In a landmark judgement, the US Supreme Court struck down on Friday the infamous tariffs imposed by Donald Trump, stating that the president "overstepped" his authority by using the International Emergency Economic Powers Act to impose his "reciprocal" tariffs across the globe.
The tremors of this judgement will be felt worldwide, but primarily rattle Washington's economy. According to SC's ruling, the IEEPA does not authorise the president to impose tariffs. Therefore, as of now, the window will open for trade partners, companies and importers to potentially demand refunds. These refunds could tally up to nearly $175 billion, as per the Penn-Wharton Budget Model, drilling significant holes into the US treasury.
January saw a record tariff revenue by the US government after tariff collections surged to $30 billion and reached a year-to-date total of $124 billion, as per reports. The revenue registered a whopping 304% surge year-on-year.
In months leading up to the ruling, Trump had himself pointed out that a judgement against the levies could cost America billions of dollars in revenue refunds.
"The biggest threat in history to United States National Security would be a negative decision on Tariffs by the US Supreme Court,” the Republican president had remarked in a post on Truth social in January, adding that such an outcome would render the country financially defenseless. Trump had added that tariffs were resulting in a revenue of $600 billion.
In another post, he had noted that it would take many years to figure out what number "we are talking about and even, who, when, and where, to pay and become an impossible task altogether".
The SC's ruling may have nullified tariffs under the IEEPA, but it has not blocked them as a measure entirely. Other laws allow for the Trump administration to resurrect the levies.
The Supreme Court's order highlighted that under the Trade Act of 1974, section 122 allows temporary import surcharge for the US balance-of-payments crisis; section 201 permits safeguard duties if imports hurt domestic industry; and section 301 authorises duties against unfair foreign trade practices. However, none of these can be enforced immediately the way IEEPA was by Trump.
The waters may still be troubled for Washington's trading partners going forward, as clarity is yet to emerge on how the situation can be tackled.
Impact On American Consumers
Some studies and reports had indicated that American citizens bore about 90% of the tariff costs despite claims that foreign producers would pay.
With a reversal of tariffs, consumers and retailers may find themselves on a patch of greener grass as imported goods will be available for cheaper prices in the market, sans the levies.
Highlights Of SC's Tariff Strike
In the 6-3 opinion, Chief Justice John Roberts wrote, “The President asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope. 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. The Government points to no statute in which Congress used the word “regulate” to authorize taxation. And until now, no President has read the IEEPA to confer such power," reads the order.
"We claim no special competence in matters of economics or foreign affairs. We claim only, as we must, the limited role assigned to us by Article III of the Constitution. Fulfilling that role, we hold that IEEPA does not authorize the President to impose tariffs," said the court.
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