Setback ruling for the economic agenda of the president of the United States; Trump imposes an additional 10% global tariff on its partners
The United States Supreme Court is seen in Washington, United States. REUTERS/FILE
WASHINGTON:
The US Supreme Court ruled Friday that Donald Trump’s sweeping global tariffs are illegal, a stunning rebuke of the president’s signature economic policy that disrupted international trade.
Reacting to the ruling, the US president said the Supreme Court’s decision declaring his sweeping global tariffs illegal was “deeply disappointing.”
Trump also told reporters that he was “absolutely ashamed” of “certain members” of the conservative-dominated court who ruled against him.
He announced he would impose an additional 10 percent global tariff on U.S. trading partners. Speaking to reporters after the Supreme Court ruled that his sweeping global tariffs were illegal, Trump said he would impose tariffs using alternative authorities.
“Today’s Supreme Court decision made a president’s ability to regulate trade and impose tariffs more powerful and clearer, rather than less,” he said.
The conservative-majority high court ruled six to three in the ruling, saying that a 1977 law known as the International Emergency Economic Powers Act (IEEPA) that Trump has relied on “does not authorize the president to impose tariffs.”
The ruling does not affect sector-specific tariffs that Trump imposed separately on imports of steel, aluminum and several other goods. Several government investigations remain underway that could lead to more sectoral tariffs.
Still, this marks Trump’s biggest defeat at the Supreme Court since he returned to the White House last year.
While Trump has long used tariffs as leverage for pressure and diplomatic negotiations, he made unprecedented use of emergency economic powers in his second term to impose new tariffs on virtually all of the United States’ trading partners.
These included “reciprocal” tariffs on trade practices that Washington considered unfair, along with separate sets of tariffs targeting its main partners, Mexico, Canada and China, over illicit drug flows and immigration.
The court noted Friday that “if Congress had intended to convey the distinctive and extraordinary power to impose tariffs” to the IEEPA, “it would have done so expressly, as it has consistently done in other tariff statutes.”
The Supreme Court’s three liberal justices joined three conservatives in Friday’s ruling, which upheld lower courts’ decisions that tariffs imposed by Trump under the IEEPA were illegal.
Conservative justices Brett Kavanaugh, Clarence Thomas and Samuel Alito dissented.
Chief Justice John Roberts, issuing his opinion, said that “the IEEPA contains no reference to tariffs or duties.”
A lower trade court ruled in May that Trump overstepped his authority with general taxes and blocked most of them, but that outcome was put on hold when the government appealed.
With the White House already bracing for a negative outcome, KPMG chief economist Diane Swonk warned that “tariffs declared illegal can be quickly reinstated through other levers.”
“Financial markets recovered on the news, but that is premature,” he added.
Still, business groups applauded the ruling, with the National Retail Federation saying it “provides much-needed certainty” for American businesses and manufacturers.
“We urge the lower court to ensure a smooth process to refund tariffs to U.S. importers,” the federation said.
But the judges did not address the extent to which importers can receive refunds. This is likely to be litigated.
Kavanaugh warned that this process – as was acknowledged during oral arguments – could be a “disaster.”
Gregory Daco, chief economist at EY-Parthenon, told AFP that the loss of IEEPA tariff revenue to the US government could amount to about $140 billion.
Delighted Democratic leaders pounced on the ruling, with Senate Minority Leader Chuck Schumer hailing the outcome as a “victory for the wallets” of American consumers.
But the top Democrat on the Senate Banking Committee, Elizabeth Warren, warned that there remains “no legal mechanism for consumers and many small businesses to get back the money they have already paid.”
The Yale University Budget Lab estimates that consumers will face an average effective tariff rate of 9.1 percent with Friday’s decision, up from 16.9 percent.
But he said this “is still the highest since 1946”, excluding 2025.
The European Union said it was studying the court ruling and will remain in close contact with the Trump administration.
Britain plans to work with the United States on how this affects a trade deal between the two countries, while Canada said the decision affirms Trump’s tariffs were “unjustified.”
Eliminating the emergency tariffs “would limit the president’s ambitions to impose blanket tariffs on a whim,” said Erica York of the nonprofit Tax Foundation.
But it leaves other statutes to apply to tariffs, even if they tend to be more limited in scope or require specific processes such as investigations, York told AFP.
“The ruling dismantles the legal scaffolding, not the edifice itself,” ING analysts Carsten Brzeski and Julian Geib said of Trump’s trade restrictions.
