What happened on Friday?
The US supreme court, in a six-three majority decision, has ruled that US president Donald Trump exceeded his authority in imposing many of the tariffs announced over the past year under the International Emergency Economic Powers Act.
These include the reciprocal and top-up tariffs imposed on many countries, including the European Union. Under this arrangement, imports from the EU to the US have been subject to a 15 per cent tariff, with exceptions for a number of sectors. The ruling does not cover the tariffs imposed on specific sectors, such as steel, aluminium, the automotive sector and so on. Trump had used a separate legal grounding for these.
Why did it make this ruling?
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Trump relied on legislation allowing him to declare an emergency situation as justification for imposing the so-called reciprocal tariffs. Specifically, the president declared two emergencies – based on certain drug imports into the US and the size of the US trade deficit. However, a range of importers and 12 US states had argued he did not have the right to do this and many had won in lower courts – the cases were then joined together so that the US supreme court could make the final decision.
Under the US constitution, the president is meant to get congressional approval for most tariffs, with a few limited exceptions. The administration had tried to get around this and had not gone to Congress, but the majority court judgment was that it had gone too far and that the president had exceeded his powers under the US constitution. This is a landmark decision in relation to Trump’s trade policies
What happens now?
Good question. Trump said after the ruling that he can use other legal authority to impose tariffs, but this will not be straightforward. This is a big setback for his tariff policy and for his ability to shoot off threats – sometimes followed by action – aimed at various countries. Introducing tariffs in future will be more complicated.
To underline his ongoing commitment to tariffs as an economic weapon and source of revenue, Trump initially said he will now introduce a new 10 per cent " global tariff" on imports into the US, under separate legislation which allows him to impose such a charge for 150 days. He signed an executive order and said the new import charge would come into play within days,
However on Saturday he announced that the rate on the new global tariffs would be 15 per cent, the maximum allowed under the legislation. The timing is confusing. He said the 10 per cent charge would be increased to 15 per cent immediately, but that during the " next short number of months" the administration will " determine and issue" the new tariffs.
[ Why haven’t Trump’s tariffs caused a downturn in the US?Opens in new window ]
Will the companies on which tariffs were imposed get their money back?
So far this is unclear and the supreme court did not rule on this. Demands are growing for repayments and legal action to try to secure them looks certain, though the administration will resist and lengthy court actions could follow. Irish businesses who have paid the tariffs will be watching on closely.
The tariffs - or import charges - were levied on the companies - including some Irish exporters- at the point of import of their goods to the US, though of course the actual burden of the tariffs often fell on US consumers or on businesses bringing in inputs for further manufacture, who ended up paying higher prices.
What about the EU/US trade deal?
What happens with this deal – and other deals struck by Trump – is now a really interesting question. Trump imposed the reciprocal tariffs on the EU and these have now been deemed illegal. However, last summer the US and the EU did a trade deal under which many of the tariffs would continue. This deal has not yet come into force, however, which could be crucial.
So there is a question now for both sides about how to proceed. The EU might well still reckon it is better to have a trade deal and accept some tariffs as the price of certainty, though all it would say on Friday was that it was in touch with the US administration on how to proceed.
Rescuing the deal, if this is possible, might also be to Ireland’s advantage as it capped potential tariffs at 15 per cent in all areas, including vital pharma exports, currently not charged any tariffs and - it emerged on Saturday- not subject to the new global tariff announced by Trump as one of the few exceptions.
While a court decision to strike down tariffs might appear to be good news, it introduces a new uncertainty and unpredictability in what tariffs or other economic weapons Trump may use.
What tariff rate will Irish exporters to the US now face?
Trump’s idea in introducing the new global tariff and increasing it to 15 per cent appears to be to safeguard revenues and stop a renewed flood of imports. For Irish businesses it will take a bit of time before we get clarity. Trump’s tactic is probably to maintain the charge at 15 per cent and perhaps get the deal with the EU over the line to allow this to continue before the 150 days are up.
But there is a way to go now and the reaction in the EU will be interesting to watch, too. Interestingly, pharma sales - by far the biggest Irish export to the US and so far tariff-free - are one of a small number of sectors excluded from the global tariffs. Trump has done deals with some of the pharma firms in relation to investment and prices in the US and will want to hold drug costs down. Nonetheless, Ireland will be nervous that he could at some stage impose tariffs on pharma as part of a longstanding investigation process.
This is a mess, isn’t it?
Yes. It is a setback Trump as it is the first time he has got serious pushback from the US supreme court, which has a conservative majority. It has potentially significant implications for US tax revenue – some $140 billion is estimated to have been raised from the tariffs covered by the court decision in 2025. And it seriously threatens his ability to throw around tariff threats. Hearings during the action had said any repayment process would be chaotic. For 2026 a new uncertainty has entered the economic equation.
