US Supreme Court Limits Presidential Tariff Authority

The Supreme Court of the United States ruled that tariffs imposed by Donald Trump under the International Emergency Economic Powers Act exceeded presidential authority, creating uncertainty for global trade and opening the possibility of billions of dollars in refunds for affected companies. The decision has implications for Mexico and other major trading partners by reshaping the regulatory framework governing tariffs, cross-border trade flows and the USMCA, affecting manufacturing, energy and import-dependent industries. 

The Supreme Court of the United States has invalidated several tariffs imposed by Donald Trump, determining that the legal framework cited to justify the measures did not grant the president the authority to enact them. 

In a 6-3 ruling, the court found that the administration overstepped its authority by using the International Emergency Economic Powers Act to impose duties on imports from nearly every country. The law allows the president to regulate trade in response to national emergencies but does not explicitly authorize tariffs.

Writing for the majority, Chief Justice John Roberts stated that “When Congress has delegated its tariff powers, it has done so in explicit terms and subject to strict limits. Had Congress intended to convey the distinct and extraordinary power to impose tariffs, it would have done so expressly, as it consistently has in other tariff statutes.”

The tariffs, introduced last year, initially targeted imports from Mexico, Canada and China before expanding globally in April under what the administration called “Liberation Day.” The White House argued the measures addressed drug trafficking and trade imbalances while encouraging domestic investment and manufacturing.

States and private companies challenged the tariffs, arguing the law cited by the administration made no reference to duties and did not grant the president broad authority to override existing trade agreements or tax imports. The ruling sided with those claims, marking a major legal setback for the administration’s effort to expand executive power over trade policy.

The decision drew support from the court’s three liberal justices as well as two Trump appointees, Amy Coney Barrett and Neil Gorsuch. Justices Clarence Thomas, Brett Kavanaugh and Samuel Alito dissented.

The ruling opens the door to potential refunds for companies that paid the duties. The United States has collected about US$130 billion in tariffs under the law, according to government data. Studies indicate that most of the costs were absorbed by US importers and consumers.

Businesses welcomed the outcome, though uncertainty remains over how refunds will be handled. The decision did not specify a process, leaving implementation questions to the Court of International Trade.

“This comes as a relief for our employees here in Burlington, Vermont and at our manufacturing facility in Washington State,” said Nik Holm, Chief Executive, Terry Precision Cycling. “Though it will be many months before our supply chain is back up and running as normal, we look forward to the government’s refund of these improperly-collected duties.”

In recent weeks, hundreds of companies, including retailer Costco, aluminum producer Alcoa and food importer Bumble Bee, filed lawsuits seeking reimbursement. Justice Brett Kavanaugh, in his dissent, warned that resolving refund claims could become a mess.

Steve Becker, Head, Pillsbury’s international trade practice, said companies are likely to recover their funds but face uncertainty over timing. “I think companies can be fairly confident that they will get their money back eventually,” he said. “How long it will take really is up to the government.”

US Tariff Actions Under IEEPA

As of December 31, 2025, the United States implemented a series of IEEPA-based tariffs targeting major trading partners and trade practices linked to fentanyl trafficking, migration, trade deficits, and geopolitical concerns. The IEEPA tariffs include:

• Canada: Tariffs apply to all goods from Canada, except imports qualifying for duty-free treatment under the USMCA. The measures impose a 35% tariff on most goods, a 10% tariff on energy and potash imports, and a 40% tariff on goods “transshipped to evade applicable duties.” The initial 25% rate became effective on March 4, 2025, before being increased to 35% on August 1st. USMCA exceptions and the 10% tariff on potash became effective on March 7, 2025.
   

• Mexico: Applies to all goods from Mexico, excluding USMCA-qualified imports. The tariffs are set at 25% for most goods and 10% on potash imports. They became effective on March 4, 2025, with USMCA exceptions effective March 7. A proposed 30% increase was announced for Aug. 1 but later delayed pending negotiations.
   

• China: Fentanyl-related tariffs apply to all goods from China. The rate was 10% effective February 4, 2025, increased to 20% on March 3, and reduced back to 10% on November 10 following trade discussions.
   

• Venezuelan: Applies to all goods from countries designated by the US Secretary of State as importers of Venezuelan oil. The tariff rate of 25% became effective on April 2, 2025, following the March 24 issuance of the executive order.
   

• Global: Applied to most trading partners globally, excluding Canada and Mexico, targeting products affected by trade imbalances. Tariffs range from 10% to 41% depending on the country, with 40% applied to goods “transshipped to evade duties.” Exemptions were granted for selected products including steel, aluminum, automobiles, pharmaceuticals, semiconductors, and certain agricultural goods. The global 10% minimum rate was effective April 5, 2025, with country-specific rates implemented on August 7, 2025. Multiple bilateral adjustments and temporary tariff modifications were issued throughout the year.
   

• Low-value imports from China: Targeted shipments valued at US$800 or less, including Hong Kong. Duties were calculated at the IEEPA rate or as per-package fees ranging from US$80 to US$200, effective May 2, 2025. This measure was later superseded by the global low-value de minimis action.
   

• Global low-value imports: Applied worldwide to shipments valued at US$800 or less, using duties equal to the IEEPA rate or US$80–US$200 per package. The measure became effective August 29, 2025, ensuring uniformity across all countries.
   

• Brazil: Applied to certain products from Brazil, with a tariff rate of 40% effective Aug. 6, 2025. Exemptions were granted for selected agricultural and energy products. This measure cited a national emergency due to Brazilian government actions regarding the prosecution of former President Bolsonaro, online platform regulation, and other related issues.
   

• India: Applied to most products from India, linked to Russian oil imports. The tariff rate was set at 25%, effective Aug. 27, 2025, with exemptions for products covered by Section 232 actions.