What does the Supreme Court ruling mean for Trump's tariff regime?

The U.S. Supreme Court on Friday dismantled the legal basis for Donald Trump's sweeping tariffs. Following this rare defeat of his signature trade agenda and of his executive authority, Trump signed a new 10 percent global tariff, citing a different law, after attacking the six Supreme Court justices who ruled against his tariff policy. 

Without specifying the legal consequences the Trump administration could face, what does the Supreme Court ruling mean for the future of Trump's tariff regime?

What has the Supreme Court ruled illegal?

Throughout the first year of Donald Trump's second presidency, his expensive global tariffs, imposed under the guise of a national emergency, have received little to no challenge. Trump invoked the International Emergency Economic Powers Act (IEEPA), a 1977 law that gives the president powers to take economic measures after declaring a national emergency.

The IEEPA authorizes the president to use financial regulations to "deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States." 

In April 2025, a little over two months after Trump's second inauguration, he invoked the IEEPA by declaring the "large and persistent" trade deficit that the U.S. runs with the rest of the world a national emergency, providing legal grounds for his expansive global tariffs.

The U.S. Supreme Court ruled on Friday that this practice is illegal. A 6-3 ruling crossed the ideological line among the conservative-majority Supreme Court, with two judges appointed by Trump during his first term rebuking the president's tariff regime.

The lawsuit of Learning Resources, Inc. v. Trump was initially filed in the lower court, which agreed with the plaintiff that IEEPA did not authorize Trump's tariffs. The ruling was then put on hold, allowing the government to continue collecting tariffs as the Supreme Court continued its proceedings.

"Based on two words separated by 16 others in Section 1702(a)(1)(B) of IEEPA—'regulate' and 'importation'—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.  "Those words cannot bear such weight."

The Supreme Court opinion deemed the tariff "a tax levied on imported goods and services," which determined the power to impose tariffs a "taxing power" that belongs to Congress instead of the Executive Branch.   

How did Trump issue another global tariff after the Supreme Court ruled his earlier tariffs illegal?

After the Supreme Court ruling, Trump pivoted the legal basis for his tariffs from the IEEPA to Section 122 of the Trade Act, a 1974 law designed to protect the U.S. currency amid a large trade deficit. 

The Act was approved by Congress in order to give the president emergency authority to prevent "depreciation of the dollar in foreign exchange markets" and to correct "an international balance-of-payments disequilibrium."

The tariff under Section 122, however, is limited to "a period not exceeding 150 days," unless Congress approves the period to be extended. The tariff is also capped at 15 percent. 

Will the Trump administration face any legal consequences?

The Trump administration has collected more than $175 billion in tariffs so far, according to the Penn Wharton Budget Model. More than 1,000 lawsuits have been filed by U.S. importers in trade court for refunds, according to Reuters. Some Democrats have called for the White House to refund the collected tariffs.

"These tariffs were nothing more than an illegal cash grab that drove up prices and hurt working families," said Gavin Newsom, the Democratic governor of California. "Every dollar unlawfully taken must be refunded immediately — with interest."

The Supreme Court ruling however, has not stated whether the federal government could keep the money already collected.

Justice Brett Kavanaugh, one of the three Supreme Court judges dissenting the Friday ruling, wrote that the refund "would have significant consequences for the U.S. Treasury."

"The Court says nothing today about whether, and if so how, the Government should go about returning the billions of dollars that it has collected from importers," Justice Kavanaugh wrote. "But that process is likely to be a 'mess.'"

Importers seeking refunds might have to sue in the Court of International Trade within a 2-year window under U.S. trade law. The Court has overseen large-scale refunds in 1986 involving more than 100,000 claimants, according to Reuters. 

When asked about refunds on a Friday press conference, Trump said, "we'll end up being in court for the next five years."

Read more:

Trump's new tariffs reignite volatility after Supreme Court blocks emergency powers

Washington's constitutional crisis and the global fallout

(With inputs from agencies)