U.S. Supreme Court Strikes Down Trump Tariffs As Illegal

Types : Alerts

In a landmark defense of the separation of powers, the Supreme Court ruled 6-3 today in Learning Resources et al. v. Trump that the executive branch overstepped its constitutional authority by unilaterally imposing sweeping global tariffs. The Court held that the International Emergency Economic Powers Act (IEEPA), the 1977 statute invoked by the administration to justify the levies as a response to national emergencies, does not grant the President the power to bypass Congress in matters of taxation and trade. Writing for the majority, Chief Justice John Roberts emphasized that the authority to “lay and collect taxes, duties, and imposts” is a power “lodged exclusively in the hands of the legislature” under Article I of the Constitution.

​The ruling strikes a significant blow to the administration’s “America First” trade agenda, effectively nullifying the “reciprocal” tariffs and emergency duties on goods from China, Mexico, and Canada that have dominated the economic landscape since 2025. The Court’s decision centered on the principle that while IEEPA allows the executive to “regulate” property during emergencies, it does not provide a “blank check” to impose indefinite, broad-based taxes without explicit congressional approval. Joining the Chief Justice were the Court’s three liberal justices along with Justices Gorsuch and Barrett, with Justice Gorsuch’s concurrence noting that Congress did not “clearly surrender” its fundamental tariff-setting role when it passed the emergency act decades ago.

​While the legal victory for the coalition of states and small businesses is clear, the financial fallout remains in flux. The ruling calls into question more than $130 billion in duties already collected by the Treasury Department, leading to immediate demands from state governors and industry leaders for comprehensive refunds. While the Court vacated the specific tariffs justified under IEEPA, it left intact those imposed under other authorities, such as Section 301. The administration is expected to pivot to these alternative statutory frameworks to maintain its trade policy, though today’s decision ensures that any future expansion will face much stricter judicial and legislative scrutiny.

We had recommended nearly a half year ago that if carriers or their underwriters are making settlement of cargo claims involving shipments that arrived on or after March 1, 2025, that the settlement agreement (especially in large cases) should include an “assignment of rights“ provision turning over the power to seek refunds of the illegal tariffs to the carriers. We continue to make this recommendation, especially in larger settlements.

Hopefully this decision will result in the resumption of trade with the United States and provide our clients with the economic advantage of pursuing U.S. trade routes. For further guidance about how the decision may impact your business going forward, please contact Vincent DeOrchis or Jon Werner of Montgomery McCracken’s Maritime and Transportation Industry Group.