US President Donald Trump on Friday pledged to impose a new 10 per cent global tariff after the US Supreme Court struck down his sweeping emergency duties.
In its 6-3 ruling, the Supreme Court said Mr Trump did not have the power to impose tariffs under the International Emergency Economic Powers Act (IEEPA), which grants the President power to regulate economic transactions upon declaring a national emergency.
Mr Trump first invoked IEEPA powers when he unilaterally imposed tariffs on Canada, China and Mexico last February over accusations that they did not do enough to halt the flow of fentanyl into the US.
He again invoked IEEPA when imposing his sweeping universal tariffs on what he called 'liberation day' in April, in an announcement that challenged global trading norms.
Chief Justice John Roberts said granting the President power to unilaterally impose tariffs under IEEPA would be a “transformative expansion” of the office's authority.
“It is also telling that in IEEPA’s half century of existence, no president has invoked the statute to impose any tariffs, let alone tariffs of this magnitude and scope,” he wrote in a majority opinion.
Mr Trump appeared to hold to his tariff plans, calling the court's decision a “disgrace” and vowed to explore other avenues to impose duties on the country's trading partners.
“The good news is that there are methods, practices, statutes and authorities as recognised by the entire court in this terrible decision … that are even stronger to me than the IEEPA tariffs,” he said during a press conference at the White House.
In the weeks leading up to the ruling, the White House had suggested that it had other means at its disposal should the Supreme Court decide against Mr Trump.
Some of those options – such as Section 232 tariffs – have already been used to place levies on sectors such as aluminium, copper, steel, furniture and car parts. The court did not rule on Section 232 tariffs.
Mr Trump had quoted Section 122 to impose the new 10 per cent global tariff.
He also mentioned Section 301, under which the White House can impose tariffs on products from a trading partner only after the US Trade Representative conducts an investigation and confirms unfair trading practices. Mr Trump's administration has so far initiated Section 301 investigations into Brazil and China.
Mr Trump has framed the use of tariffs in existential terms, arguing they were essential for national security and would help boost domestic manufacturing.
His administration has also used the threat of tariffs to push for trade agreements with partners such as the European Union, South Korea, India and Japan. A deal with China remains elusive.
Speaking to reporters, Mr Trump said foreign countries were “ecstatic” over the court's ruling and they had been “ripping off” the US for years. He made a similar allegation in the run-up to his tariff announcement last year.
“They're so happy, and they're dancing in the streets, but they won't be dancing for long. That I can assure you,” he said.
Despite the tariffs, the US trade deficit fell only modestly last year. Data released by the Commerce Department on Thursday showed the US ran a $901.5 billion trade deficit in 2025, a year-on-year decline of 0.2 per cent from 2024.
Wall Street rebounds
Stocks rose following the Supreme Court's ruling, with the Dow Jones Industrial Average closing 230 points, or 0.47 per cent, higher. The S&P 500 gained 0.69 per cent, while the Nasdaq Composite advanced 0.9 per cent.
Karl Schamotta, chief market strategist at Corpay, said the decision should reduce uncertainty for corporations and investors, and drive a “modest compression” in currency volatility.
“The threat of abrupt and unilateral changes in US tariff rates has been a persistent source of volatility premia in foreign exchange, particularly for export-sensitive currencies,” he wrote to clients.
On 'liberation day' last year, as well as placing a universal 10 per cent tariff on almost all trading partners, Mr Trump also imposed harsher “reciprocal tariffs” on dozens of other countries where the US had large trade deficits.
The April announcement brought an era of uncertainty into the global outlook and threatened to rupture international trade norms, while also opening new points of tension between the US, its allies and its rivals.
The effective US tariff rate has jumped extensively since Mr Trump retook office in January 2025. The Supreme Court's ruling effectively drops the average US tariff from 15.3 per cent to 8.3 per cent, according to Global Trade Alert.
Despite earlier fears of a global downturn, recent forecasting from the International Monetary Fund projected global growth to pick up at a 3.3 per cent pace this year, revised slightly up from its projection over the summer.
During arguments in November, the Supreme Court had appeared sceptical about the legality of the tariffs, with Mr Roberts calling tariffs an “imposition of taxes” on Americans, which is under the power of Congress.
Refund 'mess'
The court's ruling also casts in question how the US will pay back revenue it collected from the tariffs. The administration now faces having to refund more than $133.5 billion in tariffs to importers, according to most recent data from the Customs and Border Protection agency.
Heading into the court's decision, it was unclear if the justices would order refunds or defer the issue to lower courts or the federal government.
Two questions that appeared unresolved were whether importers who paid the tariffs would be entitled a refund and, if so, what that process would look like.
And while the court ruled against Mr Trump's use of IEEPA powers, it declined to rule on the refund process. Justices struggled with the practicality of the refund process during November's arguments, with conservative justice Amy Coney Barrett saying it would be a “mess”.
In his dissenting opinion, Justice Kavanaugh, another member of the court's conservative bloc, suggested the refund process could make the court's decision “substantial”.
“The United States may be required to refund billions of dollars to importers who paid the IEEPA tariffs, even though some importers may have already passed on costs to consumers or others,” he wrote.
Speaking at a separate event before the Economic Club of Dallas, Treasury Secretary Scott Bessent said the Supreme Court did not provide instructions on how to handle the refunds.
“My sense is that could be dragged out for weeks, months, years,” he said. Mr Bessent also said Treasury estimates the alternative tariff methods “will result in virtually unchanged tariff revenue in 2026".
Canada and UK react
The Supreme Court's ruling reverberated throughout global politics, with some countries at the heart of Mr Trump's tariff saga giving early reactions.
The UK, the first country to reach a trade deal with the US after Mr Trump's liberation day announcement, said it expects its “privileged trading position” with the US to continue, Reuters reported.
The Canadian Chamber of Commerce said the country should prepare for different methods the US might use to impose tariffs, Reuters reported. Trade tension has caused a rift between the two countries since Mr Trump returned to office.
A large majority of imports from Canada and Mexico have been exempt from Mr Trump's fentanyl-related tariffs because of the Canada-US-Mexico Agreement on free trade. That agreement is scheduled for joint review in the summer.
The Swiss government said it would assess the specific effects of the tariff ruling, while Germany's chamber of commerce acknowledged that the White House can impose tariffs through other avenues.
