The U.S. Supreme Court has ruled that former President Donald Trump went too far when he used emergency powers to impose broad tariffs on imports from countries like Canada, China, and Mexico. The decision, released on Friday, says Trump exceeded his authority by invoking the 1977 International Emergency Economic Powers Act (IEEPA) to enforce these wide-ranging duties.
This ruling doesn’t eliminate all of Trump’s tariffs, but it invalidates those based on the IEEPA. The court emphasized that setting tariffs is a power reserved for Congress. Since the IEEPA does not specifically mention tariffs, the president cannot use it to impose global trade duties without clear limits. Before this case, no president had used the law in this way, and the court determined that using it to justify large-scale tariffs goes beyond what lawmakers intended nearly 50 years ago.
Lower courts had previously ruled against the Trump administration, and both sides asked the Supreme Court to give a final answer. During the hearing, justices expressed doubts about the administration’s interpretation. The Chief Justice pointed out that taxing Americans has always been a core function of Congress, and other justices questioned the lack of tariff references in the IEEPA.
Some of the tariffs invalidated include Trump’s “reciprocal” tariffs aimed at halting drug trafficking. The ruling arrives as the White House was pushing to expand tariff use further, including efforts to influence European countries in support of Trump’s bid for Greenland.
This decision marks a rare loss for the Trump administration at a court with a strong conservative majority. It reaffirms Congress’s role in trade policy and limits the president’s ability to use emergency powers to make sweeping changes in global trade.
The ruling also has implications beyond Washington. For insurers and their clients, it could ease pressure on companies that rely heavily on imports. Sudden, hard-to-price tariffs had squeezed these sectors, creating challenges for trade credit, surety, and supply-chain insurance. Removing the IEEPA-based tariffs may bring some stability and reduce legal uncertainty. It also shifts trade risks back to formal, legislative processes, allowing businesses and insurers more time to prepare for changes.
However, the court’s decision does not end broader trade tensions or other tariffs that remain under different laws. Insurers covering political risks, trade disruptions, marine cargo, and business interruptions still face a volatile global market. But this ruling may put a lid on one source of unpredictable tariff shocks.