In a 6-3 decision today, the U.S. Supreme Court ruled that President Donald Trump exceeded his authority by implementing broad global tariffs under the International Emergency Economic Powers Act. That 1977 law gives the president broad authority to regulate commerce amid a national emergency.
In its ruling, the court’s majority affirmed that, absent war, taxation is a matter for the legislative branch, not the executive.
“The president enjoys no inherent authority to impose tariffs during peacetime,” the ruling stated. “And it does not defend the challenged tariffs as an exercise of the president’s war-making powers. The United States, after all, is not at war with every nation in the world.”
Upon learning of the decision during a White House meeting with state governors, Trump called the decision a “disgrace.”
Rollins has little to say
Shortly after the decision came down, Agriculture Secretary Brooke Rollins spoke at a previously scheduled event during USDA’s Agricultural Outlook Forum. She acknowledged she was at the White House meeting with Trump but said little else about the court’s decision during her nearly 30-minute remarks.
Rollins later declined to answer questions during a press conference following her address.
“I certainly don’t want to get out in front of my boss,” Rollins said less than an hour before Trump planned to speak publicly.
Writing in dissent, Justice Brett Kavanaugh expressed concerns that potential refunds totaling billions are likely to be a “mess,” depending on whether or how that money should be returned to importers. The court’s decision could also “generate uncertainty regarding various trade agreements” with nations that have already facilitated trade deals with the U.S. to avoid tariffs, he wrote.
Kavanaugh summarized his dissent as follows: “The tariffs at issue here may or may not be wise policy. But as a matter of text, history and precedent, they are clearly lawful. I respectfully dissent.”
Trump promises to use ‘other methods’
“I can do anything I want to do, but I can’t charge any money,” a furious Trump said during today’s afternoon press conference. According to Trump, the court’s ruling actually increased his authority to regulate trade.
The president offered high praise for dissenting justices Kavanaugh, Clarence Thomas and Samuel Alito, calling Kavanaugh’s written dissent “genius.” As for the six justices in the majority, Trump said he was “ashamed” of certain justices for “not having the courage” to do what he considers right.
Trump later said he planned to invoke a “10% global tariff” through an executive order through Section 122 of the Trade Act of 1974. That law allows a president to impose temporary tariffs or quotas for up to 150 days. After that, the law requires congressional approval.
When asked if he planned to ask Congress to formally approve additional tariffs, Trump said he “didn’t need to.” According to him, the Supreme Court’s ruling unintentionally authorizes him to invoke other tariffs through other means.
Without offering specifics, Trump later indicated he did not plan to issue refunds to tariff payers who would be entitled to them according to the court ruling.
Impact to farmers
The decision could have several immediate and longer-term implications for U.S. farmers, including:
- Lower costs for farm equipment and inputs. Tariffs, for example, on steel and aluminum have increased the price of farm machinery. Could that trend begin to reverse? The U.S. also imports a major amount of fertilizer and other crop inputs from overseas.
- Increased competition in some export markets. With the ruling, some retaliatory tariffs may also be erased, which will make some commodities more lucrative in certain markets.
- Demands for refunds. It’s reasonable to assume that now that these tariffs have been ruled unlawful, agricultural exporters who paid those fees will seek refunds.
- Change in trade tactics. If the Trump administration can’t use wide-sweeping tariffs to push trade partners into signing new agreements, it will need to figure out what negotiation tactics will be most compelling moving forward.
- Short-term market volatility. This is not a guarantee, but it will be prudent to keep a close eye on grain prices over the next several weeks, especially as the planting season approaches and important acreage decisions must be made.
Lawmakers react
House Agriculture Ranking Member Angie Craig, D-Minn., welcomed the news. She was one of several Democrats who introduced legislation in January that would limit the president’s tariff authority. According to her, tariffs have “wreaked havoc” on the U.S. economy by driving up the price of everyday goods for consumers and businesses.
“They’ve been especially disruptive for our growers, producers and ranchers who have been suffering under the weight of high input costs and lost market access,” Craig said in a press release today. “While I applaud the Supreme Court for reining in the president’s power to issue tariffs by decree, I fear these tariffs have already caused lasting damage to farm country.”
It wasn’t just Democrats welcoming the news. Sen. Chuck Grassley, R-Iowa, a member of the Senate Ag Committee and the Senate’s longest-serving Republican, praised the president for working to negotiate trade deals.
“I urge the Trump administration to keep negotiating, while also working with Congress to secure longer-term enforcement measures so we can provide expanded market opportunities and certainty for Iowa’s family farmers and businesses,” Grassley said.
House Agriculture Chair Glenn “GT” Thompson, R-Pa., did not offer a strong opinion on the ruling in his statement today. Instead, he said securing reliable access to international markets is “incredibly important” for ag producers.
“Moving forward, America’s agricultural sector is looking for clarity across the trade landscape,” Thompson said. “I will continue to engage with the Trump administration as we work toward the mutual goal of strengthening our economy and opening up new export markets."