The Supreme Court Killed the IEEPA Tariffs — Here Is What Happens Next to Trump's Trade War

The Supreme Court ruled 6-3 that Trump cannot use IEEPA to impose tariffs. Here is what this means for the $180 billion in annual tariff revenue, the refunds owed, and where trade policy goes next.

The Supreme Court's 6-3 ruling that President Trump lacks the authority to impose tariffs under the International Emergency Economic Powers Act — a decision that J.P. Morgan economists described as 'widely expected' following last November's appeals court hearing — has resolved one of the major legal uncertainties hanging over the US economy in early 2026. But 'resolved' is not the same as 'simplified'.

The ruling's immediate financial consequence is specific and large: the government collected approximately $166 billion in IEEPA tariffs from more than 330,000 businesses that have now been found unconstitutional. US Customs and Border Protection is working on a refund system for these tariffs. The administrative complexity of refunding $166 billion across hundreds of thousands of businesses — with varying eligibility, varying import classifications, and varying documentation requirements — will take months or years to resolve cleanly, and the political pressure to slow-walk the refunds is significant.

The tariffs that survive: Section 232 tariffs on steel, aluminium, autos, pharmaceuticals, and copper (based on national security authority that the IEEPA ruling doesn't affect); Section 301 tariffs on Chinese goods (a separate legal basis upheld by courts); and the Section 122 tariff of 10 percent on all imports that Trump invoked after the IEEPA ruling, which has a 150-day shelf life before Congressional approval is required.

For businesses that have been navigating tariff policy since 2025, the ruling creates immediate uncertainty rather than relief: the trade deals negotiated under IEEPA authority — with the EU, Japan, South Korea, and others — used IEEPA tariffs as both leverage and structure. With the IEEPA tariffs now invalidated, those deals' legal foundations are in question, potentially requiring renegotiation or formal Congressional action to maintain.

J.P. Morgan estimates the effective average US tariff rate after the ruling at approximately 13.7 percent — down from the IEEPA peak but significantly above the pre-Trump era 2.5 percent average. This level is high enough to have permanently altered supply chain structures that businesses won't reverse even if the legal and political environment continues to shift.