What the Supreme Court ruling against Trump tariffs means for your money

The Supreme Court struck down a centerpiece of President Donald Trump's tariff agenda on Friday, ruling that the International Emergency Economic Powers Act of 1977 (IEEPA) doesn't authorize the president to impose broad tariffs. This decision in the case Learning Resources, Inc. v. Trump was made by a 6-3 vote and rebuked one of Trump's signature economic policies that had raised the nation's tariff rate to its highest since before World War II. The tariffs had been imposed as part of Trump's response to what he described as public health crises related to illegal drugs from Canada, Mexico and China, and trade deficits undermining U.S. manufacturing. The ruling represents a significant limitation on presidential authority over trade policy, as the court noted that in IEEPA's half century of existence, no president had previously invoked it to impose tariffs. The decision is expected to provide relief to American consumers who have shouldered the financial burden of Trump's tariffs, which have made a wide range of goods including furniture, clothing, food, electronics and cars more expensive. According to analyses from the Yale Budget Lab and the Tax Policy Center, the cost of tariffs to households could fall by $1.4 trillion over 10 years, with families potentially saving an average of $1,200 in 2026 alone. Before the ruling, the Tax Foundation estimated Trump's tariffs were costing each U.S. household $1,000 in 2025 and projected to cost $1,300 in 2026. The Yale Budget Lab now estimates the cost will drop by about half in 2026, to about $600 to $800 per household, though this assumes the tariffs aren't replaced with new ones. However, the financial impact of the Supreme Court ruling will depend significantly on what the Trump administration does next. Just hours after the decision, Trump announced he would sign an executive order imposing a new 10% "global tariff" using Section 122 of the 1974 Trade Act. Economists predict Trump may also later invoke other authorities like Section 338 of the 1930 Smoot-Hawley Tariff Act or rely on existing tariff provisions like Section 232 of the 1962 Trade Expansion Act (national security grounds) and Sections 201 and 301 of the 1974 Trade Act (anti-competitive grounds). Even after accounting for the new tariff, the U.S. average effective tariff rate would still be around 12%, significantly higher than the roughly 2% rate before Trump's second term began. The remaining tariffs will continue to affect consumers differently based on income, with lower-income households bearing a disproportionate burden, and uncertainty remains about potential refunds for the more than $130 billion in tariffs already paid.