Bold statement: The Supreme Court just toppled a cornerstone of Donald Trump’s economic strategy, ruling that the president lacked authority to unilaterally slap tariffs on foreign goods. And this is the part most people miss: the ruling doesn’t wipe out all tariffs, only those tied to emergency powers. Here’s what happened, why it matters, and what could come next.
How the issue began
Under the US Constitution, Congress holds the power to levy tariffs, not the president. Trump believed he found a workaround that would let him impose tariffs without congressional approval by declaring emergencies. Last year he proclaimed two national emergencies: one citing a public health crisis from illegal drugs like fentanyl, and another addressing large and persistent trade deficits. The White House argued these emergencies gave Trump authority to deploy emergency tariffs under the International Emergency Economic Powers Act (IEEPA).
What tariffs were challenged
First, Trump announced so-called fentanyl tariffs on imports from China, Mexico, and Canada to pressure those countries to tighten drug smuggling controls. Later, he unveiled reciprocal tariffs on imports from nearly every other country to address trade deficits.
A coalition of businesses and about a dozen US states sued, contending that emergency declarations could not grant Trump the power to impose tariffs unilaterally.
Court decisions along the way
- A journey through the courts began at the US Court of International Trade, which sided with the opponents and held the emergency tariffs illegal.
- An appeals court paused that ruling briefly, then reinstated the tariffs.
- The Supreme Court has now affirmed the trade court’s original decision: IEEPA does not authorize the president to impose tariffs.
Justice Neil Gorsuch joined most colleagues in support, while three justices dissented. Justice Brett Kavanaugh noted in his dissent that while the tariffs may or may not be wise policy, their legality is not in question.
What exactly was struck down
The ruling targets only the tariffs imposed under emergency orders. In practice, this means country-specific tariffs—such as the 10% levy on Australian imports—were removed. Other tariffs, imposed under different statutes (including those on aluminum, steel, copper, wood, vehicles, auto parts, and furniture), remain in effect. In broad terms, going forward we’re likely to see tariffs aimed at products rather than broad country-wide measures.
Trump’s reaction and immediate steps
Trump denounced the ruling as ridiculous and accused the justices of disloyalty to the Constitution. He quickly signed a new 10% tariff order on many foreign imports, leveraging a trade-law provision that allows up to 15% for 150 days. He pledged to pursue workarounds to reintroduce tariffs on a more permanent basis.
US Trade Representative Katherine Greer (in this scenario) outlined that faster investigations under Section 301 of the Trade Act could be used to justify tariffs if a partner nation is deemed to treat the US unfairly. Such investigations would cover major trading partners and areas including industrial capacity, forced labor, pharmaceutical pricing, discrimination against US tech companies and digital goods, digital services taxes, ocean pollution, and trade practices in seafood and other products. If unfair practices are found, tariffs remain a tool that can be used.
Why not seek congressional approval?
Even with Republicans controlling Congress, the House holds a razor-thin majority. Unity among Republicans is necessary to pass any tariff legislation, and that consensus is far from guaranteed. Notably, a February vote against tariffs on Canadian goods showed that party support isn’t universal.
Implications for Australia
The baseline 10% tariff on Australian imports is gone and has been replaced by another 10% tariff enacted under a different provision. However, this mechanism is limited to 150 days, after which the policy could change again. The practical takeaway: leverage over Australia to extract concessions may be diminished, at least temporarily.
Refund prospects for tariffs
It’s unclear whether refunds will be issued on a broad scale. Importers who paid the emergency tariffs may pursue refunds, and the court didn’t provide definitive guidance on this issue. Justice Kavanaugh warned that refunds could amount to billions and that the process might be messy, with some costs already passed to consumers.
If Australian exporters have used US-based subsidiaries to facilitate sales and paid tariffs through those channels, those entities could be eligible for refunds. Some exporters with agreements to share tariff costs with US importers might pursue recoupment of those shared costs.
How refunds could work
There are preexisting pathways to recover erroneous tariffs, including post-summary corrections and protest procedures through US Customs and Border Protection. Businesses should evaluate which route applies to them and prepare submissions in anticipation of further court guidance on refunds.
Bottom line
- The Supreme Court’s decision clarifies that emergency powers do not grant unilateral tariff authority.
- Not all tariffs disappear—only those tied to emergency orders; product-specific tariffs may endure under different legal authorities.
- The political path to reinstating or expanding tariffs remains complex, even with a large legislative minority for fast action.
- Refunds could be possible for some importers, but the process will be intricate and uncertain until courts and agencies provide clearer rules.
What do you think? Should emergency powers be allowed to shape tariffs, or should Congress hold sole authority over trade measures? Are there scenarios where broad, targeted tariffs could be justified, or does this approach risk too much economic disruption? Share your thoughts in the comments.
