The US Supreme Court has delivered a significant blow to former President Donald Trump's trade policy, striking down his flagship initiative of imposing tariffs on foreign imports, which he had implemented to revitalize American manufacturing. The court's decision, which Trump reportedly called a “disgrace,” stemmed from the finding that he exceeded his authority and should have sought congressional approval for these tariffs. The tariffs, announced on what Trump dubbed “liberation day” last April, had covered dozens of countries, from Syria and Lesotho to major trading partners like the UK, China, Canada, Mexico, Japan, and EU nations.

In a six-to-three ruling by the conservative-majority court, it was determined that the International Emergency Economic Powers Act (IEEPA) of 1977, the law Trump had used to implement the tariffs, “does not authorise the president to impose tariffs.” This decision affirmed earlier findings by lower courts that the tariffs imposed under the IEEPA were illegal.

Despite this legal setback, Trump has made it unequivocally clear that he will not abandon his trade war. Hours after the ruling, he held a press conference where he vowed to maintain tariffs, asserting that the court's decision only curbed his powers under the IEEPA, not his overall ability to regulate trade. He declared his intention to use different statutory authorities, announcing a new 10% global tariff and stating that his administration would conduct additional “investigations” into unfair trading practices using the Trade Act of 1974. Trump claimed the ruling actually made a president’s ability to regulate trade and impose tariffs “more powerful and more crystal clear.”

The US Treasury Secretary, Scott Bessent, confirmed plans to use sections of the Trade Act of 1974 to enact the new tariffs, estimating that they “will result in virtually unchanged tariff revenue in 2026.” While these alternative routes exist, they come with more restrictions, including capped amounts and durations of tariffs, along with procedural prerequisites such as investigations and hearings. Specifically, the administration plans to pass a 10% global tariff under Section 122 of the Trade Act of 1974, which permits tariffs up to 15% to address “fundamental international payments problems.” This law, however, caps the tariff at 150 days. Other sections of the Trade Act would require investigations to determine if tariffs are necessary for national security or to remedy unfair trade practices. Trump acknowledged the increased complexity and time required for these new processes but insisted the tariffs would not cease. He also stated that tariffs under section 232 of the Trade Expansion Act of 1962 and section 301 of the Trade Act of 1974 would remain “in place and in full force and effect.”

Companies that have already invested significantly to adapt to America’s import regulations are now in a holding pattern, awaiting clear guidance on the ruling's implementation and the long-term plan before adjusting supply chains further. Richard Rumbelow, director of international business at Make UK, emphasized the need for clear, practical guidance for businesses.

Regarding the potential for refunds, tariff revenues for the previous year were estimated between $240 billion and $300 billion, largely borne by US manufacturers and consumers. Experts like McLaughlin suggest that US firms paid 90% of this, often passing the cost to consumers. The cost to the US government could be immense if forced to repay this money, though repayment is unlikely to be swift. Supreme Court Justice Brett Kavanaugh described the refund process as potentially a “mess,” while Trump explicitly dismissed the idea of any refunds, stating, “It’s not [being] discussed. We’ll end up being in court for the next five years.”

International reactions have been varied. The UK’s Department for Business and Trade (DBT) stated that the ruling did not affect its preferential deal on steel, automobiles, and pharma, asserting that the UK enjoys the lowest reciprocal tariffs globally and expects its privileged trading position to continue. The European Commission trade spokesperson, Olof Gill, said they were analyzing the ruling “carefully,” advocating for low tariffs and stability in trade relations. The German confederation of industries, BDI, saw the ruling as a “strong signal for the rules-based trade order.”

In a further development, the EU parliament, which has yet to ratify a trade deal struck in Scotland last year, may decide to pause it again on fresh legal grounds, having previously paused and unpaused it due to tariff threats related to Trump’s bid to acquire Greenland. A formal vote by the International Partnership Committee is anticipated soon, followed by a session of all MEPs.

Trump also publicly railed against the justices who ruled against him, calling the decision a “disgrace to the nation” and expressing shame for certain members of the court. He praised the three dissenting justices – Brett Kavanaugh, Clarence Thomas, and Samuel Alito – but derided his own appointees, Amy Coney Barrett and Neil Gorsuch, for joining the majority. He accused them of being “fools and lapdogs for the Rinos [Republicans in name only] and the radical left Democrats,” and called them “unpatriotic and disloyal to our constitution,” even deeming them an “embarrassment to their families.” When questioned about evidence of foreign influence over the Supreme Court, Trump vaguely replied, “You’re going to find out.”