Domestic reckoning: the US Supreme Court’s tariff decision

June 2026  |  FEATURE | GLOBAL TRADE

Financier Worldwide Magazine

June 2026 Issue

The early months of the second Trump administration saw a flurry of proclamations and executive orders from the Oval Office – among them trade tariffs that sent shudders around the world.

The measures were immediately divisive. Critics contend that the regime increased prices for US consumers and disrupted the global economy, while the president argued that import taxes boosted domestic manufacturing and created jobs.

After months of legal uncertainty, in February 2026 a US Supreme Court decision redefined the limits of presidential authority over trade.

The US Supreme Court ruling

In Learning Resources, Inc. v. Trump (2026), the US Supreme Court ruled by a 6-3 majority that the president does not have the power to unilaterally impose tariffs under the International Emergency Economic Powers Act (IEEPA), the authority Donald Trump invoked to impose tariffs on nearly every US trading partner.

Telling the president that “the core pillar of his international economic agenda was unconstitutional” represents a rare instance of the Court checking presidential power in economic policy, with implications extending well beyond tariffs.

“It is a significant moment in constitutional law,” says Brent Skorup, a legal fellow in the Cato Institute’s Robert A. Levy Center for Constitutional Studies. “For structural reasons – namely that the president is very powerful in our constitutional system and the courts are relatively weak – it is rare for the Supreme Court to rule against the executive branch in matters touching on foreign policy.

“They did so here because three justices – Roberts, Barrett and Gorsuch – have been sceptical of presidents claiming broad powers from vague statutory language,” he continues. “In my view, it is the most significant decision constraining the executive branch since Youngstown in 1952, where the Supreme Court rejected President Truman’s attempt to seize steel plants during the Korean War.”

Alex Durante, senior economist at the Tax Foundation, views the ruling as a question of legislative intent. “Did Congress intend to give the president the power to tariff under IEEPA?” he asks. “Statutory interpretation suggests that it did not, and therefore the IEEPA tariffs are unconstitutional.”

Presidential response

Having long framed tariffs as central to his economic agenda, Mr Trump responded swiftly. He derided the ruling as “terrible” while announcing a 10 percent global tariff under a different statute, with the administration reportedly considering an increase to 15 percent.

The president also announced new section 301 investigations covering more than 60 countries. “Those investigations are handled by the United States Trade Representative (USTR), and tariffs can be applied if it is determined that the targeted countries engaged in ‘discriminatory’ trade practices,” adds Mr Durante. “The main complaint the government is asserting is that these countries export more than they consume, and that they are threatening US ‘competitiveness’ by doing so.”

Since the Supreme Court ruling, US trade policy has entered a contested phase, with legal and geopolitical consequences still unfolding. The pivot to section 122 and section 301 authorities has already sparked fresh challenges in the US Court of International Trade.

At the same time, the launch of wide-ranging section 301 investigations into structural excess capacity and forced labour marks a more targeted, but still expansive, approach to trade enforcement, potentially laying the groundwork for a new round of tariffs later in 2026.

Payments and refunds

Questions also remain over how the latest tariffs will be applied and whether businesses will be reimbursed for duties now deemed unlawful.

“Because of ongoing tariff threats, the uncertainty for businesses will not go away even after the Supreme Court ruling,” asserts Mr Durante. “Many companies are already suing the government to get their refunds, and I expect it will be a long and protracted process.”

One complicating factor is the importer of record. “Who paid the tariffs is not always the business itself,” explains Mr Durante. “It could be an intermediary that handles all of the compliance costs for the business, and how much of that refund the business receives will depend on whatever was negotiated with that intermediary.”

Alternative actions

With the administration exploring alternative tariff powers, the outlook remains uncertain.

“As government lawyers stated in their briefs to the Supreme Court, higher tariffs are one of the most important foreign policy priorities of the administration,” says Mr Skorup. “The most commonly cited statutes for other tariffs are section 122 of the 1974 Trade Act and section 232 of the 1962 Trade Expansion Act. However, those statutes impose far more limits than the powers the administration claimed under IEEPA.”

In Mr Durante’s assessment, further legal challenges are likely. “Section 301 tariffs, if and when they come into effect, might also face legal challenges,” he suggests. “The crux of the problem is that Congress did grant the president the power to impose tariffs under these authorities, and the statutes themselves are broad, although not boundless.

“We should also expect more section 232 tariffs, which target specific products rather than countries, and the Department of Commerce has already initiated 12 such investigations. It will be a long road ahead for US businesses and consumers,” he adds.

In the end, the tariffs ruling is about the balance of power. As trade policy grows more litigious and fragmented, businesses and governments must now navigate a landscape in which constitutional limits, economic ambition and political authority are once again in open negotiation.

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BY

Fraser Tennant