Summary

The U.S. Supreme Court ruled 6-3 that President Trump's use of the International Emergency Economic Powers Act to impose sweeping tariffs was unconstitutional, finding that only Congress has the authority to levy taxes and duties. The decision effectively removes more than 60 percent of tariffs imposed in 2025 and eliminates an estimated $175 billion in expected annual collections.

Key Facts

• Supreme Court ruled 6-3 that IEEPA does not authorize presidential tariffs
• More than 60 percent of 2025 tariffs are effectively eliminated
• Estimated $175 billion in annual tariff collections removed

Context

Chief Justice John Roberts wrote that affirming Trump's use of IEEPA would represent a transformative expansion of presidential authority over tariff policy. The ruling creates immediate uncertainty for businesses seeking refunds on tariffs already paid, with the court leaving refund procedures to the administration to determine.

The decision complicates trade deals previously announced with China, the United Kingdom, and Japan, as those agreements were negotiated under the threat of tariffs now deemed illegal. The administration has indicated it may pursue other trade authorities, though these typically require investigations taking weeks or months to complete.

Analysts estimate the overall effective tariff rate will drop to approximately 9.1 percent from roughly 17 percent. Fitch Ratings characterized the ruling as having tangible upside for U.S. consumers and corporate profitability.

Sources

• Axios