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J.D. Tuccille: Trump's trade war on America's own consumers merely weakened

The average effective tariff rate will still be 9.1%, though that's down from 16.9%

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U.S. President Donald Trump’s trade war against American consumers (and Canada and the rest of the world) isn’t over, but it just suffered a major setback. In a 6-3 decision, the U.S. Supreme Court ruled that the law on which the president relied to unilaterally impose high tariffs without seeking congressional approval awards him no such authority. With two of the three justices Trump appointed to the high court joining the decision, it’s a decisive blow against the Trump administration’s neo-mercantilist trade policies and also against the growth of executive power, which has been stretched beyond constitutional bounds by presidents from both major political parties.

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For the majority in the case of Learning Resources Inc. v Trump, brought by small toy manufacturers that claimed harm from the administration’s tariff policies, Chief Justice John Roberts wrote, “the Government reads IEEPA (International Emergency Economic Powers Act) to give the President power to unilaterally impose unbounded tariffs. On this reading, moreover, the President is unconstrained by the significant procedural limitations in other tariff statutes and free to issue a dizzying array of modifications at will. All it takes to unlock that extraordinary power is a Presidential declaration of emergency, which the Government asserts is unreviewable.“

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After extensive consideration of the federal government’s position as well as the challenges brought by the plaintiffs, Roberts concluded, “IEEPA’s grant of authority to ‘regulate . . . importation’ falls short. IEEPA contains no reference to tariffs or duties. The Government points to no statute in which Congress used the word ‘regulate’ to authorize taxation… we hold that IEEPA does not authorize the President to impose tariffs.”

The chief justice’s opinion was joined in whole or in part by five other members of the court including Associate Justices Neil Gorsuch and Amy Coney Barrett, both appointed by Trump during his first term, as well as Associate Justices Elena Kagan and Sonia Sotomayor, both appointed by President Barack Obama, and Associate Justice Ketanji Brown Jackson, appointed by President Joe Biden. Roberts was appointed by President George W. Bush. The partisan affiliations of judges aren’t supposed to matter, but of course they do in these politically polarized times. That makes the court’s bipartisan decision especially important.

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President Trump took office in 2017, and then for his second term last year, as a trade warrior who opposes the relatively free global commerce that has connected the world in recent decades. He objected to the trade deficit, which examines the relative value of imports and exports. His position put him at odds with most economists and with the hard data about economic conditions. Free trade, along with free markets and reliable property rights, is credited as a significant driver of the enormous reduction in poverty from 2.3 billion people living below the poverty line in 1990 to 831 million in 2025, even as the population has increased.

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“The proponents of quotas say, ‘Free trade is fine in theory but it must be reciprocal. We cannot open our markets to foreign products if foreigners close their markets to us,’” prominent economist Milton Friedman objected in the 1970s to the sort of arguments made by Trump, decades before the current president raised them. “The argument sounds reasonable. It is, in fact, utter nonsense. Exports are the cost of trade, imports the return from trade, not the other way around.”

In fact, even by President Trump’s standards, his policies didn’t achieve their goal. The U.S. trade deficit, for those who care about such things, barely budged last year, according to the U.S. Census Bureau.

What did move were costs for Americans. Those increased as a direct result of the tariffs President Trump imposed under the IEEPA authority just knocked down by the Supreme Court. According to the Tax Foundation, “The Trump tariffs amount to an average tax increase per U.S. household of $1,000 in 2025 and $1,300 in 2026.” The analysis, published earlier this month, also pointed out that “The Trump tariffs are the largest U.S. tax increase as a per cent of GDP (0.54 per cent for 2026) since 1993.”

Yes, despite claims to the contrary by the Trump administration and its supporters, tariffs are taxes that fall primarily on domestic consumers.

“Over the course of 2025, the average tariff rate on U.S. imports increased from 2.6 to 13 per cent,” noted the Federal Reserve Bank of New York’s Mary Amiti, Chris Flanagan, and Sebastian Heise, joined by Columbia University’s David E. Weinstein, in a write-up published last week. “We find that nearly 90 per cent of the tariffs’ economic burden fell on U.S. firms and consumers.”

So, the U.S. Supreme Court’s decision could stand as a huge boon for affordability — a big concern after Biden-era inflation even before Trump’s tariffs. That is, it could be a boon for affordability if the tariffs actually go away rather than reappearing under new authority. The White House has already threatened to invoke other legal grounds for trade actions, such as Section 301 of the 1974 Trade Act. But that law doesn’t offer a clear path for unilateral authority, which is why it wasn’t the administration’s go-to.

“Section 301 comes with constraints — particularly with regard to speed and applicability,” the Atlantic Council’s Sophia Busch commented last November. “Section 301 duties cannot be applied instantly or without a comprehensive assessment.”

That said, even after the Supreme Court ruling, tariffs remain higher than before Trump. The Yale Budget Lab cautions that, in the absence of IEEPA authority, the average effective tariff rate will be 9.1 per cent, still the highest rate since 1946. But that’s better than the 16.9 per cent that would have prevailed.

There’s also the problem of unraveling what to do about all the revenue Trump boasted of having collected under authority now voided by the Supreme Court.

“The court’s decision is welcome news for American importers, the United States economy, and the rule of law, but there’s much more work to be done,” the Cato Institute’s Scott Lincicome warned in an emailed statement. “Most immediately, the federal government must refund the tens of billions of dollars in customs duties that it illegally collected from American companies pursuant to an ‘IEEPA tariff authority’ it never actually had.” He added that further litigation would almost certainly be required.

But unwinding the damage caused by protectionism is a separate matter from stopping the president unilaterally imposing that policy. For the moment, America’s chief executive has been restrained.

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