Supreme Court axes most presidential tariffs
The 6-3 decision focuses on the taxes Trump imposed using an emergency law.
On Friday, the Supreme Court struck down the majority of President Trump's tariffs, ruling that his expanded use of the International Emergency Economic Powers Act (IEEPA) for global trade was unlawful. The decision was a 6-3 ruling, with Justices Kavanaugh, Alito, and Thomas dissenting.
In the ruling, Chief Justice John Roberts writes: “We claim no special competence in matters of economics or foreign affairs. We claim only, as we must, the limited role assigned to us by Article III of the Constitution. Fulfilling that role, we hold that IEEPA does not authorize the President to impose tariffs.”
The court also says that if government interprets IEEPA as giving the president power to "unilaterally impose unbounded tariffs and change them at will," it would represent an explosive expansion of his authority over tariff policy. The Supreme Court notes that in the act's half-century of existence, no president has invoked it to impose tariffs, let alone ones of this "magnitude and scope."
"That 'lack of historical precedent,’ coupled with the breadth of authority that the President now claims, suggests that the tariffs extend beyond the President’s 'legitimate reach,'" the court concludes.
So far, the U.S. Treasury reports that $133 billion has been collected from the IEEPA tariffs, with an estimated $3 trillion expected over the next decade, reports AP News.
Trump pivoted on Friday, announcing plans for a new 10% global tariff on all foreign goods that he would impose via an executive order, and then upping the number to 15% on Saturday, via a post on his Truth Social platform, calling the court's ruling "anti-American," "ridiculous," and "poorly written."
The tariffs would be legal under Section 122 of the 1974 Trade Act, which means they would only be limited to 150 days unless Congress votes to extend them. Section 122 has never been invoked, and is "designed to address short-term emergencies, not long-term trade policies," notes Axios.
After that time period, Trump says the tariffs will be replaced with Section 301, which allows for more permanent taxes, but requires longer investigations before they can be imposed. Section 232, a subsection allowing him to impose tariffs on countries that threaten national security, could also be an option for the president to use, The Hill reports.
For some countries, such as Britain, Australia, Argentina, and Saudi Arabia, Trump’s new 15% tariff will be higher than the rates previously applied to their exports to the U.S. For others such as China, Vietnam, India, and Brazil, the new rate will be much lower, says The New York Times. The new tariff does have exemptions, notably beef and other agricultural products, which the president had previously spared from tariffs to keep prices steady.
What does this mean for snack, bakery, and candy manufacturers? On Friday, the American Bakers Association said:
"The American Bakers Association (ABA) recognizes today’s U.S. Supreme Court decision that the International Emergency Economic Powers Act (IEEPA) does not authorize the Administration to impose tariffs. This ruling provides important clarity to the commercial baking industry.
Commercial bakers rely on integrated global supply chains for ingredients, packaging, and equipment. Tariffs imposed under IEEPA have added significant costs across the sector, affecting jobs, wages, and the affordability of baked goods for American families. According to ABA research, tariffs have added an estimated $744 million annually to the cost of imported ingredients and supplies.
ABA looks forward to continuing to work with policymakers to support a stable, competitive commercial baking industry."
What are your thoughts on the new tariffs and the Supreme Court decision, and how will it affect your business? Feel free to drop me a line at ParkerKuhnE@bnpmedia.com.
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