Taking stock of the Supreme Court’s tariffs ruling

Flanked by economic advisers and framed by dim lighting, President Donald Trump addressed a high-stakes ruling from the Supreme Court on Friday. Trump called the ruling, which struck down some of the president’s tariffs, a disgrace. He called the justices in the majority disloyal to the country and “lapdogs for RINOs” (Republicans in Name Only) and the radical left. But Trump declared the decision did not permanently tie his hands in levying tariffs.

“Their decision is incorrect, but it doesn’t matter because we have powerful alternatives that have been approved by this decision,” Trump said.

In the 6-3 decision, the conservative justices splintered over whether Trump obeyed the Constitution when he declared a national emergency over trade and renegotiated trade agreements with dozens of countries, largely through retaliatory tariffs or the threat of them. The court found that he did not have this authority.

The decision came down to two key words in the International Emergency Economic Powers Act (IEEPA) of 1977: regulate and importation.

“Based on two words separated by 16 others … the President asserts the independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time,” Chief Justice John Roberts wrote in the majority opinion. “Those words cannot bear such weight.”

The ruling delivers a rebuke against a key pillar of Trump’s agenda. It also complicates what could come next from the administration and from businesses that have footed the bill for nearly a year on increased tariffs.

What does the ruling mean for the economy? The stock market responded positively to the Supreme Court decision on Friday. The Dow Jones Industrial Average, which started the morning in a dip following weak gross domestic product data, spiked around the time the tariff ruling was announced, then fell again. Following Trump’s news conference, the index began climbing and remained above yesterday’s closing.

The fluctuations likely represent investors pricing in uncertainty over how long it will take the Trump administration to find new avenues for tariffs, according to Sanford Ikeda, professor emeritus of economics at Purchase College SUNY.

Under the ruling, most of Trump’s so-called retaliatory tariffs are lifted for now. These tariffs primarily covered goods such as apparel and food products. Other products typically tariffed under other statutes, such as metals and automobiles, are still affected.

Although one of Trump’s goals with the tariffs was to reduce the trade deficit, new data from the Census Bureau shows the inflation-adjusted deficit hit a record high in 2025. The tariffs were also intended to increase manufacturing jobs in the United States, but such jobs have been on a steady decline since January 2024, according to the Federal Reserve Bank of St. Louis.

With the tariff effects still unclear, significant disagreement continues over Trump’s political future and how the policy shift will affect international relations.

“This could be the downfall of the Trump administration,” said Charles Steele, director of the Center for Commerce and Freedom at Hillsdale College. “A lot of his foreign policies use the tariffs as a lever to try and get things done.”

What does this mean for business owners and importers? Several major businesses, including Costco, aluminum producer Alcoa, and Chinese automaker BYD, have sued the U.S. government to recoup tariff losses. But Friday’s Supreme Court opinion says nothing about how to pay back revenue collected through an unconstitutional act. If much of the repayable tariff revenue has already been spent, the government might have to raise taxes to fulfill repayment demands, according to Ikeda. The result would be a payment-repayment cycle that would do little to expand the economy and could significantly reduce government revenue.

Small businesses may see the effects more immediately. Thuy Huynh lives in Seattle, Wash., and owns an online shop that sells imported French antiques. She said that for several months last year, she couldn’t receive packages from overseas because companies like UPS and DHL had no way to estimate rapidly changing tariffs. On top of those tariffs, Huynh said she also had to pay processing fees, which sometimes added up to 50% of the value of her items.

“I am very happy, and I hope that [this decision] is going to take away all the tariffs,” she said. “I have raised my prices a little bit, and I also stopped bringing in as much stuff as I used to, because it’s not worth it. It doesn’t really bring me any profits.”

Still, any good news for small importers is blunted by doubt over the future of tariff policy.

“I hope it’s all going to be lifted, but I’m not sure,” Huynh said. “I feel like [Trump] would find a way to apply them in other areas.”

What does this mean for consumers? It is unclear how much revenue the United States has taken in because of the enhanced tariffs, although the Federal Reserve Bank of Richmond estimated nearly $300 billion was collected in 2025. During a Cabinet meeting in December, Trump claimed to have raked in trillions of dollars. According to the president, the extra funds have paid for increases in the military budget, bailouts for American farmers, $1,776 checks for military members, and offsets for increased borrowing under the One Big Beautiful Bill Act. This year, Trump had also planned to mail $2,000 tariff dividend checks to every American.

But according to several studies, tariffs have passed on additional costs to American companies and consumers rather than to foreign countries. Earlier this year, a National Bureau of Economic Research study found that while the supply chain mitigated some tariff burdens, the United States has borne most of the costs. Another paper from the Federal Reserve Bank of New York found that American firms and consumers pay for roughly 90% of import taxes. National Economic Council Director Kevin Hassett during a Wednesday CNBC interview called the paper a partisan analysis and said the authors should be disciplined.

But some analysts agree with the high numbers. Advancing American Freedom, a think tank founded by former Vice President Mike Pence, has argued against the tariffs since they were implemented last year.

“It’s the American importers that pay 100% of the tax,” said Marc Wheat, general counsel at Advancing American Freedom. “These are taxes on Americans. And no one disputes that who works for any place outside the West Wing of the White House.”

Average overall duties on consumer goods remain above 9%, according to Yale Budget Lab, the second-highest rate since 1946. With IEEPA tariffs, this rate would have been 16.9%.

Wheat said Trump’s tariffs added to market insecurity, especially when new tariffs were levied or removed nearly every week last summer. While Trump could use other, narrower authorities to change tariffs, Wheat said the administration should change course.

“It makes it harder for manufacturers to make decisions because so many of their components are imported on a global marketplace,” he said. “And it also made it uncertain for foreign investors whether they wanted to invest in America, not knowing if they could have a reliable supply chain because it was all disrupted by these tariffs. So it gives the president an opportunity to pivot in a pro-growth direction, and that’s what we’re hoping for.”

What imports will still be taxed? Section 232 of the Trade Expansion Act of 1962 authorizes the president to impose tariffs without congressional approval if the secretary of commerce finds a compelling national security threat. Tariffs implemented under this rule won’t be affected by the Supreme Court decision. Products in this category include certain metals, cars and car parts, buses, trucks, furniture, lumber, and timber. Steel and aluminum face particularly steep tariffs of 50% with nearly all U.S. trading partners.

Section 301 tariffs are additional duties imposed on Chinese imports to offset perceived discriminatory trade practices. Goods tariffed under this statute include certain electronics, machinery, and other goods, and are also unaffected by the Supreme Court’s decision.

In his news conference on Friday, Trump announced he would sign an immediate executive order to implement a 10% global tariff using Section 122 of the Trade Act of 1974. Such tariffs would be subject to caps unless approved by Congress and would likely face lawsuits, since previous administrations have not relied on them for extensive tariff policy.

Although the court challenged Trump’s power to levy tariffs, it did not challenge other aspects of IEEPA, which gives the president other, broad powers to regulate trade. These include the authority to completely cut off imports and exports, sanction entire countries, and freeze financial assets if there is an “unusual and extraordinary threat” from abroad.

“Maybe Trump should just call their bluff—‘OK, great. I’m just going to start blocking things,’” Steele said. “I don’t know what has been gained if you’re a free-market advocate.”

Trump said the court’s decision unintentionally confirms he has access to these powers, which he said he plans to implement immediately, although some of his agendas would still require congressional approval.

“There will no longer be any doubt that the income coming in and the protection of our companies and country will actually increase because of this decision,” Trump said. “The numbers could be far greater than the hundreds of millions we’ve already taken in.”

“I have the right to do tariffs,” he added. “I’ve always had the right to do tariffs.”

What about Congress? Last October, the Senate narrowly passed a resolution to condemn Trump’s use of emergency powers to levy tariffs on Canada, Brazil, and a handful of other countries. And last week, the House voted 219-211 to revoke the 25% tariffs on Canada. Six Republicans broke with party leadership to vote with Democrats, while Rep. Jared Golden from Maine was the only Democrat to oppose the measure.

Following Friday’s Supreme Court ruling, Rep. Don Bacon, R-Neb., praised the decision as a protection of Article 1 powers. “I feel vindicated as I’ve been saying this for the last 12 months,” he wrote in a post on X. “In the future, Congress should defend its own authorities and not rely on the Supreme Court. Besides the Constitutional concerns I had on the Administration’s broad-based tariffs, I also do not think tariffs are smart economic policy.”

Several other Republicans agreed Congress should take a more active role in trade policy following the ruling. Sen. Chuck Grassley praised Trump for negotiating more fair trade policies but also said the president should work with Congress for longer-term measures.

“This is a very healthy decision that helps strengthen the distinctions between the different powers that are separated by the Constitution in the legislative executive and judicial branches,” Wheat said.

Only one senator so far, Sen. Bernie Moreno, R-Ohio, has called on Congress to reinstate Trump’s tariffs. But most legislation requires at least 60 votes to pass the Senate. Moreno suggested passing Trump’s tariffs using a tool known as reconciliation, which would lower the bar to a simple majority vote.

On the other side of the Capitol, House Speaker Mike Johnson, R-La., promised some congressional action on the president’s agenda. He said in a post on X that the use of tariffs have brought billions of dollars in extra revenue to the country and allowed significant strategic leverage on the world stage.

How might this affect the State of the Union address? The president is scheduled to deliver the annual State of the Union address on Tuesday night, with the justices sitting in the front row of the House of Representatives chamber. Over the past year, he has insisted that the tariffs have contributed to national security and a more fair trade system.

“I think it was a good choice by Roberts just to put it squarely up there and stand for the Constitution,” Wheat said. “I think it will make the State of the Union address much more important. People will watch it to see how Trump responds. I think that this is a good validation for the court in ensuring that there is separation of powers as the Framers intended.”

Before the Supreme Court issued its ruling, Trump called the existence of his tariffs a matter of life or death. In a speech in Georgia on Thursday, he said the country would be bankrupt without them.

Justice Neil Gorsuch acknowledged the administration’s likely pushback to the decision in a concurrence he wrote for Friday’s ruling. He said it was important to rely on the legislative process to manage taxes and tariffs, even if it takes longer than a presidential administration would like.

“Yes, legislating can be hard and take time. And, yes, it can be tempting to bypass Congress when some pressing problem arises,” Gorsuch wrote. “But the deliberative nature of the legislative process was the whole point of its design. Through that process, the Nation can tap the combined wisdom of the people’s elected representatives, not just that of one faction or man.”