Ruling Backlash for US President’s Economic Agenda; Trump imposes 10% extra global tariffs on partners
The US Supreme Court is seen in Washington, USA. REUTERS/ FILE
WASHINGTON:
The US Supreme Court ruled on Friday that Donald Trump’s sweeping global tariffs were illegal – a stunning rebuke of the president’s signature economic policies that have reshaped international trade.
Reacting to the ruling, the US president said the Supreme Court decision declaring his sweeping global tariffs illegal was “deeply disappointing”.
Trump also told reporters he was “absolutely ashamed” of “certain members” of the conservative-dominated court that ruled against him.
He announced that he was imposing an additional 10 percent global tariff on American trading partners. Speaking to reporters after the Supreme Court ruled his sweeping global tariffs illegal, Trump said he would impose tariffs using alternative authorities.
“The Supreme Court’s decision today made a president’s ability to both regulate trade and impose tariffs more powerful and more crystal clear, rather than less,” he said.
The conservative-majority Supreme Court ruled six-three, saying a 1977 law known as the International Emergency Economic Powers Act (IEEPA), which Trump has invoked, “does not authorize the president to impose tariffs.”
The order does not affect sector-specific tariffs that Trump is imposing separately on imports of steel, aluminum and various other goods. Several government investigations, which could lead to more sector tariffs, are still ongoing.
Still, this marks Trump’s biggest Supreme Court defeat since he returned to the White House last year.
While Trump has long invoked tariffs as a lever for diplomatic pressure and negotiations, he made unprecedented use of economic emergency powers in his second term to impose new tariffs on virtually all of America’s trading partners.
These included “reciprocal” tariffs on trade practices Washington deemed unfair, along with separate sets of duties aimed at major partners Mexico, Canada and China over illegal drug flows and immigration.
The court noted Friday that “had Congress intended to convey the separate and extraordinary power to impose tariffs” with the IEEPA, “it would have expressly done so 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 court rulings that tariffs Trump imposed under the IEEPA were illegal.
Conservative Justices Brett Kavanaugh, Clarence Thomas and Samuel Alito dissented.
Chief Justice John Roberts said in delivering his opinion, “The IEEPA contains no reference to tariffs or duties.”
A lower trade court ruled in May that Trump exceeded his authority with blanket tariffs and blocked most of them, but that result 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 that have been ruled illegal can quickly be reimposed through other levers.”
“Financial markets picked up on the news, but it’s too early,” she added.
Nonetheless, business groups cheered the ruling, and the National Retail Federation said it “provides much-needed certainty” for American firms and manufacturers.
“We urge the lower court to ensure a smooth process to refund the duty to US importers,” the federation said.
But the judges did not address the extent to which importers can receive refunds. This will likely be sued.
Kavanaugh warned that this process — as acknowledged during oral arguments — could be a “mess.”
EY-Parthenon chief economist Gregory Daco told AFP that the loss of IEEPA customs revenue for the US government could amount to around $140 billion.
Jubilant Democratic leaders pounced on the ruling, with Senate Minority Leader Chuck Schumer hailing the outcome as a “win for the wallet” for American consumers.
But the top Democrat on the Senate Banking Committee, Elizabeth Warren, warned that there is still “no legal mechanism for consumers and many small businesses to get back the money they’ve already paid.”
The Budget Lab at Yale University estimates that consumers face an average effective tariff of 9.1 percent with Friday’s decision, down from 16.9 percent.
But it said this “remains the highest since 1946”, excluding 2025.
The European Union said it is studying the court ruling and will remain in close contact with the Trump administration.
Britain plans to work with the US on how this affects a trade deal between both countries, while Canada said the decision confirms Trump’s tariffs were “unfounded”.
Striking down the emergency tariffs “would limit the president’s ambitions to impose tariffs across the line on a whim,” said Erica York of the tax policy nonprofit, the Tax Foundation.
But that leaves him with other statutes to use for tariffs, though 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 building itself,” ING analysts Carsten Brzeski and Julian Geib said of Trump’s trade restrictions.
