Court Limits Presidential Authority
The US Supreme Court on Friday struck down Donald Trump’s sweeping global tariffs, ruling that the president overstepped his authority by invoking emergency powers. In a 6–3 decision, the justices emphasized that the Constitution clearly grants Congress — not the president — the power to levy taxes, including tariffs. Chief Justice John Roberts wrote that the Framers “did not vest any part of the taxing power in the Executive Branch.” Justices Samuel Alito, Clarence Thomas, and Brett Kavanaugh dissented, with Kavanaugh calling the tariffs “clearly lawful” despite questions of policy.
Emergency Powers and Legal Challenges
The ruling centered on Trump’s use of the International Emergency Economic Powers Act (IEEPA), a 1977 law that allows presidents to declare a national emergency and impose sanctions or other economic measures. Trump was the first to use it to justify broad import tariffs, which he argued were needed to address trade deficits and drug trafficking concerns. The tariffs, including so-called “reciprocal” duties on nearly every US trading partner, prompted lawsuits from Democratic-leaning states and small businesses across multiple sectors. Plaintiffs argued that the emergency powers law does not authorize tariffs, citing precedents that previously blocked executive overreach, including legal challenges to former President Biden’s student loan forgiveness program.
Economic Fallout and Market Response
Since the rollout in April 2025 — branded by Trump as “Liberation Day” — the US Treasury has collected about $240 billion in tariff revenue, with estimates that potential refunds could cost roughly $120 billion, around 0.5% of GDP. Justice Kavanaugh, in dissent, warned that processing refunds could become chaotic. Markets initially reacted positively to the Supreme Court’s decision, with the S&P 500 rising as much as 1% before gains moderated. While the ruling constrains Trump’s use of emergency powers for tariffs, officials note that he could still impose duties under other laws, meaning the administration may continue to pursue its trade agenda despite the setback.
