Supreme Court Weighs Legality of Tariffs

As global supply chains remain strained and tariff policies continue to shift, the U.S. Supreme Court is now reviewing the legality of former President Trump’s broad tariff actions—a case that could reshape presidential power over trade and carry significant economic implications. The ruling will decide whether the International Emergency Economic Powers Act (IEEPA) allows presidents to impose tariffs without congressional approval.

Our Tariff Support Team has been actively assisting clients with mitigation strategies and monitoring the case closely. Below, we outline the key issues before the Court and the potential outcomes that businesses should prepare for.

The foundational argument of the case

The Supreme Court is being asked to decide not only whether a president can use emergency powers to influence trade, but also how far those powers should reach in shaping the U.S. economy. The outcome could redefine the balance of authority between Congress and the executive branch, an issue with implications far beyond trade policy.

Specifically, the Court is evaluating two questions:

1. Does IEEPA authorize the president to impose tariffs?
   The law was designed to give the executive branch authority to regulate commerce during national emergencies, primarily to restrict or block transactions, not to levy duties or taxes.
2. If so, does that delegation violate the Constitution by giving the executive branch power reserved for Congress?
   The Constitution grants Congress exclusive authority to “lay and collect taxes, duties, imposts, and excises.” Allowing the president to impose tariffs under IEEPA could blur that constitutional boundary.

Lower courts have already ruled that the tariffs exceeded the powers granted under the IEEPA, reasoning that tariffs represent a fundamental economic policy decision that requires explicit congressional authorization. The Supreme Court’s decision will determine whether those rulings stand, or whether the president retains broad discretion to use emergency powers in shaping trade policy.

Timing and expectations

Initially, legal analysts did not expect a ruling until early 2026, given the complexity and potential precedent-setting implications of the case. However, many believe we could receive a decision much sooner than that. With billions of dollars at stake and broad economic consequences for U.S. manufacturers, importers, and consumers, many now believe the Court may act far sooner possibly within the next several weeks. Below is a more detailed description of the two outcomes.

If the Court rules against the tariffs

A ruling that the tariffs exceeded presidential authority would bring sweeping financial and policy repercussions:

• Alternative legal avenues: The administration could pivot to other trade authorities, such as Section 301 (unfair trade practices) or Section 232 (national security), though these require investigations and stricter procedural compliance.
• Refunds: The federal government could be required to return between $100 billion and $140 billion in tariffs already collected. However, refund procedures would likely be complex, requiring extensive documentation and potentially taking years to resolve.
• Short-Term disruptions: While businesses might welcome refunds, supply chain and pricing uncertainty could persist as all of the changes are factored in.
• Reasserting congressional control: Such a decision would reinforce Congress’s exclusive role in setting trade and tax policy, effectively limiting unilateral executive action in economic affairs.

If the Court upholds the tariffs

If the Court upholds the use of IEEPA for tariffs, the implications could be equally significant:

• Expanded presidential authority: Future presidents could leverage IEEPA to impose broad tariffs without congressional consent, reshaping the balance of trade power in Washington.
• Global trade tensions: U.S. trading partners could view this as a precedent for unilateral economic action, potentially inviting retaliation.
• Legislative countermeasures: Congress may move to amend IEEPA, clarifying that it cannot be used as a tariff authority.

Next steps for business owners

Regardless of the outcome, companies should prepare for continued volatility. Modeling tariff exposure, reviewing refund eligibility, and scenario planning for potential trade realignments will be essential steps. We always recommend meeting compliance needs first, to avoid any financial or legal repercussions.

UHY’s Business Performance Optimization practice continues to support clients in evaluating tariff impacts, identifying recovery opportunities, and adapting supply chains to mitigate risk under evolving trade policies.

For more information or to discuss potential implications for your business, fill out the form on this page.