The United States Supreme Court issued a monumental ruling on Friday that effectively dismantled President Donald Trump’s extensive global tariff policy. The nation’s highest court decided that the President went beyond his legal boundaries when he used a specific 1977 law to place taxes on goods coming from almost every country that trades with the United States.

In a 6-3 split decision, the justices found that the International Emergency Economic Powers Act (IEEPA) does not actually give a president the right to create and collect tariffs. Writing for the majority, Chief Justice John Roberts explained that the U.S. Constitution gives the power to tax and manage trade specifically to Congress under Article I, Section 8. To reach this conclusion, the court used a legal standard known as the "major questions doctrine." This rule says that if the executive branch wants to take an action that has huge economic and political consequences, it must have very clear permission from Congress first.

In the written opinion, Chief Justice Roberts was very direct about the limits of presidential power. “The president asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope,” Roberts wrote. He further noted that the IEEPA law itself does not contain any specific mention of tariffs or duties.

This legal defeat strikes at the very heart of the "Liberation Day" tariff program, which President Trump officially started in April 2025. According to the U.S. Court of International Trade, which previously looked at these issues, the program was a massive shift in trade policy. It included a 10% base tax on goods from most nations, which the administration claimed was necessary because the U.S. trade deficit had become a "national emergency."

The program also hit specific allies and rivals with much higher costs, including:

• Up to 145% on certain products from China.
• 25% on most items coming from Canada and Mexico.
• Significantly higher taxes on goods from the European Union, Japan, South Korea, India, and Brazil.

This was the first time in history that the IEEPA had been used to justify such broad taxes. Before this ruling, the program had already brought in a massive amount of money. U.S. Customs and Border Protection has collected more than $130 billion, though some financial experts suggest the total could be over $175 billion in revenue.

The court’s judgment highlighted that the administration did not claim the president has a natural, "inherent" right to tax imports during times of peace. Instead, the legal team for the White House put all their eggs in one basket. “It instead relies exclusively on IEEPA to defend the challenged tariffs,” the ruling states. The court observed that the government tried to use “the words ‘regulate’ and ‘importation’ to effect a sweeping delegation of Congress’s power to set tariff policy—authorizing the President to impose tariffs of unlimited amount and duration, on any product from any country.”

By making this ruling, the Supreme Court has confirmed previous decisions made by the U.S. Court of International Trade and the Federal Circuit. However, it is important to note that this does not stop all tariffs. Taxes created under different laws—like Section 232 (for national security) or Section 301 (for unfair trade)—remain in place.

The majority of the court included an interesting mix of perspectives, with Justices Sonia Sotomayor, Elena Kagan, Ketanji Brown Jackson, Neil Gorsuch, and Amy Coney Barrett joining Chief Justice Roberts. On the other side, Justices Clarence Thomas, Samuel Alito, and Brett Kavanaugh disagreed. In his dissent, Justice Kavanaugh argued that the law’s permission to "regulate importation" should naturally include tariffs, as they have long been used in trade history.

One major question remains: what happens to the billions of dollars the government has already taken from businesses? The Supreme Court did not provide a final answer on the money already collected. Instead, they sent the case back down to lower courts to figure out how to handle refunds. This is expected to be a very difficult and messy administrative task for companies that import goods.

President Trump, who made these tariffs a primary focus of his 2024 campaign and his second-term plans, has reacted strongly to the news. He had previously cautioned that striking down these taxes would lead to economic "payback" from other countries and would ultimately result in an “economic disaster.”