The Supreme Court’s ruling on the constitutionality of President Donald Trump’s extremes, which he decided to impose against US competitors and allies under a law intended to be activated in an emergency, was negative. The Court’s rejection of one of its most controversial moves regarding the limits of its power is indeed a decision with significant implications for the global economy as a whole.
The American president himself commented on the decision, calling it a “shame”. A stronger reaction is obviously expected from him.
Trump has until now used tariffs — taxes on imported goods — as a key economic and foreign policy tool.
The tariffs have been central to the global trade war that began after his second term, alienating the US from traditional trading partners, affecting financial markets and creating global economic uncertainty. Trump has been preaching that his tariffs will generate tens of trillions of dollars over the next ten years for the US, the world’s largest economy, but after this decision it is possible that the US will be forced to pay many billions of euros to those affected by the tariffs.
The Trump administration has not released data on tariff collections since December 14. But Penn-Wharton Budget Model economists estimated Friday that revenue from tariffs imposed under the International Emergency Economic Powers Act (IEEPA) exceeded $175 billion. With the Supreme Court ruling against the tariffs, this amount will likely have to be returned.
An important part of the tariff policy is the tariffs with the IEEPA
According to the US Constitution, only Congress has the power to impose taxes and duties. However, Trump invoked a statistical power, invoking IEEPA to impose tariffs on nearly all US trading partners without congressional approval. There are additional tariffs imposed by Trump under other laws that are not involved in this case. According to government data from October through mid-December, the tariffs under IEEPA account for about a third of the revenue from the tariffs imposed by Trump.
IEEPA gives the president the power to regulate commerce in a national emergency. Trump became the first president to use the IEEPA to impose tariffs — one of several examples in which he has aggressively expanded the limits of executive power since returning to the presidency, in areas such as fighting immigration, firing federal officials, domestic military deployments and military operations abroad.
Trump also has a plan B
Trump has called the tariffs vital to US economic security, predicting that the country would be defenseless and devastated without them. In November he said that without the tariffs “the rest of the world would make fun of us, because they have used tariffs on us for years and taken advantage of us”. According to him, the US had been exploited by other countries, including China, the world’s second largest economy.
After the Supreme Court hearings in November, Trump said he would consider alternatives if the decision is negative, telling reporters that “we’re going to have to develop a game two plan.”
Treasury Secretary Scott Besant and other administration officials have said the US will invoke other laws to keep as many of Trump’s tariffs in place as possible. These include a provision authorizing tariffs on imported goods that threaten US national security and another authorizing retaliatory measures, including tariffs, against partners the Office of the US Trade Representative deems have used unfair trade practices.
None of these alternative measures offer the flexibility and power to act that IEEPA gave Trump, and they may not be able to fully replicate the extent of his tariffs in the short term.
Trump’s endless threats are coming to an end
Trump’s ability – based on the IEEPA – to instantly impose tariffs on any imported products through a declared national emergency increased his bargaining power with other countries, forcing world leaders to visit Washington for deals that often included billions in investment or increased market access for American companies.
However, the use of tariffs as a foreign policy tool has caused tension with many countries, even traditional US allies.
Historically, IEEPA has been used to impose sanctions on enemy countries or seize their assets, not to impose tariffs. The law does not expressly mention the word “duty”. The US Department of Justice had argued that the IEEPA authorizes the imposition of tariffs by authorizing the president to “regulate” imports to meet emergency situations.
Hundreds of billions of dollars in tariff revenue
Congress had estimated that if all current tariffs remained in place, including those under the IEEPA, they would raise about $300 billion a year over the next decade.
Net revenue from U.S. customs duties reached a record $195 billion in fiscal year 2025, which ended Sept. 30, according to data from the U.S. Treasury Department.
On April 2, on what Trump called “Liberation Day,” he announced “retaliatory” tariffs on goods imported from most of the U.S.’s trading partners, invoking the IEEPA to address what he called a national emergency over trade deficits, despite the fact that the U.S. had already run deficits for decades.
In February and March 2025, Trump invoked the IEEPA to impose tariffs on China, Canada and Mexico, citing the trafficking of the commonly abused painkiller fentanyl and other illegal drugs as a national emergency.
Trump has used the tariffs to secure concessions and renegotiate trade deals, as well as a lobbying tool on non-trade policy issues, including the prosecution of former Brazilian President Jair Bolsonaro, India’s purchases of Russian oil that are funding the war in Ukraine, and an anti-tariff ad in the Canadian province of Ontario.
IEEPA was passed by Congress and signed into law by Democratic President Jimmy Carter, with restrictions on presidential power over the previous law.
Win for small business and for states
The tariff cases before the judges involved three lawsuits.
The Washington Court of Appeals sided with five small business importers in one case and the states of Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, Nevada, New Mexico, New York, Oregon and Vermont in another.
At the same time, a federal court in Washington sided with the family-owned game company Learning Resources.
