The US supreme court has dealt a significant blow to President Donald Trump's economic agenda, ruling that his administration's imposition of tariffs on countries around the world was illegal. The decision, made on Friday, marks the first time the court has overruled one of Trump's second-term policies. As reported by The Guardian, this ruling has sparked a strong reaction from the president, who has vowed to enact a new 10% global baseline tariff.
The court's 6-3 ruling declared that a 1977 law designed to address national emergencies did not provide the legal justification for most of the Trump administration's tariffs. The ruling was a sharp rebuke to the president's aggressive economic agenda, which has relied heavily on tariffs to reshape US trade policy. According to the court, the ability to enact tariffs during peacetime belongs to Congress, not the executive branch.
Trump has used tariffs to aggressively reshape US trade policy, upending decades of agreements and collecting tens of billions of dollars from companies importing foreign goods. However, the court cited the creators of the constitution, who recognized the unique importance of the taxing power, which includes the power to impose tariffs. The court also cited the "major questions doctrine", a principle under which the executive branch cannot rely on ambiguous language in laws passed by Congress to justify consequential action.
Reaction to the Ruling
The president blasted the justices who ruled against him at a press conference, calling them "a disgrace to the nation" and said the ruling had emboldened him to enact "very powerful alternatives" to the tariffs declared illegal. Trump promptly announced he would enact a new 10% global baseline tariff under Section 122 of the Trade Act of 1974, which allows the president to impose tariffs for 150 days.
Chuck Schumer, the Senate minority leader, called the decision a "victory for the wallets of every American consumer. Trump's illegal tariff tax just collapsed – He tried to govern by decree and stuck families with the bill. Enough chaos. End the trade war." The US's major trading partners reacted cautiously to the news, with William Bain, head of trade policy at the British Chamber of Commerce, saying that the decision gives clarity on the president's executive powers to raise tariffs but does little to clear the murky waters for business.
Mexico's president, Claudia Sheinbaum, said her administration was reviewing the decision, emphasizing the importance of maintaining the trade agreement between the two countries. The ruling relates to Trump's use of the IEEPA, and different legislation has been used for other US tariffs, such as for steel and aluminium, and the president also has other options at his disposal to retain his current regime.
Implications of the Ruling
The ruling has significant implications for the US economy and trade policy. Economists have warned that tariffs risk raising prices further for Americans after years of heightened inflation. The court's decision may also lead to refunds of billions of dollars in tariffs, which could have significant consequences for the US Treasury. Justice Brett Kavanaugh argued in a dissenting opinion that the court's opinion "is not likely to greatly restrict presidential tariff authority going forward" because the court essentially ruled that Trump just "checked the wrong statutory box" by relying on IEEPA instead of other laws to pass his tariffs.
The ruling may also generate other serious practice consequences in the near term, including whether refunds will be issued on the tariffs. The process of returning the billions of dollars collected from importers is likely to be complex and may have significant consequences for the US economy. As the US and its trading partners navigate the aftermath of the ruling, it remains to be seen how the president will respond and what the long-term implications will be for US trade policy.
