The Supreme Court’s decision to strike down Trump’s so-called emergency tariffs doesn’t end the legal battle — it opens another one that could claw back as much as $175 billion from the companies on the line.
In a 6-3 decision on Friday, the US Supreme Court rejected President Donald Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose sweeping duties. How the government should handle the billions collected from foreign buyers is still unclear.
The United States Commercial Court (USCIT) is now faced with the task of deciding whether – and how – to release months of tax collection that experts say could amount to $175 billion.
Markets are now isolating the recession. Olu Sonola, head of US economics at Fitch Ratings, called the decision “Independence Day 2.0 – arguably the first with a tangible effect on American consumers and business profits.” More than 60% of the 2025 prices have been effectively eliminated, he explained. That lowers the effective US tax rate from about 13% to about 6% and removes more than $200 billion from expected annual collections.
The big issue is raising tensions in the US wherever business and politics intersect. After all, the prices may reappear in a revised form, said Sonola. Indeed, Trump has retaliated with a new 10% global tax under different legal authorities.
“Take a potential tax refund, and you’re introducing a messy legislative and regulatory backlog that increases economic uncertainty,” Sonola said.
More Litigation to Come
Since Trump first announced the tariffs last April, hundreds of companies have slammed the charges.
Supermarket giant Costco, cosmetics firm Revlon and seafood packager Bumble Bee Foods are among the US-based companies seeking bailouts. Kawasaki Motors and Yokohama Tire, both based in Japan, also filed complaints.
How those cases will proceed is completely unknown, and that’s fine with Trump.
“At his press conference today, Trump suggested that he would try to derail the recovery process by taking it to court,” said Phillip Magness, executive director of the Independent Institute. “I suspect USCIT will have very little patience for any delaying tactics.” Also, the future of Trump’s trade deals, the deals made with the UK and Japan, for example, is also unclear.
“Many of these alleged agreements were never put in writing, so it’s doubtful they were legally binding in the first place,” Magness said.
Magness also pointed to dissenting opinions — particularly that of Justice Neil Gorsuch — as revealing the Court’s evolving philosophy.
Gorsuch’s statements relied heavily on interpretations of the law and the “great questions doctrine,” which requires express congressional approval for policies of major economic or political importance. He sharply criticized Justice Clarence Thomas’s dissent, saying it would give the president the power to sweep under vague congressional delegations.
“Gorsuch suggested that Thomas’ thinking would effectively extend unlimited power to the president in congressional delegations — a position that is not only constitutionally questionable, but at odds with Thomas’ previous judicial philosophy. I believe that Thomas’s dissent has greatly damaged his reputation for consistency as a conservative legal thinker defines the ‘starting camp.'” tax.”
‘Important Results’
Justice Brett Kavanaugh, dissenting, warned that the federal government could end up holding the fund and have to return billions of dollars to immigrants who pay IEEPA rates, even though the costs have already been passed on to consumers.
The refund, he continued, would have “significant consequences for the US Treasury.”
Some industry groups seem unconcerned, and are already pressuring Customs and Border Protection to move faster, likely through its Automated Trading Zone program, to process claims.
The American Apparel & Footwear Association (AAFA), for example, welcomed the Court’s decision, saying it affirms that only Congress has the constitutional authority to levy duties.
AAFA President and CEO Steve Lamar, in a prepared statement, called the decision a vindication of the power of Article I and thanked the justices for their review of the case.
“CBP’s newly modernized, comprehensive refund process should help expedite this effort,” he said.
