The US Supreme Court has dealt a major blow to President Donald Trump’s trade agenda, ruling that he exceeded his authority when he used emergency powers to impose sweeping tariffs on imports from around the world, including Canada, China and Mexico.
The decision, handed down Friday, finds that Trump overstepped when he invoked the 1977 International Emergency Economic Powers Act (IEEPA) to levy broad, open‑ended duties that the administration said were aimed at curbing illegal drugs and other threats.
The ruling does not strike down all of Trump’s tariffs, but it invalidates those imposed under IEEPA and sharply curbs the president’s ability to use that statute as a catch‑all trade weapon. The Constitution assigns tariff‑setting authority to Congress, and the court held that IEEPA – which does not expressly mention tariffs – cannot be stretched to support global duties of unspecified scope and duration.
Lower courts had already ruled against the administration, and both sides asked the Supreme Court for a definitive answer. During arguments, justices from across the ideological spectrum signalled skepticism. The chief justice noted that “the imposition of taxes on Americans” has always been “the core power of Congress,” while other justices pressed the administration on the absence of any reference to tariffs in the statute’s text.
The law allows the president to “regulate” imports and exports when there is an “unusual and extraordinary threat” to the nation. Until Trump’s second term began in January, no president had used IEEPA to impose tariffs, and the court concluded that the administration’s expansive reading went beyond what Congress intended when it passed the law nearly 50 years ago.
The now‑invalidated measures include Trump’s sweeping “reciprocal” tariffs and levies on key trading partners framed as part of an effort to halt drug flows. The decision comes as the White House has been seeking to expand tariff use further, including in an attempt to pressure European governments to back Trump’s controversial bid to gain control of Greenland.
The ruling is a rare defeat for the administration at a court that has had a solid conservative majority since Trump began his second term. It also resets the balance of power over trade policy, reasserting Congress’s central role in setting tariffs and limiting the president’s ability to invoke emergency economic powers to reshape global commerce.
While the immediate impact will be felt in Washington and world capitals, the decision also has implications for insurers and their clients. The unwinding of IEEPA‑based tariffs, and the clearer limits on unilateral emergency duties, could:
However, the ruling does not remove broader geopolitical and trade tensions, and other tariffs remain in place under different authorities. Insurers writing political risk, trade disruption, marine cargo and business interruption coverage will still need to account for a volatile global environment – but Friday’s decision may narrow one of the most unpredictable channels for sudden tariff shocks.
