Supreme Court Rules on Trump Tariffs

The Supreme Court ruled on Friday that the International Emergency Economic Powers Act (IEEPA) does not give President Donald Trump the power to impose tariffs during peacetime, striking down sweeping tariffs he put in place last year, which affected “most products,” including “automobiles and parts” coming from over 70 countries around the world, according to the Library of Congress and Federal Register.

“The Government thus concedes, as it must, that the President enjoys no inherent authority to impose tariffs during peacetime. And it does not defend the challenged tariffs as an exercise of the President’s warmaking powers. The United States, after all, is not at war with every nation in the world,” Chief Justice of the Supreme Court John G. Roberts, Jr. said upon delivering the Court’s main opinion.

The case, Learning Resources, Inc., et al. v. Trump, President of the United States, et al., sought to determine whether the IEEPA authorizes the president to impose tariffs. The Court, which began hearing the case Nov. 5, ultimately voted 6-3 that Trump exceeded his authority by using a law reserved for national emergencies to impose tariffs without “clear congressional authorization to exercise it.”

“The Framers gave ‘Congress alone’ the power to impose tariffs during peacetime,” the Court’s opinion stated.

In its analysis, the Court consistently found discrepancies with the “unlimited amount, duration, and scope” of the tariffs that Trump imposed under the IEEPA, noting, “When Congress has delegated its tariff powers, it has done so in explicit terms, and subject to strict limits.” It also found it “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.”

“The President’s assertion here of broad ‘statutory power over the national economy’ is ‘extravagant’ by any measure,” the Court stated.

While the Court recognized the president enjoys “‘independent constitutional power[s]’ over foreign affairs ‘even without congressional authorization,’” it held strong in its judgment that “the President and Congress do not ‘enjoy concurrent constitutional authority’ to impose tariffs during peacetime.”

Although “IEEPA authorizes the President to ‘investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit … importation or exportation,’” the Court noted, “absent from this lengthy list of powers is any mention of tariffs or duties.” It interpreted “regulate” in that context to mean “to subject to governing principles or laws” via Black’s Law Dictionary 1156. It also noted IEEPA does not include the power to tax, which is essentially how the Court viewed the tariffs because “tariffs operate directly on domestic importers to raise revenue for the Treasury.”

“None of IEEPA’s authorities includes the distinct and extraordinary power to raise revenue,” the Court stated.

How Tariffs Impacted the US Tire Industry

With over 60% of tires in the United States being imported, according to MTD data, Trump’s tariffs imposed under the IEEPA had a significant impact on the industry. Trump imposed tariffs on the top nine countries from which the U.S. imports passenger and consumer tires and the entire top 10 for medium truck tire imports, according to MTD’s 2025 Facts Issue and the Federal Register.

Tariffs imposed on Thailand, Mexico, Cambodia, Vietnam, Canada, Indonesia, South Korea, Japan and the Philippines — the top nine countries for passenger and consumer tire imports — ranged from 15% to 35%. Chile was the 10th and only country listed in MTD’s top 10 that was not impacted. Canada experienced the highest tariffs, starting at 25% and increasing to 35% in August last year, according to the Library of Congress. Mexico also saw a 25% tariff. Vietnam saw a 20% tariff. Thailand, Cambodia, Indonesia and the Philippines were hit with 19% tariffs. South Korea and Japan saw 15% tariffs. Vietnam, Indonesia and Japan all saw their tire imports to the U.S. decrease by more than 13% last year.

Canada saw a 1.7% decrease in passenger tire imports and a 2.6% decrease in consumer tire imports, which includes light truck tires in addition to passenger tires, in 2025. However, it was hit hardest in medium truck tire imports, seeing a 13.3% drop.

Thailand also saw a decrease in medium truck tire imports, recording a 7.1% dip.

Tariffs imposed on the top 10 countries for medium truck tire imports — Thailand, Vietnam, Japan, Cambodia, Canada, China, Brazil, India, South Korea and Pakistan — ranged from 10% to 35%. Aside from Canada, India was hit the hardest with a 25% tariff. China’s rate fluctuated between 10% and 20%, jumping from 10% to 20% last spring and dropping back to 10% in November, following trade talks with Trump. Pakistan saw a 19% tariff and Brazil saw a 10% tariff.

What’s Ahead

Although the Supreme Court struck down the tariffs Trump imposed via the IEPPA, financial analysts warn they are just part of the overall tariff picture and are unsure whether the Court’s decision will significantly impact the retail space. Notably, the Court’s decision does not impact the 25% tariff on imports of automobiles and certain automobile parts that Trump imposed last March, invoking Section 232 of the Trade Expansion Act of 1962, according to The White House’s official proclamation.

“This morning the Supreme Court ruled in a 6-3 decision that President Trump exceeded his powers by imposing tariffs without clear authorization from Congress. To be clear, this specifically impacts the reciprocal International Emergency Economic Powers Act (IEPPA) tariffs, which are just one layer of the overall tariff picture. We view this as a modest net positive for the space, but would argue the decision was largely expected and mostly priced in. The Trump administration has also made clear that they have alternative options to impose levies, which they would look to exercise in the event of this outcome. While some retailers might see some relief based on what workarounds come to fruition, we'd argue the cost outlook for the majority of the retail space is unlikely to change significantly (and these workarounds are likely to be significantly more complex). Within our coverage, we estimate WSM (Williams-Sonoma), PRTS (CarParts.com), ORLY (O’Reilly Automotive), TGT (Target), HD (Home Depot), LOW (Lowe’s), WMT (Walmart), and AAP (Advanced Auto Parts) have been most impacted by total tariffs (not just IEEPA),” RBC Capital Markets, LLC analyst Steven Shemesh wrote in a recently-released report.

Additionally, the Trump administration announced a plan to impose a temporary 10% “global tariff,” following the Court’s announcement, under Section 122 of the Trade Act of 1974, a provision that allows the president to impose temporary import surcharges (tariffs) of up to 15% for up to 150 days without a formal investigation requirement when there are “fundamental international payments problems” or related concerns, according to the Library of Congress.

No information has been released at this time regarding what will be done to potentially refund the tariffs that have already been collected.