This ruling is a major setback for President Donald Trump’s economic program, declaring that he overreached in the use of his emergency powers to tax imports.

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What have they decided on and what is the ruling?

The court examined whether IEEPA’s power to “regulate importation” allowed the president to impose tariffs unilaterally. The Trump administration had invoked this law to declare national emergencies due to drug trafficking (affecting Canada, Mexico and China) and persistent trade deficits, imposing “reciprocal” tariffs on nearly all trading partners.

The Supreme Court has decided that:

• The Constitution grants Congress, not the president, the exclusive power to impose taxes and tariffs.
• The term “regulate” does not include the power to tax, and if Congress had wished to delegate that extraordinary power, it would have done so expressly as in other tariff statutes.
• The “major issues doctrine” was applied, arguing that because of the enormous economic and political importance of tariffs, the president needs clear and unambiguous congressional authorization.

Immediate consequences and implications

The decision invalidates the general 10% tariff imposed on almost everyone, as well as higher specific levies against key partners such as the EU, China, Canada and Mexico. The main consequences include:

• Multi-billion dollar refunds: The U.S. government could be forced to repay billions of illegally collected dollars (estimates are that the cost could be around $120 billion, 0.5% of U.S. GDP).
• Administrative chaos: There is great uncertainty as to how these reimbursement claims will be handled, a process that dissenting judges have described as a potential “mess”.
• Trade instability: The cancellation of tariffs raises doubts about the validity of trade agreements that other countries accepted under the pressure of these levies.

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Next steps for the U.S. government

The Trump administration has signaled that it will not back down and will activate a “Plan B” using other legal authorities. The likely next steps are:

• Use of Section 232 and 301: The government plans to pivot to Section 232 of the Trade Expansion Act (national security) or Section 301 of the Trade Act of 1974 (unfair trade practices) to maintain the tariff framework.
• New investigations: Unlike IEEPA, these laws require slower processes, formal investigations that demonstrate harm or discrimination, and more robust procedural justifications.
• Maintenance of sectoral tariffs: The ruling does not affect the specific tariffs already in place on steel (50%) and aluminum, which were imposed under other regulations.

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Implications for the European Union

For the EU, the ruling has mixed effects and generates a re-evaluation phase:

• Doubts about the trade agreement: The pact reached last summer (where the EU accepted 15% in exchange for tariff-free industrial exports) remains up in the air. Ratification in the European Parliament could be paused until there is clarity on the steps Washington will take.
• Risk of new levies: There are fears that the Trump administration will quickly find a new legal avenue to reintroduce 15% tariffs against the EU soon.
• Seeking stability: Brussels has urged the U.S. to de-escalate the tension and seeks “predictability” in the trade relationship as it carefully analyzes the ruling.

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What questions arise from now on?

The Supreme Court’s decision has generated a panorama of great legal and economic uncertainty, opening up a number of fundamental doubts as to how the current tariffs will be dismantled and what mechanisms the government will use to try to maintain its trade policy.

The main doubts and areas of uncertainty are as follows:

1. The “chaos” of multi-million dollar reimbursements.

One of the biggest unknowns is whether the U.S. government will have to pay back the billions of dollars collected illegally.

• Who can claim them: It is unclear whether all importers who paid duties under IEEPA will be able to receive refunds.
• Economic magnitude: The Treasury has collected an estimated $133 billion from emergency tariffs alone. Some estimates put the potential cost of the refunds at $120 billion, representing approximately 0.5% of U.S. GDP.
• Process complexity: Dissenting Judge Brett Kavanaugh called the refund process a “mess” (mess), noting that many companies have already passed those costs on to consumers, complicating the logic of the refund.

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2. The future of the trade agreement with the EU

The ruling calls into question the agreement reached last summer.

• Ratification on hold: The European Parliament was scheduled to vote on the reduction of tariffs on U.S. products next week, but following the ruling, voices such as MEP Anna Cavazzini are calling for the ratification to be put on hold until there is clarity on the consequences of the ruling.
• Validity of commitments: There is doubt as to whether trade agreements signed under the pressure of these now invalidated tariffs will continue to be honored by trading partners.

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3. The Feasibility of “Plan B” (Sections 232 and 301)

Although the Trump administration plans to pivot to other laws, there are doubts as to whether these will be able to fill the loophole effectively.

• Procedural limitations: Unlike the IEEPA, laws such as Section 301 require thorough investigations, robust bureaucratic processes, and specific findings of discriminatory practices before levies can be imposed.
• A “blank check? Legal experts suggest that the judiciary has already set limits, indicating that the power to “modify” tariffs under Section 301 is not a license to launch an all-out trade war without judicial oversight.

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4. Stability and predictability for businesses

The main concern of the private sector is the lack of a stable framework.

• Operational uncertainty: Businesses on both sides of the Atlantic depend on predictability for their investments and operations; the possibility that Trump will find a new legal route soon keeps markets on edge.
• Fear of reintroduction: There is a well-founded fear among exporters, such as the German engineering industry, that similar tariffs (such as 15% to the EU) will be reintroduced under other legal instruments in the very near future.

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5. The scope of the “Doctrine of Major Issues”.

The ruling leaves open the question of how this precedent will affect other executive actions. In applying this doctrine, the Supreme Court has established that Congress must be extraordinarily clear before transferring major economic powers to the president, which could limit the use of other emergency laws in the future.