Supreme Court Kills Trump's Reciprocal Tariffs. Will Companies Get Reimbursed?

UPDATE: Trump is responding to the court ruling by announcing he’ll impose a 10% global tariff and other tariffs using different laws.

Original story:

In a huge blow to President Trump, the Supreme Court just invalidated many of his tariffs, which have been blamed for price hikes on a variety of products, including video game consoles.

The Court’s Friday 6-3 ruling strikes down Trump’s “reciprocal tariffs” and tariffs on China, Canada, and Mexico that Trump imposed using the 1977 International Emergency Economic Powers Act (IEEPA). It upholds lower court rulings that found Trump exceeded his authority to impose the tariffs under the IEEPA, which was designed to give the president special economic powers in the event of a national emergency.

Trump invoked the IEEPA to impose his tariffs on China and other countries by citing the illegal drug trade and the US’s trade deficits. However, the Supreme Court says the White House took its reading of IEEPA too far, even though the law itself makes no explicit mention of tariffs.

“The Framers gave ‘Congress alone’ the power to impose tariffs during peacetime,” the ruling says, adding, “Accordingly, the President must ‘point to clear congressional authorization’ to justify his extraordinary assertion of that power.”

The Court took up the case after several groups and states sued the Trump administration, claiming the president had “chosen to wield IEEPA to impose tariffs on the world at his whim.”

Friday’s decision means that IEEPA-related tariffs on countries including China, Brazil, India, Vietnam and Taiwan have been effectively removed. These tariffs were often set at around 15% to 25%

(The Budget Lab at Yale)

“Without IEEPA tariffs, consumers will face an overall average effective tariff rate of 9.1%, which remains the highest since 1946 excluding 2025. (If IEEPA tariffs had been allowed to stay in effect, this figure would have been 16.9%.),” according to The Budget Lab at Yale University.

Get Our Best Stories!

Your Daily Dose of Our Top Tech News

What's New Now Newsletter Image

Sign up for our What’s New Now newsletter to receive the latest news, best new products, and expert advice from the editors of PCMag.

By clicking Sign Me Up, you confirm you are 16+ and agree to our Terms of Use and Privacy
Policy.

Thanks for signing up!

Your subscription has been confirmed. Keep an eye on your inbox!

The Trump administration previously exempted many Chinese-made consumer electronics from the steepest reciprocal tariffs. In October, the White House then agreed to a 20% tariff rate on Chinese goods, citing the now-dismissed IEEPA authority. Meanwhile, video game consoles, which are largely made in Asia, including China and Vietnam, faced no such exemption. Last year, both the PS5 and Xbox consoles saw price increases, with analysts blaming the tariffs.

Apple has also been saddled with a huge tariff bill at an estimated $3.3 billion because the company shifted US iPhone production to India, which faced no tariff exemption. Earlier this month, Trump reduced the now invalidated reciprocal tariff on India from 25% to 18% after reaching a trade deal.

The Supreme Court’s ruling raises questions about reimbursing Apple and other businesses that have paid as much as $150 billion in tariffs. Justice Brett Kavanaugh noted, “The United States may be required to refund billions of dollars to importers who paid the IEEPA tariffs, even though some importers may have already passed on costs to consumers or others.”

Recommended by Our Editors

The Court is staying out of that, though. “The Court says nothing today about whether, and if so how, the government should go about returning the billions of dollars that it has collected from importers. But that process is likely to be a ‘mess,’ as was acknowledged at oral argument,” Kavanaugh added.

To retrieve their refunds, businesses might have to sue the Trump administration or submit a formal protest with US Customs and Border Protection. “US importers now will press their case to get refunds of IEEPA tariffs,” said Dave Townsend, a partner at the Dorsey & Whitney law firm. “More than 2,000 lawsuits have already been brought seeking such refunds, but this is a small fraction of US importers that may be entitled to such refunds. The United States has said in litigation that more than 300,000 U.S. importers have paid IEEPA tariffs.”

So far, Trump hasn’t commented publicly on the ruling, but CNN’s Kaitlin Collins reports that he called it a “disgrace” during a White House breakfast with governors this morning. “He told those gathered that he has a backup plan,” Collins says.

The White House could still use other laws to impose tariffs, but that could require a formal investigation into a trade issue and a public comment process.

Brad Setser, a senior fellow at the Council on Foreign Relations, tweeted that, “The Trump administration is sure to use other authorities…to raise tariffs now that the court has struck down the IEEPA tariffs,” which could include Section 301 or Section 122 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962. “But striking down IEEPA still matters, particularly for China/other countries that aren’t heavily hit by existing 232s.”