What Supreme Court ruling against Trump tariffs means for your money
People march outside the U.S. Supreme Court building to attend oral arguments on President Donald Trump’s bid to maintain broad tariffs after lower courts ruled that Trump overstepped his authority on Nov. 5, 2025, in Washington.
Nathan Howard | Reuters
The Supreme Court struck down the centerpiece of President Donald Trump’s tariff agenda on Friday, and that could be good news for consumers’ wallets, economists say.
But economists said much of the financial impact will depend on what the Trump administration does next.
A tariff is a tax on imports. The tariffs imposed by Trump affect a wide range of goods, such as furniture, clothing, food, electronics and automobiles. more expensiveAccording to Yale University Budget Lab.
“Ultimately, this came out as a price increase for consumers,” said Rathna Sharad, CEO of cross-border shipping and logistics firm FlavorCloud.
In a study published on February 6, the Tax Foundation found that Trump’s tariffs It will cost every US household $1,000 in 2025 and will cost each household $1,300 by 2026.
Economists now say consumers’ cost burden may decrease.
The Yale Budget Lab predicted Friday that the cost of tariffs for the average household will drop by about half in 2026, to about $600 to $800, because of the Supreme Court decision, according to John Ricco, the group’s deputy director of policy analysis. The remaining half arises from other tariffs on the books that are not affected by the Supreme Court decision.
These costs fall harder According to the analysis, lower-income households see higher increases than higher-income households.
The Tax Policy Center predicted in December that the cost of tariffs to households would increase if the Supreme Court ruled against Trump $1.4 trillion will decrease in 10 yearsand will save families an average of $1,200 in 2026.
But the Yale Budget Lab and Tax Policy Center’s analysis assumes that the court-ordered tariffs are not replaced by other tariffs. Trump administration officials have previously said they would impose new taxes using different legal avenues to achieve roughly the same result.
What might be next for tariffs?
Trump used the 1977 International Emergency Economic Powers Act (IEEPA) to impose broad tariffs on U.S. trading partners, pushing the country’s tariffs back to World War II. It reached its highest level since World War II. This was the first time a president used the law to raise taxes.
In a 6-3 decision, the high court ruled that IEEPA does not give the president the authority to impose tariffs.
“The government is reading IEEPA to give the President the power to unilaterally impose unlimited tariffs and change them at will.” opinion of the court Learning Resources, Inc. – In the Trump case.
“This opinion would represent a transformative expansion of the President’s authority over tariff policy,” according to the opinion. “This also shows that in IEEPA’s half-century of existence, no President has invoked the law to impose any tariffs, let alone tariffs of this size and scope.”
When announcing the tariffs last year, Trump said: illegal drug influx Outbreaks from Canada, Mexico, and China had created a public health crisis, and large and persistent trade deficits had undermined U.S. manufacturing.
Declared a national emergency and used IEEPA to impose tariffs on imports to manage perceived crises; This includes a 10% base tariff on all U.S. trading partners and higher duties on select countries.
Before the decision, the Trump administration said that if the Supreme Court struck down the IEEPA tariffs, it would use other means to impose new tariffs and get to the “same place.”
Just hours after the Supreme Court ruling, Trump said he would sign an executive order imposing a new 10% “global tariff.” Trump will leverage Section 122 of the 1974 Trade Act to do this.
Section 122 limits the maximum tariff rate to 15% for only 150 days, but that can be done without congressional approval, Paul Ashworth, chief North American economist at Capital Economics, wrote in a research note Friday.
Trump could then also invoke Section 338 of the 1930 Smoot-Hawley Tariff Act, which allows the president to impose tariffs of up to 50 percent on countries that “discriminate” against the United States, Ashworth wrote. But he said such a move would also likely lead to legal challenges.
Or, Ashworth wrote, the president could rely on “old tariff workhorses,” such as Section 232 of the Trade Expansion Act of 1962, based on national security grounds, and Sections 201 and 301 of the Trade Act of 1974, based on anticompetitive grounds.
Indeed, the Trump administration used Section 232 to impose product-specific tariffs on steel, aluminum, copper, auto, truck, and wood products.
Consumers will still feel some tariff burden
Before the Supreme Court decision, the average U.S. effective tariff rate was 16.9%, the highest level since 1932, according to Ricco of the Yale University Budget Lab.
According to Capital Economics, without IEEPA tariffs and accounting for the implementation of the new 10% global tariff, the effective tariff rate is now 12%; That rate is still significantly higher than the roughly 2% rate before Trump began his second term.
If Trump had not announced a new tariff on Friday, the rate would have been 9.1%, according to Budget Lab.
The consumer burden hasn’t fallen to zero because the Trump administration already has other tariffs based on different legal authorities, many of which stand on firmer legal ground, economists said.
Tariffs still on the books affect households differently depending on income, economists said.
For example, according to the Yale Budget Lab, the bottom decile for income will lose $430 due to tariffs in 2026; That works out to about 1.1% of their after-tax income. By comparison, the top decile of households would lose about $1,800, accounting for a smaller share of their income (about 0.8%), according to the analysis.
It was determined that consumers felt these price increases the most when purchasing metal products, electronic products and vehicles.
Trump tariff ‘dividends’, consumer refunds unlikely
It is unclear what the decision means Potential tariff rebates the Trump administration may have to pay to businesses and consumers.
“The Supreme Court has not ruled on whether the administration must refund more than $130 billion in tariffs already paid. [IEEPA] The statements will likely trigger a protracted legal battle, Michael Pearce, chief U.S. economist at Oxford Economics, wrote in a note Friday.
FlavorCloud’s Sharad said there are still many unanswered questions about potential tariff refunds, such as who is eligible and how they can apply.
“Refunds are going to be really difficult because this is unprecedented,” Sharad said.
But consumers can be left out of the equation, he said.
“Consumers probably won’t get relief from refunds,” he said. “They will see relief in prices.”
It’s also unclear how the Supreme Court decision will affect the tariff “dividend checks” that Trump has proposed sending to households using tariff revenue.
Moody’s chief economist Mark Zandi said consumers are unlikely to receive such checks. That would be the case even if the Supreme Court ruled in favor of the Trump administration, he said.
“This requires legislation and I don’t think Congress would approve it,” Zandi said in an email. he said.
