The US Supreme Court on Friday struck down most of President Donald Trump's sweeping country-specific tariffs, ruling that he overstepped his authority by using the 1977 International Emergency Economic Powers Act to impose broad levies.
While the decision is a legal setback for Trump, it does not mean American consumers will see immediate price cuts.
What Exactly Did The Court Strike Down?
In a 6-3 ruling authored by Chief Justice John Roberts, the court said the IEEPA does not give the president unlimited power to impose wide-ranging tariffs on nearly every trading partner. The ruling applies to country-based tariffs introduced last year, such as a 15% levy on goods from European Union countries and a 20% tariff on imports from Vietnam.
However, sector-specific tariffs — including duties on steel, aluminum and automobiles — remain in place because they were imposed under separate legal authorities.
Will Prices Fall Now?
Not immediately.
Tariffs contributed to higher prices over the past year, although the impact was less severe than some economists initially feared. The Yale Budget Lab estimated that tariffs could cost the average US household about $1,800 in the short term.
Federal Reserve Chair Jerome Powell said in December that tariff-related price increases were a major reason inflation remained above the Fed's 2% target.
Still, experts say shoppers should not expect sudden relief. “Generally, prices don't go down once they've gone up,” said Joe Feldman, senior managing director and retail analyst at Telsey Advisory Group. “We might see a little bit of relief.”
Companies may hesitate to cut prices because uncertainty around future tariffs remains. Many firms had stockpiled imported goods last year to cushion the impact of levies, and some of that inventory helped delay price increases.
The court's decision could prevent further price hikes if new tariffs are not quickly introduced.
Will Consumers Get Rebates?
Unlikely.
Tariffs are paid by importers during the Customs and Border Protection process. Consumers do not directly pay tariffs, though the costs are often passed on through higher prices.
Trump had previously suggested using tariff revenue — about $200 billion as of mid-December — to send stimulus checks to Americans. However, such funds go to the US Treasury and would require congressional approval before being redistributed.
Will Businesses Get Refunds?
Possibly. Importers can dispute and adjust duties paid at the border. Some companies have already started petitioning for refunds in anticipation of a favourable ruling.
Retail giant Costco filed a lawsuit in November seeking to protect its refund rights. However, the Supreme Court did not specify how refunds should be handled, and the government has not clarified whether companies will be reimbursed or how long the process might take.
What Next?
Trump has indicated he may pursue alternative legal routes to reimpose tariffs. After oral arguments, he told reporters his team would develop a “game two” plan.
Trade experts say the administration could use other laws to temporarily impose tariffs of up to 15% for several months while conducting investigations for more permanent measures.
Patrick Childress, an international trade attorney at Holland & Knight and former assistant general counsel at the Office of the US Trade Representative, said this approach would give the administration flexibility.
“This is the path I think the administration is most likely to take because it gives them speed. They have flexibility to raise tariffs up or down, and they result in country-specific tariffs much like the IEEPA tariffs,” Childress said.
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