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The Supreme Court Just Killed Trump’s Tariffs — $175 Billion May Have to Come Back

The US Supreme Court ruled 6-3 that President Trump exceeded his legal authority when he imposed sweeping tariffs on global trading partners under the International Emergency Economic Powers Act. Chief Justice Roberts wrote that two words — “regulate” and “importation” — “cannot bear such weight.” More than $175 billion in collections may now have to be refunded, but Trump has already signalled he will impose a temporary 10 percent global tariff under a different statute.

A Landmark Rebuke

The Supreme Court’s decision in Learning Resources, Inc. v. Trump represents the first time the court has overruled one of Trump’s second-term policies. Chief Justice John Roberts, joined by Justices Gorsuch, Barrett, Sotomayor, Kagan, and Jackson, held that the IEEPA — a 1977 law designed for national emergencies — does not grant the president the power to impose tariffs. Roberts noted that in the statute’s half-century existence, no president had ever invoked it to levy duties. The government’s position rested on the words “regulate” and “importation,” separated by sixteen other words in the statute. Roberts found them insufficient: the US Code is filled with laws granting the executive authority to regulate, yet the government could not identify a single one in which that power includes the power to tax.

The ruling specifically dismantles the “reciprocal” tariffs Trump announced on April 2, 2025 — his so-called Liberation Day — when he invoked IEEPA to address what he called a national emergency related to US trade deficits, despite America having run such deficits for decades. Also invalidated are the IEEPA-based duties linked to border security and fentanyl that targeted imports from Canada, Mexico, and China. The Cato Institute estimates that more than 60 percent of total tariff revenue last year stemmed from IEEPA-based duties. What remains untouched are the Section 232 tariffs on steel, aluminium, and automobiles, imposed under the Trade Expansion Act of 1962 — a separate legal authority that was not before the court.

The Dissent and the $175 Billion Question

Justice Brett Kavanaugh, joined by Justices Thomas and Alito, dissented sharply, arguing that tariffs are a traditional tool to regulate importation and that the majority’s reading was too narrow. Kavanaugh warned that the ruling’s interim effects could be substantial: the United States may be required to refund billions of dollars to importers, even though many have already passed those costs on to consumers. Government data shows roughly $130 billion was collected under IEEPA through mid-December, while Penn-Wharton Budget Model economists estimated on Friday that the total now exceeds $175 billion. The Tax Foundation calculated that the IEEPA tariffs, had they survived, would have raised $1.4 trillion over the next decade. The court’s opinion said nothing about how or when refunds should proceed — a silence Kavanaugh called a likely “mess.”

European Response and Market Reaction

European officials responded with calibrated caution. An EU spokesperson said the bloc was “carefully analysing” the decision and would continue advocating for low tariffs and open dialogue with Washington. Markets were less restrained: Europe’s STOXX 600 extended gains immediately after the announcement, while the S&P 500 and Nasdaq moved higher and were on track for weekly advances. Gold prices retreated from session highs as safe-haven demand eased.

The ruling reverberates well beyond Europe. Canada’s trade minister, Dominic LeBlanc, said the decision reinforced Ottawa’s position that the IEEPA tariffs were unjustified. The US Chamber of Commerce called for “swift refunds of the impermissible tariffs,” noting they would be meaningful for over 200,000 small business importers. DHL announced it would leverage its customs brokerage systems to ensure clients receive refunds efficiently. Irish business group Ibec, through executive director Fergal O’Brien, struck a more cautious note: while the ruling would “inevitably weaken the hand of the US government” on across-the-board tariffs, other trade instruments — including the Section 232 powers and ongoing sectoral investigations — remain very much available. For economies already reshaping supply chains in response to the tariff shock, the legal victory does not erase the structural damage already done.

What Comes Next

Trump called the ruling “deeply disappointing” at a press conference hours later and announced he would impose a temporary 10 percent global tariff under the Trade Act of 1974 — a different statute from the one the court struck down. That pivot was anticipated: Kavanaugh’s dissent noted the ruling was unlikely to greatly restrict presidential tariff authority outside the IEEPA context, and former Senate Republican leader Mitch McConnell, who backed the ruling, pointedly reminded the executive that any future trade policies must go through Congress under Article I of the Constitution.

For companies that have spent the past year adjusting pricing, rerouting supply chains, and absorbing margin compression — from steelmakers burning through share buybacks as profits halved to retailers pre-emptively suing for refund eligibility — the Supreme Court’s decision is a legal watershed. But the trade policy landscape remains volatile. Section 232 duties stay in force. Formal investigations that could produce new sectoral tariffs are still in progress. And a president who has described tariffs as America’s greatest economic weapon is unlikely to let a 170-page opinion be the final word.