Supreme Court Strikes Down President Trump’s Tariffs

The U.S. Supreme Court ruled on Feb. 20 that President Donald Trump does not have the authority to impose his tariffs under the International Emergency Economic Powers Act (IEEPA).

“Based on two words separated by 16 others in Section 1702(a)(1)(B) of IEEPA — ‘regulate’ and ‘importation’ —the president asserts the independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time. Those words cannot bear such weight,” the court wrote. Three justices dissented.

Impact of Tariffs on Businesses

More than half of HR professionals reported that tariffs have had a negative impact on their organization, according to the January 2026 Current Events Pulse, SHRM.

Fifty-five percent of HR professionals reported that tariffs had a very or somewhat negative impact on their organization over the past year, while 43% indicated no impact, and just 1% described the impact as positive.

Among those experiencing negative effects, increased costs for goods or materials were cited most frequently (83%), followed by disrupted supply chain operations (45%), reduced access to necessary goods or materials (34%), and harm to the organization’s financial performance (32%). 

Additionally, some HR professionals reported limited growth or expansion opportunities (16%) and a weakened competitive position (14%).

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Tariffs raise the price of imported materials, components, and finished goods, said Camille Olson, an attorney with Seyfarth in Chicago. “That means employers who buy tariffed inputs face higher unit costs. When input prices rise and growth slows, finance tightens compensation pools: HR sees smaller merit budgets, more scrutiny on cost-of-living adjustments, and deferred structural adjustments, even as employees ask for inflation offsets.” 

The tariffs have had a significant impact on certain businesses, especially small ones and industries that rely heavily on imported goods, Olson said. 

Other companies responded to tariffs by absorbing costs internally, passing on price increases to customers where possible, reshuffling supply chains (for example, by shifting sourcing to countries with lower tariffs or domestic suppliers), delaying capital expenditure, or in some cases, reducing headcount, she noted.

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Issues Before the Court 

The Supreme Court was asked to address the authority of the president to impose tariffs on foreign nations under the IEEPA during a declared national emergency.

The two consolidated cases before the court asked 1) whether IEEPA authorizes the trafficking and reciprocal tariffs the president has imposed, and 2) whether such a grant, if valid, unlawfully shifts legislative — that is, taxing — power to the president.

In lower court proceedings, the Federal Circuit struck down the government’s tariff scheme on the basis that IEEPA’s grant of presidential authority to regulate imports does not authorize the tariffs imposed by the challenged executive orders (Executive Orders 14193, 14194, 14195, 14257, and 14266). These executive orders followed the president’s declaration of a national emergency in Proclamation 10886. 

The Supreme Court granted expedited review to the cases.

Court’s Decision

The Supreme Court’s majority opinion, written by Chief Justice John Roberts Jr., noted that President Trump declared a national emergency as to drug trafficking and trade deficits. He imposed tariffs to deal with each threat.

“Since imposing each set of tariffs, the president has issued several increases, reductions, and other modifications,” the court stated. The IEEPA’s grant of authority to “regulate … importation” did not authorize the challenged tariffs, which the court described as “unbounded in scope, amount, and duration.”

The power to impose tariffs is clearly a branch of the taxing power that the Constitution granted to the legislative branch, the court added.

“Recognizing the taxing power’s unique importance, and having just fought a revolution motivated in large part by taxation without representation, the framers gave Congress alone access to the pockets of the people,” the Supreme Court said. “They did not vest any part of the taxing power in the executive branch.”

Nor were the challenged tariffs defended as an exercise of the president’s warmaking powers, the court noted.

“The president asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope,” the Supreme Court said. “In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorization to exercise it. IEEPA’s grant of authority to ‘regulate … importation’ falls short. IEEPA contains no reference to tariffs or duties.”

Dissent

Writing in dissent, Justice Brett Kavanaugh, joined by Justice Clarence Thomas and Justice Samuel Alito Jr., said that since early in U.S. history, Congress has regularly authorized the president to impose tariffs on imports of foreign goods.

“The plaintiffs argue, and the court concludes, that the president lacks authority under IEEPA to impose tariffs. I disagree,” Kavanaugh wrote.

While Kavanaugh disagreed with the court’s holding, he said the decision might not substantially constrain a president’s ability to order tariffs going forward.

“That is because numerous other federal statutes authorize the president to impose tariffs and might justify most (if not all) of the tariffs at issue in this case,” he wrote.

Following the decision, the Trump administration said, “Tariffs will continue to be a critical tool in President Trump’s toolbox for protecting American businesses and workers, reshoring domestic production, lowering costs, and raising wages.”

Refunds?

“U.S. importers now will press their case to get refunds of IEEPA tariffs,” predicted Dave Townsend, an attorney with Dorsey & Whitney in Minneapolis and Washington, D.C.

“More than 2,000 lawsuits have already been brought seeking such refunds, but this is a small fraction of U.S. importers that may be entitled to such refunds. The United States has said in litigation that more than 300,000 U.S. importers have paid IEEPA tariffs. There are various ways that the refunds could be issued, and the Supreme Court did not say how the process should work.”