The US Supreme Court struck down on Friday President Donald Trump’s sweeping tariffs that he pursued under a law meant for use in national emergencies, rejecting one of his most contentious assertions of his authority in a ruling with major implications for the global economy.
The justices, in a 6-3 ruling, upheld a lower court's decision that the Republican president’s use of this 1977 law exceeded his authority. The Supreme Court reached its conclusion in a legal challenge by businesses affected by the tariffs and 12 US states, most of them Democratic-governed, against Trump’s unprecedented use of this law to unilaterally impose the import taxes.
Trump has leveraged tariffs - taxes on imported goods - as a key economic and foreign policy tool.
They have been central to a global trade war that Trump initiated after he began his second term as president, one that has alienated trading partners, affected financial markets and caused global economic uncertainty.
Trump’s tariffs were forecast to generate over the next decade trillions of dollars in revenue for the United States, which possesses the world’s largest economy.
Trump’s administration has not provided tariffs collection data since December 14.
But Penn-Wharton Budget Model economists estimated on Friday that the amount collected in Trump’s tariffs based on the International Emergency Economic Powers Act stood at more than $175 billion. And that amount likely would need to be refunded with a Supreme Court ruling against the IEEPA-based tariffs.
The US Constitution grants Congress, not the president, the authority to issue taxes and tariffs. But Trump instead turned to a statutory authority by invoking IEEPA to impose the tariffs on nearly every US trading partner without the approval of Congress.
Trump has imposed some additional tariffs under other laws that are not at issue in this case. Based on government data from October to mid-December, those represent about a third of the revenue from Trump-imposed tariffs.
IEEPA lets a president regulate commerce in a national emergency.
Trump became the first president to use IEEPA to impose tariffs, one of the many ways he has aggressively pushed the boundaries of executive authority since he returned to office in areas as varied as his crackdown on immigration, the firing of federal agency officials, domestic military deployments and military operations overseas.
Trump described the tariffs as vital for US economic security, predicting that the country would be defenseless and ruined without them.
Trump, in November, told reporters that without his tariffs “the rest of the world would laugh at us because they’ve used tariffs against us for years and took advantage of us”.
Trump said the United States was abused by other countries, including China, the second-largest economy.
After the Supreme Court heard arguments in the case in November, Trump said he would consider alternatives if it ruled against him on tariffs, telling reporters that “we’ll have to develop a ‘game two’ plan”.
Treasury Secretary Scott Bessent and other administration officials said the United States would invoke other legal justifications to retain as many of Trump’s tariffs as possible.
Among others, these include a statutory provision that permits tariffs on imported goods that threaten US national security and another that allows retaliatory actions, including tariffs against trading partners that the Office of the US Trade Representative determines have used unfair trade practices against American exporters.
None of these alternatives offered the flexibility and blunt-force dynamics that IEEPA provided Trump, and may not be able to replicate the full scope of his tariffs in a timely fashion.
Trump’s ability to impose tariffs instantaneously on any trading partner’s goods under the aegis of some form of declared national emergency raised his leverage over other countries.
It brought world leaders scrambling to Washington to secure trade deals that often included pledges of billions of dollars in investments or other offers of enhanced market access for US companies.
But Trump’s use of tariffs as a cudgel in US foreign policy has succeeded in antagonising numerous countries, including those long considered among the closest US allies.
IEEPA historically had been used for imposing sanctions on enemies or freezing their assets, not to impose tariffs. The law does not specifically mention the word tariffs.
Trump’s Justice Department had argued that IEEPA allows tariffs by authorising the president to “regulate” imports to address emergencies.
The Congressional Budget Office has estimated that if all current tariffs stay in place, including the IEEPA-based duties, they would generate about $300bn annually over the next decade.
Total US net customs duty receipts reached a record $195bn in fiscal 2025, which ended on September 30, according to US Treasury Department data.
On April 2, on a date Trump labeled “Liberation Day”, the president announced what he called reciprocal tariffs on goods imported from most US trading partners, invoking IEEPA to address what he called a national emergency related to US trade deficits, though the United States already had run trade deficits for decades.
In February and March of 2025, Trump invoked IEEPA to impose tariffs on China, Canada and Mexico citing the trafficking of the often-abused painkiller fentanyl and illicit drugs into the United States as a national emergency.
Trump has wielded his tariffs to extract concessions and renegotiate trade deals, and as a weapon to punish countries that draw his ire on non-trade political matters. These have ranged from Brazil’s prosecution of former president Jair Bolsonaro India's purchase of Russian oil that help fund Russia’s war in Ukraine, and an anti-tariffs ad by Canada’s Ontario province.
IEEPA was passed by Congress and signed by Democratic President Jimmy Carter. In passing the measure, Congress placed additional limits on the president’s authority compared to a predecessor law.
The cases on tariffs before the justices involved three lawsuits.
The Washington-based US Court of Appeals for the Federal Circuit sided with five small businesses that import goods in one challenge, and the states of Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, Nevada, New Mexico, New York, Oregon and Vermont in another.
Separately, a Washington-based federal judge sided with a family-owned toy company called Learning Resources.
