US Supreme Court rules against Trump’s global tariffs imposed under emergency law

The United States Supreme Court on Friday ruled against President Donald Trump’s global tariffs that had been enacted under a federal law intended for national emergencies, striking down the use of emergency powers to justify the sweeping trade measures in a 6–3 decision, with Justices Samuel Alito, Clarence Thomas and Brett Kavanaugh dissenting.

The ruling rejected one of the most contentious assertions of executive authority in Trump’s second term and carries major implications for the global economy.

The tariffs were challenged by businesses affected by the duties and 12 US states -- most of them governed by Democrats -- after lower courts found that Trump had exceeded the powers granted to him under the International Emergency Economic Powers Act (IEEPA).


The cases stemmed from three separate lawsuits, including challenges brought by five small importing businesses and the states of Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, Nevada, New Mexico, New York, Oregon and Vermont. In a separate case, a federal judge had sided with a family-owned toy company, Learning Resources.

The American Constitution gives Congress the authority to levy tariffs, and while previous presidents have used the 1977 law largely to impose sanctions or freeze foreign assets, Trump was the first to invoke it to set broad-based import taxes.

The statute does not specifically mention tariffs. Trump’s Justice Department had argued that IEEPA allows the president to “regulate” imports during a national emergency and that this power includes imposing tariffs.

During a November 5 hearing last year, both conservative and liberal justices appeared sceptical of the administration’s argument that trade deficits constituted a national emergency under the law.

Also read: US stock indexes rise after Supreme Court rules against Trump's tariffs

Trump's tariff tantrum & its global ripple effects

The case marked the first major element of Trump’s broader economic agenda to come squarely before the nation’s highest court, which he helped shape with three conservative appointments during his first term. Although the court had earlier handed him interim victories on its emergency docket in other matters, this ruling represents a significant setback.

Trump has leveraged tariffs as a central economic and foreign policy tool, placing them at the heart of a global trade war launched after he began his second term.

The sweeping measures unsettled financial markets, alienated trading partners and injected uncertainty into the global economy. On April 2 -- a date he labeled “Liberation Day” -- Trump announced what he called “reciprocal” tariffs on goods imported from most US trading partners, invoking IEEPA to address what he described as a national emergency arising from longstanding trade deficits.

Trump had imposed so-called “reciprocal” tariffs on imports from a wide range of countries, arguing that persistent trade deficits posed an extraordinary threat to US national security and economic stability.

He said the United States would be economically ruined without them and told reporters in November that without his tariffs “the rest of the world would laugh at us because they've used tariffs against us for years and took advantage of us,” according to Reuters.

In February and March 2025, he also invoked the same statute to levy tariffs on China, Canada and Mexico, citing the trafficking of fentanyl and other illicit drugs as a national emergency. Beyond trade deficits and drugs, Trump at times used tariff threats to extract concessions or respond to unrelated political disputes, including India’s purchases of Russian oil and other geopolitical disagreements.

A series of lawsuits followed from states and businesses, including small companies and major retailers, arguing that the emergency powers law does not explicitly authorise tariffs and that Trump had bypassed Congress. Legal opposition cut across ideological lines, with libertarian and pro-business groups also objecting to the move.

Trump gets a 'terrible blow' with US top court ruling

The US President has repeatedly defended the tariffs, saying they strengthened US finances and boosted domestic manufacturing. He described the case as one of the most important in US history and, in a January 2 post, warned that a ruling against the measures would be a “terrible blow.”

According to estimates from the Congressional Budget Office, the economic impact of the tariffs could total about $3 trillion over the next decade if maintained. The CBO has also estimated that, if all current tariffs remain in place, they could generate roughly $300 billion annually over the coming decade. Total US net customs duty receipts reached a record $195 billion in fiscal 2025, which ended on September 30, according to US Treasury data.

While federal data through mid-December showed the Treasury had collected more than $133 billion from import taxes imposed under the emergency powers law, economists at the Penn-Wharton Budget Model estimated the total haul under IEEPA-based tariffs had exceeded $175 billion, according to Reuters. That amount would likely need to be refunded following the Supreme Court’s ruling.

The decision does not prevent Trump from imposing tariffs under other statutory authorities. Administration officials, including Treasury Secretary Scott Bessent, have indicated that the government would explore alternative legal justifications to preserve as much of the tariff framework as possible, though those routes may offer less flexibility than IEEPA.

Washington had imposed a 25% additional tariff on Indian exports in 2025, later doubling it to as much as 50% in August amid disputes over New Delhi’s continued oil imports from Russia.

Those duties were subsequently reduced to 18% after an interim trade deal framework was negotiated between New Delhi and Washington on February 3.