Former US President Donald Trump has received a major legal setback on the issue of global trade. The United States Supreme Court has declared illegal a major global tariff imposed by Trump citing a national emergency. The court's 6-3 ruling made clear that the president does not have the power to impose broad import tariffs without congressional approval. The biggest question after the decision is whether Trump's tariffs will now be lifted globally.
In a ruling written by Chief Justice John Roberts, the court held that Congress has the constitutional authority to impose taxes and import duties. The Court acknowledged that the International Emergency Economic Powers Act of 1977 (IEEPA) gives the President the power to regulate economic transactions, but does not expressly authorize the imposition of tariffs. The Court held that the President could not claim unlimited power to impose tariffs without any time limit or scope.
Including “reciprocal tariffs” and additional tariffs linked to the fentanyl crisis
The ruling could invalidate emergency tariffs imposed by the Trump administration on nearly all imports last year, TIME reported. These include “reciprocal tariffs” imposed on many countries and additional tariffs linked to the fentanyl crisis. However, the court also made it clear that the decision would not affect tariffs imposed under other laws.
For example, tariffs on steel, aluminum and automobiles imposed on national security grounds under Section 232 of the Trade Expansion Act of 1962 will remain in place. That is, not all of Trump's tariffs will end completely, but the most aggressive and broadest part of his tariff policy will be hit hard by the ruling.
Economically speaking, these emergency tariffs have generated an estimated $89 billion so far. Now after this judgment the government will not be able to get more revenue under this structure. Also, demand for refunds from companies that have already paid these tariffs is likely to increase.
The Court's reasoning is consistent with the “key questions doctrine”.
The case is not limited to tariffs, but also sets clear limits on the president's emergency powers. The Trump administration had imposed the tariffs citing the trade deficit and the flow of fentanyl as a national emergency, but the court found these arguments insufficient. The court's reasoning is consistent with the “major questions doctrine”, which requires clear parliamentary approval for major economic and political decisions.
After this ruling, the Trump administration now has limited options. Temporary and limited tariffs may be imposed under other trade laws, but are short-lived. There is also the option of initiating a fresh investigation under Section 301, but that is a lengthy process and invites legal challenges. Passing a new law by Congress is an option, but that doesn't seem likely given the current political climate.
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