The Supreme Court ruling against the Trump administration’s sweeping tariffs may ease import taxes on U.S. consumers and businesses, but it also brings new economic uncertainty.
Friday’s 6-to-3 ruling has widespread implications. It means that the White House, with weakened credibility abroad, is seeking other ways to rebuild its tariff wall. It means companies that have paid duties on imported goods will likely sue the federal government for refunds. And it means that consumers might see the prices of those goods fall, even as budgetary pressure to raise taxes goes up.
“This was an important case to me, more as a symbol of economic national security,” President Donald Trump, appearing combative, said at a briefing at the White House. “Now I’m going to go in a different direction. Probably the direction I should have gone the first time …. which is even stronger than our original choice.”
Why We Wrote This
A landmark Supreme Court ruling affirms limits on presidential tariff-setting. But key questions remain, including where tariffs will settle and whether the government owes refunds to businesses that paid tariffs the court just revoked.
Mr. Trump immediately invoked an alternative approach, imposing a temporary 10% global tariff under a different statute to replace the canceled ones. And in a Saturday social media post, he went further, pledging to boost the new rate to 15% while his administration pursues additional actions.
It may take weeks or even months for the extent of the economic fallout and Mr. Trump’s evolving next steps to become clear. But at minimum, the ruling checks the President’s executive authority, undermining the administration’s signature tariff policy while triggering legal chaos over $175 billion in potential importer refunds.
Friday’s court ruling involved the 1977 International Emergency Economic Powers Act (IEEPA), which allows the president to regulate imports during national emergencies. The administration has used it far more expansively than any previous president, says Gautham Rao, a legal historian at American University. “No president before Trump would have looked at the conditions in the world and declared an emergency on this scale,’’ he says.
A majority of the court ruled that Mr. Trump couldn’t.
It’s a clear ruling against the president’s ability to unilaterally tax Americans through tariffs, says Alan Wm. Wolff, a senior fellow at the Peterson Institute for International Economics and former deputy director-general of the World Trade Organization. But the court didn’t address a host of other related questions.
One of those unanswered questions is where tariff policy will go next – in an economy that has already struggled for a year with the doubts that have attended Mr. Trump’s bluff, zig-zag course on the scale and scope of tariffs.
Options for new tariffs
Many companies, which have seen prices rise and business slow because of the tariffs, cheered Friday’s court decision. But the president has vowed to reinstitute the tariffs using other authorities.
Four tariff-related statutes offer options, says Mr. Wolff of the Peterson Institute. But all are problematic for an administration looking to reinstitute sweeping tariffs. Two of those statutes haven’t been used in at least 50 years. The administration has invoked a third, Section 232 of the Trade Expansion Act of 1962, to restrict imports of steel, aluminum, copper, automobiles, and other products. The fourth, allowing the president to retaliate against foreign unfair trade acts under Section 301 of the Trade Act of 1974, is already being used against China.
Those tariffs are not affected by the high court’s ruling. But they include requirements, such as formal government investigations of the administration’s claims, that make them difficult to use to rebuild Mr. Trump’s tariff wall.
For the near term, the president is trying another route, signing an order Friday under Section 122 of the Trade Act of 1974.
The new global tariff comes “over and above our normal tariffs already being charged,” Mr. Trump said Friday. “And we’re also initiating several Section 301, and other investigations, to protect our country from unfair trading practices of other countries and companies.”
But action under Section 122 expires after 150 days unless Congress votes to extend it. Whether Congress goes along is another uncertainty. In one symbolic move, some House Republicans voted with Democrats on Feb. 11 to overturn the Trump administration’s tariffs on Canada.
“We can expect the tariffs to come back,” says Mr. Wolff. “The question is to what extent and whether those tariffs will be judged to be legitimate if there’s a suit against the government.
“He will re-impose some” tariffs,” agrees Howard Gleckman, a non-resident fellow at the Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution that analyzes tax and budget policies. But “I don’t think he’s going to reimpose as much as he says he will.”
Other uncertainties
Friday’s ruling also didn’t address reimbursements to companies that have paid the IEEPA tariffs. Without a clear path to getting their money, they’re likely to sue in court, which could lead to litigation that lasts for months or years.
“There’s no mechanism” for refunds in a case like this, says Mr. Gleckman. “Assuming that they actually refund them, the Trump administration is going to have to figure out exactly how it’s going to do this. That’s going to be a rather complex process.”
Then there’s the budgetary uncertainty.
The federal deficit fell by about 2.8% in fiscal year 2025, in part because of corporate tariff payments estimated at $175 billion to $200 billion. From that, the government netted about $132 billion, according to the Tax Foundation. If the government now has to refund the $175 billion, then the federal deficit, already drowning in red ink, will look even worse, especially as President Trump’s new income-tax cuts kick in.
Those tax cuts are projected to cost $4 trillion over 10 years, offset by tariff revenues that were supposed to reach $1.4 trillion during that same period. But the import levies that were just overturned accounted for about three-fourths of the expected revenue from tariffs. For the budget, much will depend on whether new tariffs from Mr. Trump will stick – and replace the revenue the court ruling has taken away.
Staff writer Victoria Hoffmann contributed to this report.
Editor’s note: This article was updated Feb. 21, the date of initial publication, with news that President Trump pledges to boost a new global tariff to 15%.