In a landmark decision that has sent shockwaves through Washington and global markets, the United States Supreme Court ruled on Friday that President Donald Trump’s unilateral imposition of sweeping international tariffs violated federal law. The 6-3 ruling represents the most significant legal defeat for the second Trump administration, striking at the very heart of the President’s “America First” economic agenda.

The verdict arrived while the President was meeting with governors at the White House. Upon receiving a note detailing the court’s decision, Mr Trump reportedly described the ruling as a “disgrace” before abruptly exiting the room.

The Ruling: A Constitutional Check

Chief Justice John Roberts, writing for the majority, was joined by Justices Amy Coney Barrett and Neil Gorsuch, as well as the court’s three liberal members. The core of the dispute rested on the International Emergency Economic Powers Act (IEEPA), a 1970s-era law that Mr Trump had invoked to bypass Congress.

The administration argued that the authority to “regulate importation” during national emergencies naturally included the power to levy tariffs. However, the Court disagreed.

 “The president asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope,” Roberts wrote. “In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorisation to exercise it.”

The Court clarified that while the Executive has the power to regulate commerce under IEEPA, that does not grant an inherent power to tax. Because the words “tariff” or “duty” appear nowhere in the IEEPA statute, the President’s actions were deemed an overreach of constitutional boundaries.

The $130 Billion Question

While the ruling is a definitive legal stop-sign, it has created a massive financial vacuum. To date, the administration has collected more than $130 billion in revenue from these tariffs—including duties as high as 145% on Chinese imports.

The Supreme Court offered no specific guidance on how, or if, this money should be returned to the businesses that paid it. Justice Brett Kavanaugh, who dissented alongside Justices Thomas and Alito, warned that the process of issuing refunds is likely to be a “mess.” Small businesses and retail giants like Costco have already begun legal manoeuvres to ensure their payments are returned, but the administration has warned that mass repayments could have “devastating consequences” for the national economy.

What are the President’s remaining options?

Despite the sting of this defeat, the President is far from disarmed. The ruling specifically struck down the use of IEEPA for broad-based tariffs, but several other statutory “trapdoors” remain available to the Oval Office, albeit with more strings attached.

1. Section 122 of the Trade Act of 1974

This provision allows the President to deal with large balance-of-payments deficits. However, it comes with strict limitations that would frustrate Mr Trump’s preference for “unlimited” leverage:

Cap: Tariffs are limited to a maximum of 15%.

Duration: They can only remain in place for 150 days unless Congress grants an extension.

2. Section 338 of the Tariff Act of 1930

Commonly known as “Smoot-Hawley,” this remains a potent, if controversial, tool. It allows the President to impose tariffs of up to 50% on any country that “discriminates” against American commerce. Treasury Secretary Scott Bessent has already hinted that this could serve as the administration’s primary backup plan.

3. Section 232 (National Security)

The President can still impose tariffs on specific industries—such as steel or aluminium—if they are deemed essential to national security. However, this requires a formal investigation by the Department of Commerce, a process that takes time and is subject to public comment, preventing the “lightning strike” style of trade policy Mr Trump prefers.

Political Fallout and the “Major Questions”

The ruling has created a rare moment of celebration for Mr Trump’s critics within his own party. Former Vice President Mike Pence praised the decision on social media, calling it a “win for the separation of powers.” Republican Senator Rand Paul and Representative Don Bacon also voiced support, with Bacon noting that “broad-based tariffs are bad economics.”

Interestingly, the ruling highlights a shift in judicial logic. In recent years, the conservative majority has used the “major questions doctrine” to block President Biden’s policies (such as student loan forgiveness), arguing that the Executive cannot act on issues of “vast economic significance” without explicit word-for-word permission from Congress.

Justice Elena Kagan, in a concurring opinion, noted the irony. While she agreed the tariffs were illegal, she argued that “straight-up statutory construction” was enough to sink the President’s case, without needing the “major-questions thumb on the interpretive scales” that her conservative colleagues often favour.

The Road Ahead

The White House has already signalled that it will not back down. By shifting to more established (though narrower) authorities like the Trade Act or the Tariff Act, the President can continue his trade wars, but he will be forced to operate within a much tighter legal cage. For now, the “Liberation Day” tariffs are in legal limbo, and the global trade community is left waiting to see if the $130 billion already paid will ever find its way back to the companies that footed the bill.