The U.S. Supreme Court on the 20th, local time, handed down a final ruling that President Donald Trump's reciprocal tariff policy, which he has pushed against the world, is unlawful. Trump introduced this tariff policy in April last year, citing the need to resolve the trade deficit and revive American manufacturing. Since then, the Trump administration has shaken the global trade order by imposing a 10 percent base tariff across imports into the United States and levying retaliatory taxes targeting specific countries.
But as the highest court determined that the president's unilateral imposition of tariffs exceeded constitutional authority, the administration's momentum for governing took a major hit. According to major outlets, the Supreme Court ruled 6-3 that Trump's sweeping tariff measures on imports exceeded presidential authority and were unlawful. With this ruling, the reciprocal tariffs, which relied on the International Emergency Economic Powers Act for the first time in half a century for tariff purposes, immediately lost their legal basis. Chief Justice John Roberts, who wrote the majority opinion, made clear that "the Constitution vests the power to lay taxes and tariffs only in the legislative branch, Congress."
The Trump administration imposed tariffs by declaring a national emergency under the International Emergency Economic Powers Act of 1977. However, the court found that while the law grants the president authority to regulate imports, it does not include explicit authority to impose tariffs. In particular, it put the brakes on executive overreach by strictly applying the principle that matters with significant impact on the national economy and politics require clear delegation from Congress. The lawsuit began as numerous corporations in the United States and 12 state governments, hit hard by a sudden tariff shock, joined forces. Justice Neil Gorsuch, whom Trump appointed, also wrote in a concurring opinion that "the deliberative nature of the legislative process is a bulwark of liberty," sharply criticizing attempts by the executive branch to bypass Congress.
With a core policy agenda neutralized, Trump immediately pushed back, declaring he would seek alternatives to circumvent the law. Right after the ruling, Trump held an emergency press conference at the White House and blasted the decision as "shameful." He even floated a conspiracy theory that "the justices were unduly influenced by foreign forces." At the briefing, Trump aired his displeasure with economic policy broadly, lashing out at Federal Reserve Chair Jerome Powell as "an incompetent figure who prefers high interest rates for political reasons." He then took to his social media to say that "foreign countries that had been exploiting the United States may be dancing in the streets, but the dance won't last long," again showing his displeasure.
Trump said, "As a new tool to replace existing tariffs, I will invoke Section 122 of the Trade Act of 1974 and impose a new universal 10 percent tariff within three days." He added, "I just signed in the Oval Office a presidential executive order to impose a global 10 percent tariff on every country in the world," and said "the tariffs will take effect almost immediately."
His strategy is to use Section 301 of the Trade Act, which investigates unfair trade practices, and Section 232, which restricts imports for national security reasons, instead of the tariff policy that was ruled unlawful. These two provisions allow the president to issue executive orders directly. However, the effects are temporary and limited. For example, Section 122 is an old clause that allows the president to restrict imports for up to 150 days to address a serious balance-of-payments deficit. Treasury Secretary Scott Bessent claimed, "If we mobilize these alternative provisions, U.S. government tariff revenue this year will be almost unchanged."
The Supreme Court ruling immediately heralds a massive refund upheaval across the U.S. economy. Major business groups such as the U.S. Chamber of Commerce and the National Retail Federation have mounted strong pressure for lower courts to establish clear refund procedures so corporations can receive tariff refunds quickly and smoothly. Erica York, a vice president at the Tax Foundation, estimated that the tariffs collected by the U.S. government under the law deemed unlawful by the court amount to at least $160 billion (about 232 trillion won).
A look at the ruling shows the justices did not provide specific guidance on tariff refunds. Justice Brett Kavanaugh, in dissent, warned that "refunding tens of billions of dollars when importers have already passed the expense on to consumers will be a mess." Martin Heubel, a former Amazon brand manager and consultant, told the Financial Times (FT) that "retail giants will use this ruling as leverage to strongly press for lower wholesale prices," expressing concern. In the Government Bonds market, long-term yields ticked up as expectations spread that the government would increase bond issuance to plug a fiscal gap caused by reduced tariff revenue. Olu Sonola, an economist at Fitch Ratings, said, "With this ruling, more than 60 percent of the tariffs imposed this year will effectively disappear."
With a brake placed on the Trump administration's unilateral tariff drive, uncertainty is set to grow for major trading partners such as Korea, which struck new trade deals with the United States in exchange for tariff exemptions. As the United States loses its negotiating leverage of using tariffs as a weapon to pressure other countries, the international community finds itself needing to swiftly prepare for a reordering of trade dynamics.
Major trading partners that struck new trade deals with the United States in exchange for tariff exemptions have all begun complex recalculations. Korea, along with Japan and the European Union, concluded new trade agreements by pledging massive capital investments in the United States to avoid reciprocal tariffs. Specifically, Korea was pressed for $350 billion (about 507 trillion won), Japan for $550 billion (about 797 trillion won), and the European Union for $600 billion (about 870 trillion won) in investments. However, with the United States losing its negotiating leverage of using tariffs to pressure other countries, the international community finds itself needing to swiftly prepare for a reordering of trade dynamics. There is a strong likelihood of disputes over the legitimacy of existing agreements and demands for full-scale renegotiation. The European Parliament immediately convened an emergency meeting after the ruling to discuss whether to delay implementation of its trade agreement with the United States.
In the stock market, shares of European automobile corporations and luxury corporations such as Stellantis and BMW, which had struggled under America's high tariff walls, rose across the board. Canadian Trade Minister Dominic LeBlanc welcomed the ruling, saying it "clearly supports Canada's position that U.S. tariff impositions are not justified." Ontario Premier Doug Ford also called it "an important victory in the fight against President Trump's tariffs," adding, "We will watch the White House's follow-up steps." In Korea, Yeo Han-koo, head of the Office of the Minister for Trade at the Ministry of Trade, Industry and Resources, previously said during a visit to the United States that, if a ruling invalidating reciprocal tariffs were to come down, Korea should observe how other countries that reached agreements with the United States respond and make the best decision depending on the situation, expressing a cautious stance.
The U.S. political sphere showed sharply divided reactions to the judiciary's check on the expansion of executive power. Rep. Don Bacon, a Republican, welcomed the ruling, saying, "The checks-and-balances system set by the Constitution worked perfectly." Mike Pence, who served as vice president in the first Trump administration, likewise hailed the decision as "a great victory for the separation of powers."
By contrast, Sen. Bernie Moreno, a close ally of Trump, called the ruling "ridiculous" and argued that "Congress should directly step in and immediately codify President Trump's tariff policy." Democratic Sen. Elizabeth Warren jabbed that "not even the Supreme Court's ruling can undo the massive economic wounds left by Trump's tariffs." Fiscal conservatives, who emphasize fiscal soundness, voiced deep concern that the evaporation of tariff revenue could push U.S. national liability close to $2 trillion.
Experts assessed that the Trade Act's Sections 301 and 122, which Trump has put forward as alternatives, have short application windows and complex investigative procedures, making it realistically difficult to achieve tariff impositions as comprehensive and immediate as before. In the end, the more the Trump administration tries to forcibly extend its protectionist stance by constantly probing for new legal loopholes, the more global trade uncertainty is expected to remain at a peak for some time.