US supreme court has struck down Trump tariffs. What will that mean in practice?

DCM Editorial Summary: This story has been independently rewritten and summarised for DCM readers to highlight key developments relevant to the region. Original reporting by Irish Times, click this post to read the original article.

What has just happened?

The US supreme court, in a six-three majority decision, has ruled that US president Donald Trump exceeded his authority in imposing many of the tariffs announced over the past year under the International Emergency Economic Powers Act.

These include the reciprocal and top-up tariffs imposed on many countries, including the European Union. Under this arrangement, imports from the EU to the US are subject to a 15 per cent tariff, with exceptions for a number of sectors. The ruling does not cover the tariffs imposed on specific sectors, such as steel, aluminium, the automotive sector and so on. Trump had used a separate legal grounding for these.

Why did it make this ruling?

Trump relied on legislation allowing him to declare an emergency situation as justification for imposing the so-called reciprocal tariffs. Specifically, the president declared two emergencies – based on certain drug imports into the US and the size of the US trade deficit. However, a range of importers and 12 US states had argued he did not have the right to do this and many had won in lower courts – the cases were then joined together so that the US supreme court could make the final decision.

Under the US constitution, the president is meant to get congressional approval for most tariffs, with a few limited exceptions. The administration had tried to get around this and had not gone to Congress, but the majority court judgment was that it had gone too far and that the president had exceeded his powers under the US constitution. This is a landmark decision in relation to Trump’s trade policies

What happens now?

Good question. Trump said after the ruling that he can use other legal authority to impose tariffs , but it is not clear what exactly these would be. This is a big setback for his tariff policy and for his ability to shoot off threats – sometimes followed by action – aimed at various countries. Introducing tariffs in future will be more complicated. However, to underline his ongoing commitment to tariffs as an economic weapon and source of revenue, Trump said he will now introduce a new 10 per cent ” global tariff” on imports into the US, in addition to existing charges under separate legislation which he says allows him to impose such a charge for 150 days. It was not immediately clear how this will interact with existing tariffs, but it could mean additional costs for Irish exporters in some sectors.

[ Why haven’t Trump’s tariffs caused a downturn in the US?Opens in new window ]

Will the companies on which tariffs were imposed get their money back?

So far this is unclear and the supreme court did not rule on this. Some are certainly shaping up to try to do so and have already made legal manoeuvres in anticipation of this ruling. There will certainly be moves to get repayment but legal action on this could continue for years. The tariffs were levied on the companies – including some Irish exporters- at the point of import to the US, though of course the actual burden of the tariffs often fell on US consumers or on businesses bringing in inputs for further manufacture, who ended up paying higher prices.

What about the EU/US trade deal?

What happens with this deal – and other deals struck by Trump – is now a really interesting question. Trump imposed the reciprocal tariffs on the EU and these have now been deemed illegal. However, last summer the US and the EU did a trade deal under which many of the tariffs would continue. This deal has not yet come into force, however.

So there is a question now for both sides about how to proceed. The EU might well still reckon it is better to have a trade deal and accept some tariffs as the price of certainty, though all it would say on Friday was that it was in touch with the US administration on how to proceed.

Rescuing the deal, if this is possible, might also be to Ireland’s advantage as it capped potential tariffs at 15 per cent in all areas, including vital pharma exports, currently not charged any tariffs. While a court decision to strike down tariffs might appear to be good news, it introduces a new uncertainty, as evidenced by Trump’s new proposal for a 10 per cent global tariff and his promise to keep raising money through these import charges.

This is a mess, isn’t it?

Yes. And a setback for Trump as it is the first time he has got serious pushback from the US supreme court, which has a conservative majority. Trump had warned that a decision striking down the tariffs would be a “disaster”. It has potentially significant implications for US tax revenue – some $200 billion is estimated to have been raised from the tariffs in 2025. Hearings during the action had said any repayment process would be chaotic. And for 2026 a new uncertainty has entered the economic equation.