Majority ruled six to three to dismantle core Trump policy
The U.S. Supreme Court has struck down President Donald Trump’s sweeping “Liberation Day” global tariffs, abruptly dismantling a core pillar of his second-term economic strategy.
The decision centered on whether the administration could use the International Emergency Economic Powers Act (IEEPA) to impose across-the-board tariffs of at least 10%—and up to 50% for some countries—on imports from nearly all major trading partners. Lower courts had previously ruled that IEEPA did not authorize such broad, revenue-oriented duties and that the approach raised serious concerns.
The law that underpins those import duties “does not authorize the President to impose tariffs,” the majority ruled, according to CNBC.
In the majority opinion for Learning Resources, Inc. v. Trump, Chief Justice John Roberts said Trump "asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration and scope," but that "in light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorization to exercise it."
This ruling forces an abrupt reset of U.S. trade policy and removes—at least temporarily—hundreds of billions of dollars in expected tariff revenue that had been partially earmarked to offset tax cuts and fund Trump’s proposed “tariff dividend” for households.
The decision also marks a dramatic twist in a US-Canada trade war that began shortly after Trump took office last January and that has plunged the Canadian economy into crisis.
Trump's move to impose levies on Canadian imports sparked fears of mass layoffs and a sharp economic downturn north of the border.
Messy refund process ahead
For the Canadian legal community, the ruling triggers an immediate shift from trade defense to an arduous recovery phase. Economists estimate that the U.S. government may have to refund more than $175 billion collected globally since 2025.
William Pellerin, an international trade lawyer at McMillan LLP, cautioned that while the ruling is a victory, the path to reclaiming duties will be difficult.
"I think we're in for a very messy time in terms of what will happen at the border with the tariffs that companies have paid, and whether or not people will be able to get their tariff refunds back," Pellerin said. He noted that despite some modernizations, the U.S. refund system remains quite archaic.
Adam Taylor, of NorthStar Public Affairs, echoed the sentiment, stating, "It's going to be an administrative nightmare as well, because you'll see manufacturers, retailers, and consumers all saying: these were collected illegally, I should see some money back."
Economic impact for Canada
While the ruling removes a significant burden from many Canadian exporters, experts warn that it is not a total reprieve.
Randall Bartlett, deputy chief economist at Desjardins, noted that the decision does not affect tariffs imposed under other authorities. It doesn't include things like steel and aluminum that are covered under Section 232, Bartlett said. He described the impact as unambiguously positive for the Canadian economy, but added it was not really clear that it's going to have any substantive magnitude of an impact given the tools the U.S. administration still has at its disposal.
The ruling specifically targets the use of IEEPA—a law traditionally used for freezing assets or imposing sanctions—as a tool for broad trade taxes. However, U.S. officials have already signaled they may attempt to maintain the tariff framework using other statutes, such as Section 232 or Section 301.
"If the Supreme Court strikes it down, it really does send a big message... that these tariffs, really were not permissible, Pellerin said. "And hopefully, it will give the U.S. administration pause... though I think we are going to see a continued use of tariffs, and that's unfortunate."
