U.S. Supreme Court rejects Trump's worldwide tariffs

The U.S. Supreme Court has struck down President Trump's sweeping tariffs on Friday (20 February), which he imposed under a law intended for national emergencies.

The decision rejects one of his most controversial assertions of presidential power and carries significant implications for the global economy.

The tariffs have been central to the global trade war Trump initiated after beginning his second term, a conflict that has alienated trading partners, unsettled financial markets and heightened economic uncertainty worldwide.

The Trump administration has not released tariff collection data since 14 December. However, economists at the Penn Wharton Budget Model estimated on Friday that more than $175 billion had been collected under tariffs imposed pursuant to the International Emergency Economic Powers Act (IEEPA).

That amount would likely need to be refunded following the Supreme Court’s ruling against the IEEPA-based tariffs.

The U.S. Constitution grants Congress - not the president - the authority to levy taxes and tariffs. Mr Trump instead relied on statutory authority, invoking IEEPA to impose tariffs on nearly every U.S. trading partner without congressional approval.

He has imposed additional tariffs under separate laws that were not at issue in this case. Government data from October to mid-December show that those measures accounted for roughly a third of the revenue generated by Trump-imposed tariffs.

IEEPA allows a president to regulate commerce during a national emergency.

Mr Trump described the tariffs as essential to U.S. economic security, stating in November that without them “the rest of the world would laugh at us because they’ve used tariffs against us for years and took advantage of us”.

Treasury Secretary Scott Bessent and other administration officials said the United States would pursue alternative legal justifications to preserve as many of the tariffs as possible.

These include a statutory provision permitting tariffs on imported goods deemed to threaten U.S. national security, as well as another allowing retaliatory measures - including tariffs - against trading partners that the Office of the U.S. Trade Representative determines have engaged in unfair trade practices against American exporters.

However, of these alternatives offered the flexibility and blunt-force dynamics that IEEPA provided Trump and they may not be able to replicate the full scope of his tariffs quickly.

Trump’s ability to impose tariffs immediately on goods from any trading partner under a declared national emergency had significantly strengthened his leverage in trade negotiations.

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Legal and constitutional issues of IEEPA

The Congressional Budget Office has estimated that if all current tariffs stay in place, including the IEEPA-based duties, they would generate about $300 billion annually over the next decade.

Total U.S. net customs duty receipts reached a record $195 billion in fiscal 2025, which ended on 30 September, according to U.S. Treasury Department data.

Key actions, trade impact and ongoing lawsuits

On 2 April, the president announced what he called "reciprocal" tariffs on goods imported from most U.S. trading partners, again invoking IEEPA to address what he called a national emergency related to U.S. trade deficits - despite the United States having run trade deficits for decades. 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.

IEEPA was passed by Congress and signed by Democratic President Jimmy Carter. In enacting 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 U.S. 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.

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