The Supreme Court’s marble exterior appeared unaltered, almost unconcerned, on Friday morning. Visitors took pictures. Reporters gathered in loose groups close to the stairs. But something important had just occurred inside. President Trump’s broad tariffs imposed under the International Emergency Economic Powers Act, or IEEPA, were overturned by the Court in a 6–3 ruling.
Chief Justice John Roberts’ opinion sounded like a subdued but clear warning. “Extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope” was what Roberts wrote the president had claimed. The Court determined that explicit congressional approval was necessary for that. It was not provided by IEEPA, which was passed in 1977 to handle national emergencies.
This decision may be remembered more for the boundary it establishes than for tariffs. For months, the administration maintained that it had the authority to tax imports to regulate them during an emergency. However, tariffs are never specifically mentioned in the statute. A number of justices seemed uncomfortable during oral arguments. At the time, Roberts made the almost obvious observation that “the statute doesn’t use the word tariff.”
The stakes weren’t merely hypothetical. Under the relevant tariffs, the federal government has collected over $200 billion since last year. Within minutes of the decision, screens on the New York Stock Exchange’s trading floor flickered green. The S&P 500 surged. The value of the dollar increased. Investors appear to think that some predictability is restored when executive trade authority is restricted.
However, certainty might be ephemeral. In his dissenting opinion, Justice Brett Kavanaugh cautioned that the ruling might cause a “mess,” especially with regard to refunds. He pointed out that it might be necessary to reimburse importers billions of dollars. Some businesses have already charged customers for those expenses. That won’t be easy to untangle.
A handwritten sign promoting imported notebooks outside a small Brooklyn stationery store felt less shaky. In stores like that, almost everything is imported. Owners quietly raised prices or absorbed increased costs for months. It’s difficult to ignore how frequently these storefront realities are ignored in discussions of trade policy.
Those familiar with Trump’s response said he called the decision “a disgrace.” For a long time, he has presented tariffs as leverage, either against Europe or China, or even as a means of negotiation in unrelated geopolitical conflicts. Almost immediately, the White House indicated that there are still other statutory authorities available. Sections 301, 232, and others. This may mark the end of one approach, but not the end of the tariff era.
However, there were more profound constitutional overtones in the majority opinion. Several justices cited what is now referred to as the “major questions doctrine,” which holds that Congress must be explicit when granting the executive enormous economic power. This theory has come up in situations involving student loan relief and environmental regulation. It’s in trade now.
The Court seems to be readjusting executive power in a broader sense. Emergency declarations have increased under both parties’ administrations in recent years. That trend was accelerated by the pandemic. So did disputes over energy and border policy. A fundamental question is raised by the tariff case: When is it appropriate to circumvent Congress out of urgency?
Tariffs were historically one of the first pieces of legislation passed by Congress. One of the first laws passed under the new Constitution, which was passed in 1789, levied taxes on imports. Article I gives the government the authority to tax and regulate commerce. It’s hard not to notice echoes of that initial allocation as this ruling develops.
However, constitutional theory rarely takes a backseat in politics. Both sides of the Senate responded swiftly. The decision was referred to as common sense by some Republicans. A betrayal of American workers was how some people characterized it. Democrats celebrated it as a consumer win. International trading partners, meanwhile, stressed stability while expressing cautious relief.
Earlier this week, Trump praised booming production under his tariff regime at a steel plant in Georgia. Against a dark industrial background, hard-hatted workers stood close to molten metal, sparks rising. For them, the problem might seem more about paychecks than statutory interpretation. Whether alternative tariffs will maintain those protections is still up in the air.
The next battleground is likely to be refunds. Claims are being prepared by small business legal teams. There was no process described by the Court. It might be necessary for lower courts to oversee what could develop into a massive administrative unwind. With possible repayments in the tens of billions, the Treasury will need to carefully manage the mechanics.
Observing this development, one gets the impression that the ruling emphasizes a concept that predates partisan discussion: the separation of powers as it is actually practiced. The Court, which has recently been criticized for being subservient to the executive branch, gave a Republican president a rare rebuke from a conservative majority. Analysis will be prompted by that alone.
However, the real-world ramifications are still unclear. Tariffs will continue to be “part of the policy landscape,” according to the administration. Congress could take action. Other statutes could be the president’s next move. Companies might be hesitant to make another supply chain adjustment.
There are no red or green arrows or market tickers flashing above the marble building on First Street. However, its decisions have an impact on everything from storefronts changing price tags to ports crammed with shipping containers to diplomatic cables traversing seas. The Supreme Court’s tariff decision redraws a line, but it remains unclear if that line will hold up in the coming months.