UPDATE: Supreme Court Hands Trump Tariffs Plan a Setback

The U.S. Supreme Court handed President Donald Trump’s regimen of tariffs a defeat Friday in a decision that could have far-reaching implications for a centerpiece of the White House’s international economic policy as well as the power generation and transmission industries.

In a 6-3 ruling, the high court found that presidents could not use the emergency powers spelled out in the International Emergency Economic Powers Act (the IEEPA) to impose tariffs, adding that tariffs require explicit authorization of Congress. Identifying tariffs as a “taxing power,” the justices did not lay out a specific mechanism or guidance on how tariffs should be levied.

The decision in the case, Learning Resources Inc. vs. Trump, means tariff rates based on IEEPA can no longer stand. The tariffs mentioned in the ruling specifically were the 25% duty on most Mexican and Canadian imports, and the 10% duty on most Chinese imports. It also refers to the “reciprocal” tariffs announced for all trading partners, which were at least 10%, and higher for many countries.

The tariffs on steel, copper and aluminum were not affected by this case.

The court noted in its opinion that since imposing each set of tariffs, the White House has issued several increases, decreases, rollout delays and other modifications to its tariff regime.

Political Fallout

In a press conference Friday, Trump heaped scorn on the justices for their decision.

“The Supreme Court’s ruling on tariffs is deeply disappointing, and I am disappointed and ashamed—deeply ashamed—with certain members of the court for not having the courage to do what is right for the country,” Trump said, before praising the dissenting justices. “They are a disgrace to our nation, frankly.”

Trump said this was a very important case to him, as well as for the US.

“Foreign countries that have been ripping us off for years are ecstatic. They’re so happy. And they’re dancing in the streets, but they won’t be dancing for long, that I can assure you,” he said.

“I was very modest in my ask of other countries and businesses because I wanted to be very well behaved. Because I didn’t want to do anything that would affect the decision of the court. Because I understand the court. I understand how they’re easily swayed. I wanted to be a good boy,” he said.

Sen. Jeff Merkley (D-OR), Ranking Member of the Senate Budget Committee, said if the tariffs were left in place, they would increase inflation and slow economic growth while hurting working class families.

“Today is a win for farmers, small businesses, and hardworking, middle-class families across the country,” Merkley said. “For months, Trump’s illegal and chaotic tariffs have harmed American consumers and businesses, leaving them to foot the bill for rising prices due to Trumpflation. While Trump continues his ‘families lose, billionaires win’ agenda, we’re using every tool at our disposal to fight back against his reckless policies and build an economy where families thrive, and billionaires pay their fair share.”

Industry Reactions

The National Electrical Manufacturers Association (NEMA), an industry group representing manufacturers in the energy industry, said it has long been a supporter of Trump’s plan to help industry come back to US shores, and any efforts to bolster US energy independence.

“The Supreme Court’s decision today will shape how manufacturers assess risk, plan investments, and build supply chains in the United States. Building new facilities and bringing production home takes time. Today, many critical components and raw materials are still not available at scale domestically,” NEMA President and CEO Debra Phillips said in a press release.

Phillips said electrical manufacturers have invested nearly $200 billion in the US since 2018, and that investment will only continue to grow as higher electricity demand is forecast.

“NEMA continues to support a predictable, targeted approach to tariffs that provides certainty for manufacturers and aligns trade policies with domestic manufacturing and infrastructure objectives,” she said. “With a practical approach, tariffs can support onshoring, strengthen U.S. competitiveness, and keep grid and energy projects on track to deliver benefits to American workers and communities.”

Dissenting Opinions

For Trump’s part, he has called the case one of the most important in US history, and said a ruling against his tariffs would mean an economic disaster.

"Without tariffs, this country would be in such trouble right now," Trump said Thursday.

Justices Sonia Sotomayor, Elena Kagan, Neil Gorsuch, Amy Coney Barrett, Ketanji Brown Jackson and Chief Justice John Roberts sided with the majority. Justices Samuel Alito, Clarence Thomas and Brett Kavanaugh dissented.

Dissenting justices said this decision could leave companies that had to pay tariffs on the hook for billions of dollars in paybacks. More than 1000 companies so far have sued the administration over its tariffs.

"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," Kavanaugh wrote in his dissent.

While the conservative-run court has handed mostly wins to the Trump administration, this is a rare loss for the White House. There remain avenues through which Trump can still pursue a campaign of tariffs, however.

Kavanaugh wrote that the ruling will not meaningfully restrict presidential tariff authority outside of the specific context of the IEEPA. The Constitution grants Congress the power to set tariffs, but many of Trump’s tariffs leaned on the authority of the IEEPA.

The IEEPA does not specifically refer to tariffs, but lets the president regulate exports and imports in moments of national emergency.

According to U.S. Customs and Border Protection, the IEEPA tariffs raised some $130 billion, with Trump saying the amount was closer to $3 trillion.