Supreme Court Strikes Down Most Trump Tariffs: What's His Plan Now?

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Supreme Court Strikes Down Most Trump Tariffs: What's His Plan Now?

In a significant political setback for President Donald Trump, the US Supreme Court has invalidated the majority of tariffs imposed by his administration over the past 13 months, deeming them unconstitutional. The 6-3 ruling determined that the President had overstepped his statutory authority by utilising the International Emergency Economic Powers Act (IEEPA) of 1977 to implement numerous tariffs on US trading partners.

This outcome was not entirely unexpected by the US administration, which had indicated for months that it was preparing for such a contingency. Officials had repeatedly stated their readiness to swiftly implement new tariffs under alternative legal frameworks that empower the President to impose duties. In response to Friday's ruling, Mr Trump announced his intention to enact a temporary 10% global tariff for 150 days, designed to replace some of the broad duties that were struck down. These new tariffs are slated to be implemented under Section 122 of the Trade Act of 1974, granting the President the authority to impose duties of up to 15% for a maximum of 150 days on countries experiencing "large and serious" balance of payments issues. Crucially, unlike some other presidential options, this statute does not mandate investigations or impose other procedural limitations.

However, any extension of these tariffs beyond the 150-day period would necessitate Congressional approval. "We have alternatives, great alternatives," Mr Trump told reporters at a press conference. "Could be more money. We'll take in more money, and we'll be a lot stronger for it," he added, referring to the administration's available options.

Legal experts concur that several other statutes could be employed by the President to impose tariffs on specific products or trading partners without requiring Congressional backing. However, these alternatives would necessitate either investigations or robust justifications, and their implementation is typically slower. Section 301 of the Trade Act of 1974 permits the President to impose tariffs on countries found to be violating international trade agreements that harm US businesses. While there is no limit on the tariff amount or duration under this section, they must be demonstrably justified and supported by extensive, months-long investigations.

Mr Trump indicated that his administration was also initiating several unfair trade practice investigations under Section 301 "to protect our country from unfair trading practices of other countries and companies." Section 232 of the Trade Expansion Act of 1962 allows the President to implement tariffs on national security grounds. These are typically targeted at specific sectors like steel, aluminium, or lumber and require supporting investigations by the US Department of Commerce. The President has successfully invoked this section previously. US Secretary of the Treasury Scott Bessent stated on Friday that "the Treasury's estimates show that the use of Section 122 authority, combined with potentially enhanced Section 232 and Section 301 tariffs will result in virtually unchanged tariff revenue in 2026."

Beyond potentially creating more uncertainty and prompting new tariff workarounds, the Supreme Court's ruling could also lead to substantial refunds for affected US importers. When the court heard oral arguments in early November 2025, justices showed particular interest in whether tariffs are essentially disguised taxes on US consumers. In 2025, US Customs and Border Protection, part of the Department of Homeland Security, collected $287 billion (€243 billion) in customs duties, taxes, and fees. This figure represents a 192% increase compared to the previous year, according to calculations by the Federal Reserve Bank of Richmond. This revenue includes duties, taxes, and fees on tariffs in place before Mr Trump took office, as well as the major "reciprocal" tariffs enacted since his tenure began.

Importers who paid these duties will now be scrutinising how to reclaim at least a portion of that money. For these businesses, such refunds would represent a welcome financial reprieve. However, with further tariffs likely on the horizon, the overall impact on their bottom line or planning security may be limited. For individuals, the reimbursement process is expected to be more complex, as refunds would be directed to the importers – typically businesses – who initially paid the duties, rather than directly to consumers. For the government, the ruling poses a dual challenge: processing potentially billions of refund claims will be a significant administrative undertaking, and the Treasury stands to lose substantial revenue.

Mr Trump stated on Friday that resolving the legal question of whether billions collected from his tariffs must be refunded could take years. He noted that the issue was "not discussed" in the US Supreme Court's ruling. "We'll end up being in court for the next five years," he predicted. Since the Trump administration began implementing its tariffs, hundreds of lawsuits have been filed seeking to halt them. The case that reached the Supreme Court was initiated by a consortium of businesses. Over the past 13 months, Mr Trump has imposed tariffs by executive decree on numerous countries, only to subsequently pause them or negotiate reduced rates. He has cited trade imbalances and drug smuggling as key justifications for his actions. US-based businesses have voiced concerns about the added costs imposed by tariffs. Critics, meanwhile, have argued that many of these tariffs have less to do with trade deficits and more to do with coercing other nations into complying with US demands.

7dayes News Agency