- What's at stake: The Supreme Court struck down the White House's sweeping tariff regime that went into effect last April in a 6-3 ruling.
- Expert quote: "The Government cannot identify any statute in which the power to regulate includes the power to tax." — Supreme Court Chief Justice John Roberts, writing for the majority.
- Forward look: The White House will likely seek alternative avenues to enact its tariff agenda, which economists have feared would drive up inflation and restrict trade, which could dampen economic growth and impact corporate borrowers' ability to repay loans.
The Supreme Court on Friday struck down the Trump administration's effort to impose sweeping
The majority opinion, authored by Chief Justice John Roberts, held that the International Emergency Economic Powers Act — a law designed to restrict foreign financial and property transactions during crises — did not allow the President to unilaterally impose tariffs, rejecting the legal underpinnings of the administration's tariff regime. Roberts was joined by Justices Sonia Sotomayor, Elena Kagan, Amy Coney Barrett, Neil Gorsuch and Ketanji Brown Jackson.
"IEEPA authorizes the President to 'investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit . . . importation or exportation," the court wrote. "Absent from this lengthy list of specific powers is any mention of tariffs or duties."
The court held that the authority to regulate importation conferred by the IEEPA does not extend so far as to dictate importation taxes, which is the sole purview of Congress.
"The power to 'regulate . . . importation' does not fill that void. … Many statutes grant the Executive the power to 'regulate,'" the opinion held. "Yet the Government cannot identify any statute in which the power to regulate includes the power to tax. The Court is therefore skeptical that in IEEPA — and IEEPA alone — Congress hid a delegation of its birth-right power to tax within the quotidian power to "regulate."
The Liberation Day tariff regime spurred a
In concurring with the majority, Justice Kagan focused her analysis on "the ordinary tools of statutory interpretation," arguing the case did not require special legal analysis like the "major questions" doctrine. IEEPA gives the president the power to "regulate" imported goods in the midst of a threat from abroad, she argues. "Reading text in context," and "applying a 'modicum of common sense' about how Congress typically delegates" demonstrates "IEEPA does
not authorize the President to impose tariffs," Kagan said.
"I agree with [the Court's] conclusion…[b]ut because I think the ordinary tools of statutory interpretation amply support today's result, I do not join the part of that opinion invoking the so-called major-questions doctrine," Kagan said in her opinion. "Hundreds of provisions in the U.S. Code give agencies the authority to 'regulate' one thing or another. [Y]et, the Government cannot identify a single one that is understood to grant taxing power."
Justice Jackson concurred in part, tapping legal history to interpret IEEPA's original statutory intent. Jackson cited congressional reports released alongside the 1977 law, which she said reveals that Congress' authorization of special executive powers in emergencies did not include the authority to tax imports. Indeed, she said, "there is evidence that lawmakers themselves pay more attention to these reports than a statute's text to understand the statute's purpose and meaning."
"When Congress enacted IEEPA in 1977, limiting the circumstances under which the President could exercise his emergency authorities, it kept the 'regulate … importation' language from [IEEPA's predecessor enacted in 1917, the [Trading with the Enemy Act]," Jackson wrote. "The other two relevant pieces of legislative history — the Senate and House Reports that accompanied IEEPA — demonstrate that Congress's intent regarding the scope of this statutory language remained the same … to grant the President the emergency authority 'to control or freeze property transactions where a foreign interest is involved.'"
Since tariffs are not a way the President can isolate or harness foreign assets, Jackson continued, interpreting IEEPA as a free rein to the White House to impose tariffs "would require the Court to override Congress's expressed purpose for including the 'regulate … importation' language in the statute."
The administration has already been considering alternative means of reaching their tariff policy objectives. Treasury Secretary Scott Bessent has said while the administration believed IEEPA was the strongest and most efficient legal argument for the administration, he has cited other routes they could tap if the Supreme Court nullified their initial strategy.
In an interview with CNBC in November, Bessent cited Section 232 of the Trade Expansion Act and Section 301 of the Trade Act as possible avenues, but admitted these were more "more cumbersome" strategies.
The dissenting Justices — led by Kavanaugh, along with Justices Thomas and Alito — disagreed with the majority's reading of IEEPA, saying the statute did authorize broad delegation of authority to the executive branch, including tariffs. Kavanaugh, like Bessent, cited the Trade Act and the Trade Expansion Act as granting similar tariff power "in a variety of circumstances."
"In recent years, Presidents George W. Bush, Obama, and Biden have all imposed tariffs on foreign imports under those statutory authorities," Kavanaugh wrote, "During declared national emergencies, IEEPA broadly authorizes the President to regulate international economic transactions … the broad power to 'regulate . . . importation' includes the traditional and common means to do so—in particular, quotas, embargoes, and tariffs."
Democrats like Senator Ed Markey, D-Mass., celebrated the Supreme Court's ruling, painting it as a win for small businesses suffering from higher costs, which the Senator said were in the billions. Lawmakers also called on the administration to refund businesses for the increased costs over the last year.
"This case was Small Businesses v. Trump, and small businesses won," said Markey. "While big businesses ducked the fight, relying instead on golden gifts and Mar-a-lago memberships to provide access and exemptions, small businesses took on this fight to end the pain on Main Street. Trump bet his economic agenda on an illegal power grab and lost. It is a moral obligation for this administration to return every last cent taken from small businesses by this illegal tax."
New York Attorney General Letitia James — one of the 11 attorneys general who sued to block the tariffs — underscored the harm she says tariffs have already inflicted on consumers, while saying the court's decision reinforced the rule of law.
"These illegal tariffs caused immense economic chaos, raising costs for families and businesses throughout our country," said James. "The Supreme Court has agreed that this administration has no authority to impose massive new taxes on a whim. This is a critical victory for the rule of law and our economy, and I will keep fighting to protect New Yorkers from destructive policies that make life less affordable."
Following the decision, the bicameral Joint Economic Committee issued an
"President Trump's tariffs have been a disaster for American families, driving costs up at the worst possible time," said the committee's ranking member Senator Maggie Hassan, D-N.H. "While the Supreme Court has thankfully and correctly ruled that much of Trump's tariff agenda was an illegal exercise of presidential power, today's ruling cannot undo the damage that tariffs have already caused."
Consumer advocates focused on higher price-tags in retail and grocery stores, urging the administration to heed the court's intention and not attempt to resurrect tariffs under different authority. John Breyault, Vice President of Public Policy for the National Consumers League said tariffs, "didn't protect consumers — they punished them."
"These tariffs operated as a nationwide price hike affecting everything from household goods to everyday essentials. American families should not be collateral damage in an ideologically driven trade policy," Breyault said. "The White House should respect both the spirit and the letter of this ruling and refrain from attempting to resurrect these sweeping tariffs under alternative statutory authorities…[which] would only prolong economic uncertainty and continue to squeeze household budgets."
Michael Pearce, Chief U.S. Economist for Oxford Economics, said while the decisions immediately lowers the effective tariffs rate from 12.8% to 8.3%, the potential for the administration to explore alternative routes creates a lingering uncertainty for businesses.
"Any boost to the economy from lowering tariffs in the near-term is likely to be partly offset by a prolonged period of uncertainty, and with the administration likely to rebuild tariffs through other, more durable, means, the overall tariffs rate may yet end up settling close to current levels," Pearce argued. "The White House may turn to Section 122 [of the Trade Act] to immediately implement an up to 15% tariff on all US imports for as many as 150 days before requiring Congressional approval for an extension."
Sen. Chuck Grassley, R-Iowa — who, at 92, has served in the Senate for over 45 years and was in office when IEEPA was passed — issued a statement accepting the ruling, while continuing to back the President's trade strategy, calling him a "very skilled negotiator."
Grassley urged further work between the legislative and executive branch to find a durable solution.
"The Supreme Court has determined that Congress did not authorize President Trump's use of tariffs. … I've made clear Congress needs to reassert its constitutional role over commerce," Grassley wrote in a statement. "I urge the Trump administration to keep negotiating, while also working with Congress to secure longer-term enforcement measures so we can provide expanded market opportunities and certainty for Iowa's family farmers and businesses.
This is a developing story.
