The Supreme Court Struck Down Trump's Tariffs. What Does That Mean for Your Wallet?

On Friday, February 20th, the Supreme Court delivered one of the most economically significant rulings in recent memory: in a 6-3 decision, the justices ruled that President Trump's use of the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs on imports was unlawful.

This is a big deal, but, it's also complicated. Here's what you need to know.

What are tariffs, and why do they matter to you?

A tariff is a tax on imported goods. When the US government puts a tariff on, say, shoes made in Vietnam, importers (companies that buy those shoes and sell them in the US) have to pay that tax. Most of the time, they pass that cost along to consumers, which means you pay more at the store.

President Trump used IEEPA, an emergency powers law from 1977, to impose tariffs on almost every country in the world. These included the "Liberation Day" tariffs, which hit dozens of countries simultaneously. As of mid-February, the US government had collected hundreds of billions of dollars from these tariffs.

What did the court actually rule?

Chief Justice John Roberts wrote the 6-3 majority opinion, joined by an unusual mix of justices from both ends of the political spectrum (Gorsuch and Barrett on the right; Sotomayor, Kagan, and Jackson on the left). The ruling said that IEEPA gives president broad emergency powers, but it does not include the power to set tariffs. The Constitution explicitly gives that power to Congress, not the President.

Will prices go down?

Not necessarily, or at least not quickly. Trump immediately responded to the ruling by announcing a new 10% global tariff using a different law, Section 122 of the Trade Act of 1974. He then increased the tariff to 15% on Saturday morning. The new tariff is effective February 24th. So some tariffs are still in place.

As for the billions already collected: importers are likely to get refunds eventually, but trade lawyers estimate the process could take 12–18 months to sort out through the courts and US Customs. And even if companies get refunds, they likely will not pass those savings along to consumers.

The bottom line

This ruling is a significant check on executive power, and it removes a major source of uncertainty for businesses that import goods. But it doesn't mean tariffs are gone, rather it just means the president needs a different legal basis to impose them. The trade saga continues….

Sources: SCOTUS, NPR, NBC News, Reuters