emergency Economic Powers Act, a 1977 statute typically used for sanctions and financial restrictions, “does not authorise the President to impose tariffs”, according to accounts of the majority opinion.

Chief Justice John Roberts delivered the court’s opinion, stressing that tariff-setting authority principally rests with Congress under the US constitutional framework, while the judiciary’s role is to enforce statutory limits.

The ruling targets tariffs Trump imposed using IEEPA after declaring national emergencies, including near-global “reciprocal” duties and separate measures tied to fentanyl trafficking allegations involving major trading partners.

Trump unveiled the “Liberation Day” reciprocal tariff framework at a White House event on 2 April 2025, announcing wide-ranging rates that were later adjusted through pauses, negotiations, and revisions, according to reporting on the episode.

The legal challenge was brought by businesses that argued the emergency law’s language about regulating “importation” was not a blank cheque for creating import taxes of any size, on any country, at any time.

Lower courts had previously ruled against Trump, including the US Court of International Trade and a federal appeals court, concluding he exceeded his authority and that Congress holds primary power over tariffs.

The Supreme Court heard oral arguments in November 2025, when questioning from justices across ideological lines fuelled speculation in US media that the tariffs could be struck down.

The cases stemmed from lawsuits filed by an educational toy manufacturer and a family-owned wine and spirits importer, reflecting the breadth of industries affected by the duties.

The decision immediately raised questions about refunds for tariffs already paid by importers, who typically remit duties at the border and may or may not be able to pass costs on through supply chains.

Estimates of refund exposure vary, reflecting different definitions of which tariffs are covered and which collection periods are counted, as well as uncertainty about what remains in force after the ruling.

Reuters reported that the ruling could require the government to refund more than US$175 billion collected in tariffs, and it warned that an estimated US$300 billion in annual revenue could be at risk if current tariffs cannot be sustained.

Other reporting has focused on IEEPA-specific collections of about US$133.5 billion assessed through mid-December 2025, with totals potentially rising towards US$150 billion depending on subsequent collections and calculations.

Beyond the headline numbers, legal and operational uncertainty remains over who would qualify for reimbursement, whether refunds would extend beyond the plaintiffs, and how quickly claims could be processed.

The Trump administration has argued that tariffs are a key negotiating tool and a major revenue source, and Trump has publicly floated using collections to fund a US$2,000 dividend to low- and middle-income Americans.

Independent tallies cited in US reporting have put 2025 gross tariff revenue below Trump’s own claims, underscoring the political sensitivity around how much money the duties actually generated.

Following the ruling, attention is expected to turn to the administration’s “Plan B”: reimposing parts of the tariff agenda under alternative statutes that provide narrower pathways, such as national-security or unfair-trade investigations.

Options include Section 232 of the Trade Expansion Act of 1962 for sector-specific national security actions, and Section 301 of the Trade Act of 1974 for country-specific retaliation after an investigation by the US Trade Representative.

However, analysts and trade lawyers have noted that these tools generally require procedural steps and do not replicate the sweeping, near-universal coverage that Trump pursued under his IEEPA strategy.

The broader economic impact is likely to remain contested, with the administration arguing tariffs protect domestic industry and critics pointing to price pressures and disruptions for import-reliant sectors.