Supreme Court Overturns Trump’s Tariffs In 6-3 Decision

The Supreme Court on Friday ruled in a 6-3 decision that President Donald Trump overstepped his authority by imposing sweeping tariffs under a federal law intended for national emergencies, a decision that marks a rare defeat for the administration at the high court, which holds a 6-3 conservative majority.

The court found that Trump’s use of the International Emergency Economic Powers Act of 1977, known as IEEPA, did not authorize him to unilaterally levy broad tariffs on goods entering the U.S.

The Supreme Court said Friday that IEEPA does not explicitly mention tariffs, but rather it allows the president to “regulate … importation” of foreign property transactions after declaring a national emergency in order to deal with certain “unusual and extraordinary” threats.

According to NBC News, the ruling does not affect all tariffs, leaving in place those imposed on steel and aluminum under separate legal authorities. But it does overturn tariffs in two major categories: country-by-country, or “reciprocal,” tariffs — which range from 34% on China to a 10% baseline applied to most other countries — and a 25% tariff on certain goods from Canada, China and Mexico, which the administration previously said were aimed at pressuring these countries to curb the flow of fentanyl.

The ruling does not stop Trump from trying to impose tariffs under other laws, although these methods come with more limits.

The majority concluded that the Constitution “very clearly” assigns Congress the authority to impose taxes, including tariffs.

Chief Justice John Roberts wrote the majority opinion, and Justices Clarence Thomas, Brett Kavanaugh and Samuel Alito dissented.

“The president asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope. In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorization to exercise it,” Roberts wrote. “As such, we hold that IEEPA does not authorize the president to impose tariffs.

“The tariffs at issue here may or may not be wise policy. But as a matter of text, history, and precedent, they are clearly lawful,” Kavanaugh wrote.

Cotality chief economist Selma Hepp issued a statement after the decision, saying that it won’t reduce construction costs for homebuilders in the near term due to other ongoing market headwinds.

“The Supreme Court’s decision declaring Trump-era tariffs unlawful may reduce some artificial cost pressures in construction supply chains, benefiting builders and reconstruction projects by easing price uncertainty for imported materials,” Hepp said. “Although reconstruction costs have risen 60% over four years — impacting housing affordability via higher insurance and material prices — the ruling won’t immediately lower costs due to persistent labor shortages, high financing, and global supply issues.

“However, clearer trade rules should eventually improve planning, lower risk premiums, and help stabilize or prevent further increases in new construction and reconstruction expenses.”

In April 2025, Trump imposed what he called “reciprocal” tariffs on most countries and labeled it as “Liberation Day,” citing trade deficits as a national emergency. Earlier duties targeted Canada, China and Mexico, which the administration linked to a declared emergency over drug trafficking.

The measures prompted a wave of lawsuits, including challenges brought by about a dozen predominantly Democratic-led states.

In May 2025, a federal trade court blocked Trump’s efforts to impose broad tariffs under emergency powers, citing violations of U.S. law and the creation of economic turmoil. In August 2025, the tariffs were ruled illegal by a federal appeals court that also referenced IEEPA.

Friday’s decision did not decide or specify whether companies will get refunds for the billions of dollars already paid. Some businesses, including retailer Costco, have asked lower courts to order the government to return the money, The Associated Press reported.

As of December, the Department of the Treasury had collected more than $133 billion from the tariffs imposed under the emergency law, according to federal data.

The economic impact of the tariffs has been projected at roughly $3 trillion over the next decade, according to estimates from the Congressional Budget Office. It is unclear whether the decision will impact tariffs on homebuilding inputs such as lumber, steel, aluminum and copper.

Editor’s note: This story was updated with comments from Cotality’s Selma Hepp.