US Supreme Court strikes down Trump tariffs, says 'America not at war with every nation' | Top updates

US President Donald Trump - File Photo

The US Supreme Court on Friday ruled that Donald Trump overstepped his authority in imposing a wide range of tariffs that disrupted global trade, dealing a blow to a key instrument the president has used to push his economic agenda.

In a 6–3 decision, the conservative-majority court held that the International Emergency Economic Powers Act "does not authorise the President to impose tariffs," effectively blocking the use of the law to justify such trade measures.

“The United States, after all, is not at war with every nation in the world,” the US Chief Justice said while addressing the scope of executive powers in the case.

Reacting to the verdict, Trump said that he has a "backup plan" for the punitive duties. He termed the verdict “a disgrace” during a White House breakfast with US governors this morning.

The verdict is seen as the most significant setback for the second Trump administration at the conservative Supreme Court so far. Last year, the court had repeatedly ruled in Trump’s favour in emergency cases involving immigration, the removal of heads of independent agencies and major cuts to government spending.

“The president asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope," Chief Justice John Roberts wrote.

“In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorisation to exercise it," he added, ruling that the emergency authority he relied on “fell short".

Trump has long used tariffs as a tool for pressure and negotiations, but after returning to the presidency last year, he took the unusual step of invoking emergency economic powers to impose new duties on nearly all US trading partners.

These measures included so-called "reciprocal" tariffs aimed at trade practices the US government described as unfair, as well as separate rounds of duties on Mexico, Canada and China linked to concerns over illegal drug flows and immigration.

In its ruling on Friday, the court said that "had Congress intended to convey the distinct and extraordinary power to impose tariffs" under the International Emergency Economic Powers Act, "it would have done so expressly, as it consistently has in other tariff statutes."

The judgment does not affect sector-specific tariffs that Trump has imposed separately on imports such as steel, aluminium and other goods. Investigations that could eventually result in additional sector-based tariffs are still underway.

The Supreme Court’s decision also upholds earlier conclusions reached by lower courts, which found that tariffs imposed under IEEPA were unlawful.

In May, a lower trade court ruled that Trump exceeded his authority by introducing across-the-board tariffs and blocked most of them from being implemented. That ruling had been temporarily paused while the government pursued an appeal, leading to the Supreme Court’s final decision.

Constrained ambition

The strike down of these tariffs will likely bring the average tariff rate from 16.8 percent to around 9.5 percent, EY-Parthenon chief economist Gregory Daco told AFP ahead of the ruling.

But this could prove to be temporary as the government seeks other ways to reimpose sweeping duties, he added.

Also at stake are tariff revenues for the government, Daco said, estimating a loss in government revenues of around $100 billion to $120 billion.

The justices did not address the degree to which importers can receive refunds.

But Kavanaugh warned that this process -- as acknowledged during oral arguments -- could be a "mess."

Striking down the emergency tariffs "would constrain the president's ambitions to impose across-the-board tariffs on a whim," said Erica York of tax policy nonprofit the Tax Foundation.

But it still leaves him other statutes to tap for tariffs, even if they tend to be more limited in scope -- or require specific processes such as investigations -- York told AFP.