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SUPREME COURT RULES 6-3 THAT TRUMP’S TARIFFS ARE ILLEGAL

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In a major blow to President Donald Trump’s foreign policy and political branding, the Supreme Court has ruled 6-3 that Donald Trump’s far-reaching global tariffs are illegal. It ruled that Trump can’t use a 1977 law for national emergencies to impose tariffs without the approval of Congress. You can read the ruling here.

Trump called the ruling a “disgrace” and said he has a backup plan.

One sticking point: the government collected over $200 billion to $28 billion in new tariff revenue. The money has to be refunded but the court didn’t outline any procedure for how importers can get the money back.. In his dissent from the ruling, Justice Brett Kavanaugh predicted it would be a “mess.” However, others contend that the refund process might indeed by messy but it would be manageable. Expect to see many lawsuits from countries and companies seeking to get refunds.

Newsweek notes:

The ruling does not bar Trump from imposing tariffs under other statutes. Top administration officials have said they expect to maintain the tariff framework under separate legal authorities.

Kavanaugh also warned the decision could destabilize existing trade agreements. Because IEEPA tariffs had “helped facilitate trade deals worth trillions of dollars — including with foreign nations from China to the United Kingdom to Japan,” he wrote, the ruling “could generate uncertainty regarding various trade agreements. That process, too, could be difficult.”

…Many companies, including Costco, have already lined up in lower courts to demand refunds.

This is how the Wall Street Journal framed it:

President Trump’s global tariffs are illegal, the Supreme Court ruled Friday, in a stinging repudiation of a signature White House initiative.

The 6-3 decision, written by Chief Justice John Roberts, removes a tool of diplomatic pressure that Trump has aggressively wielded to remake U.S. trade deals and collect tens of billions of dollars from companies importing foreign goods. The ruling didn’t directly address whether the government will have to pay back the tariff revenue it has already collected.

It is the first time the high court has definitively struck down one of Trump’s second-term policies. In other areas, the court’s conservative majority has so far granted Trump broad latitude to deploy executive power in novel ways, but a majority of justices—three conservatives and three liberals—said he went too far in enacting his most sweeping tariffs without clear authorization from Congress.

The case involved two categories of tariffs. Trump imposed one category on virtually every country in the world, ostensibly to repair trade deficits. He imposed the other set of tariffs on Mexico, Canada and China, saying those countries are responsible for the flow of illegal fentanyl into the U.S.

The court rejected Trump’s argument that a 1977 law, the International Emergency Economic Powers Act, implicitly authorized both groups of tariffs.

“Had Congress intended to convey the distinct and extraordinary power to impose tariffs, it would have done so expressly,” Roberts wrote.

The White House didn’t immediately respond to a request for comment.

Stock indexes rose modestly after the decision, while trade- and tariff-exposed stocks gained. The dollar slipped and Treasury yields edged higher.

The decision rebuffed an extraordinary public pressure campaign that Trump had mounted against the court while it was weighing the case. The president claimed, for instance, that a decision against the tariffs would be “the biggest threat in history” to U.S. national security and “would literally destroy the United States of America.”

The ruling will likely prompt the White House to try to re-enact the tariffs using other legal justifications. The administration does have other laws it can rely on, but those laws have procedural constraints and may not allow tariffs as expansive as the ones the court struck down.

What are the global economic implications of the Supreme Court decision striking down the tariffs?

Global economic implications would be immediate and symbolic as well as practical. Financial markets tend to reward predictability, and tariffs–particularly those imposed through expansive executive authority–injected uncertainty into global supply chains, trade pricing, and diplomatic relations. Allies in Europe and Asia long argued that unilateral tariffs disrupted decades of rules-based trade.

A ruling curbing Presidential tariff powers would likely be read abroad as a reassertion of institutional stability in the United States: Congress and the courts reclaming authority over trade policy. Multinational companies could respond by acceralating delayed investments, while trading partners might reopen negotiations assuming fewer sudden policy shocks from Washington. In short, the decision would signal to the world economy that U.S. trade policy is moving away from personality-driven disruption toward procedural continuity.

And politically? The impact on Donald Trump would be far more complicated.

Tariffs were not merely an economic tool for Trump, they were central to his political identify–proof to supporters that he was willing to defy global elites and protect American industry. A Supreme Court rebuke would weaken his claim to unilateral executive power, limiting a signature mechanism he used to demonstrate toughness on trade. Yet it could also hand him a potent political argument. Trump has historically turned institutional resistance into political fuel, portraying courts, bureaucracies and international systems as obstacles placed in the path of a political agenda. Rather than diminishing his influence outright, the ruling could shift his rhetoric from policymaker to aggrieved challenger, reinforcing his outsider narrative even as it constrains his governing option. The paradox is that the decision might reduce his policy leverage while simultaneously energizing his political base.

For a guy who prided himself on deal-making and strong-arming the globe, it turns out that the art of the deal might have a new chapter: how to negotiate with the Supreme Court. And as for Trump’s power, well, he might just start calling the court the biggest tariff of all–one on his plans.