The Supreme Court delivered a stunning rebuke to the Trump administration's trade policy Thursday, ruling that the president's sweeping global tariffs exceeded his constitutional authority—and immediately putting more than $175 billion in collected duties at risk of refunds.
In a 6-3 decision, the Court found that the president lacked the legal authority to impose blanket tariffs on all imports without explicit Congressional approval, striking down the emergency trade measures that had been in effect since early 2025. The ruling invalidates tariffs that affected virtually every product entering the United States, from automobiles to consumer electronics.
The numbers don't lie, but executives sometimes do. In this case, the Treasury Department will face uncomfortable questions about $175 billion already collected from American importers—funds that companies like Costco and over 1,000 other firms are now positioning to recover.
The decision, however, failed to resolve what Fortune called "the $200 billion question": who gets their money back, and when? While the Court struck down the tariffs as illegal, it punted the refund mechanics back to the Court of International Trade, where resolution could take months.
Trump's Immediate Pivot
Within hours of the ruling, Trump announced he would impose a new 10% global tariff using different legal authority—specifically Section 301 of trade law, which allows targeted tariffs on specific countries or products based on alleged unfair trade practices.
The pivot represents more than tactical maneuvering. It signals that the administration views the Court's decision not as a defeat on trade policy, but as a procedural obstacle requiring new paperwork. "We have other options," a White House official stated, "and we're going to use them."
The new 10% tariff, while lower than some of the previous rates, would still apply broadly across trading partners. Legal experts suggest this approach may survive constitutional scrutiny because it relies on established statutory frameworks rather than emergency powers.
The Refund Conundrum
For businesses, the refund question looms larger than any new tariff announcement. Companies that paid duties under the now-illegal framework face a murky path to recovery:
First, U.S. Customs will likely continue collecting tariffs for days or weeks until a formal injunction halts the practice. Second, firms must navigate the Court of International Trade to claim refunds—a process legal experts say "will very likely take months."
Third, and most troubling for businesses: the Trump administration initially suggested it wouldn't oppose full refunds, but government lawyers have since signaled concern that "repaying the full amount would be a massive blow to the Treasury." That sets up a potential fight where the administration could challenge refund orders, possibly escalating the dispute back to the Supreme Court.
Corporate Strategy in Uncertainty
Savvy companies saw this coming. Costco and over 1,000 other firms filed preliminary lawsuits in December to preserve refund rights before Customs finalized collection amounts. Those early movers now have stronger legal positions to recover payments.
The broader economic impact extends beyond refunds. Markets initially rallied on the Supreme Court news, with the Dow, S&P 500, and Nasdaq all posting weekly gains. But the celebration proved short-lived once Trump announced the replacement tariff.
For multinational corporations with complex supply chains, the ruling creates whiplash: do they prepare for refunds on old tariffs while simultaneously planning for new ones? The answer, frustratingly, is yes.
Constitutional Commerce Clause at Stake
The Court's majority opinion centered on the Constitution's Commerce Clause, which grants Congress—not the president—authority to regulate international trade. While presidents have emergency powers under certain statutes, the Court found that blanket global tariffs without Congressional authorization exceeded those bounds.
The decision doesn't eliminate presidential tariff authority entirely. Section 301 powers, national security provisions under Section 232, and anti-dumping measures remain available tools. But the ruling makes clear that unilateral, across-the-board taxation of all imports requires legislative action.
For investors and executives, the takeaway is stark: trade policy volatility isn't ending—it's evolving. The $175 billion refund question, whenever resolved, will be the largest trade-related government payment in American history. Companies should lawyer up and prepare for a long fight to get their money back.
