Supreme Court strikes down Trump’s reciprocal tariffs

Key Takeaways

1The Supreme Court struck down President Trump's use of emergency authorization to impose sweeping reciprocal tariffs.
2The court's decision was based on the premise that the President exceeded his authority by invoking a 1977 law inappropriately.
3The ruling's impact on existing auto tariffs and metals duties remains unaffected.
4JPMorgan estimates a modest fall in the effective US tariff rate following these changes.

Could a Supreme Court decision trigger billions in refunds for importers? The recent ruling against President Trump's tariff policies has injected fresh uncertainty into global trade, but the long-term impact remains to be seen.

Supreme Court Limits Presidential Tariff Power

In a 6-to-3 decision, the Supreme Court ruled that President Trump exceeded his constitutional authority when imposing "reciprocal" tariffs in April 2025 [1]. The court found that the President's use of the International Emergency Economic Powers Act (IEEPA) was not a valid basis for setting tariffs without congressional approval [2]. This decision introduces a new layer of uncertainty for businesses involved in international trade.

The Ruling and its Implications

The Supreme Court’s opinion, written by Chief Justice John Roberts, emphasized that the power to impose taxes and tariffs belongs to Congress [1]. The Trump administration had argued that the IEEPA, which allows the president to regulate importation during emergencies, also allowed him to set tariffs [2]. Roberts noted, "And the fact that no President has ever found such power in IEEPA is strong evidence that it does not exist," [2].

Samuel Rines, macro strategist at WisdomTree, cautioned that the court’s decision "doesn’t really matter for the overall tariff picture." According to Rines, it mainly shifts the legal mechanisms used for tariffs. Treasury Secretary Scott Bessent described a potential global tariff as a “five-month bridge," suggesting the administration will seek alternative routes to enact tariffs [2].

Potential for Tariff Refunds

The ruling raises the possibility of refunds for importers. Justice Brett Kavanaugh acknowledged in his dissent that the process of returning billions of dollars collected from importers would likely be a "mess," [2]. A U.S. appeals court had previously ruled that most of Trump’s "reciprocal" tariffs were illegal but paused any refund process until the Supreme Court’s decision [5].