By Andrew Chung and John Kruzel

WASHINGTON, Feb 20 (Reuters) - The U.S. Supreme Court ruled against Donald Trump's extensive tariffs, which he implemented using a 1977 law originally intended for national emergencies. This decision, announced on Friday, represents a significant defeat for the former president with important consequences for the global economy.

The 6-3 ruling, written by Chief Justice John Roberts, infuriated Trump, who criticized the justices for their decision. He mentioned he would seek "other alternatives" for imposing tariffs and declared a new 10% global tariff using a different legal basis than the one challenged in court, "in addition to our normal tariffs."

The justices agreed with a lower court's finding that Trump's application of the 1977 International Emergency Economic Powers Act (IEEPA) was beyond his authority. They stated that this law did not give him the power he claimed to levy tariffs.

After the ruling, Trump labeled the decision as "terrible" and "totally defective."

"I’m ashamed of certain members of the court – absolutely ashamed – for not having the courage to do what’s right for our country," Trump said.

Trump has used tariffs, which are taxes on imported goods, as a major tool in his economic and foreign policies.

"Today's task is to determine whether the power to 'regulate ... importation,' as given to the president in IEEPA, includes the power to impose tariffs. It does not," wrote Roberts, highlighting that the Constitution grants Congress, not the president, the authority to impose taxes and tariffs.

Trump's tariffs have been a central component of a trade war he initiated during his second presidency, which has strained relationships with trade partners, impacted financial markets, and created global economic uncertainty.

He has claimed that these tariffs are crucial for U.S. economic security, arguing that without them, the country would be vulnerable.

"Foreign countries that have been ripping us off for years are ecstatic," Trump remarked following the ruling. "They’re so happy, and they’re dancing in the streets, but they won’t be dancing for long, I can assure you."

While the Supreme Court, which has a conservative majority, has previously supported Trump's wide use of presidential powers, this ruling marks a significant setback for him since he assumed office again in January 2025.

Trump stated, "I believe the court was influenced by foreign interests and a political movement that is much smaller than people realize."

Joining Roberts in the verdict were Justices Neil Gorsuch, Amy Coney Barrett, and the three liberal justices: Sonia Sotomayor, Elena Kagan, and Ketanji Brown Jackson. Gorsuch and Barrett were both appointed by Trump during his first term.

Roberts referenced earlier Supreme Court decisions that emphasized the need for "clear congressional authorization" for the president to assert such powers, concluding that "He cannot."

The ruling was praised by Democrats and various industry groups, though some business leaders expressed concern that it could lead to extended uncertainty as the administration seeks other legal avenues for tariffs. The decision did not clarify whether the government would refund tariffs deemed invalid, an issue that Trump mentioned could take years to resolve.

As a result of the ruling, trading on Wall Street saw fluctuations as investors weighed potential inflation relief against uncertainties surrounding Trump’s future tariff strategies.

THREE CONSERVATIVES DISSENT

Justice Brett Kavanaugh, along with Justices Clarence Thomas and Samuel Alito, dissented, stating that the ruling does not entirely prevent Trump from imposing similar tariffs under different legal grounds. Kavanaugh argued that the court’s decision merely indicates that Trump chose the wrong legal basis for his tariffs.

Kavanaugh, a Trump appointee, expressed pride in Trump's tenure but acknowledged the complexities arising from this ruling.

Trump had already imposed some tariffs under other laws unrelated to this ruling, which reportedly generated a substantial portion of revenue from his tariffs.

Despite declaring a national emergency concerning the U.S. goods trade deficit to justify IEEPA tariffs, the deficit had grown to a record $1.24 trillion by 2025.

Trump’s invocation of IEEPA allowed him to impose tariffs on nearly all U.S. trading partners without Congressional approval. The court's majority opinion emphasized that Trump's interpretation of the law encroached on Congress's authority and violated the "major questions" doctrine, which requires that significant governmental actions must have clear legislative backing.

Roberts mentioned that supporting the administration's arguments would dangerously expand presidential power over tariffs.

The ruling followed legal challenges from businesses impacted by the tariffs and several states, primarily led by Democrats.

Trump's tariffs were projected to bring in trillions for the U.S. economy in the next decade. Economists from the Penn-Wharton Budget Model estimated that Trump's tariffs based on IEEPA had already generated over $175 billion.

Kavanaugh acknowledged that the ruling left uncertainty regarding the refund process for tariffs collected thus far, indicating that it could be complicated.

BOUNDARIES OF EXECUTIVE AUTHORITY

IEEPA permits a president to regulate commerce in times of national emergency. Trump was the first president to use this law to impose tariffs, pushing the limits of executive power significantly.

Candace Laing, President of the Canadian Chamber of Commerce, characterized the decision as a legal ruling rather than a shift in U.S. trade policy and warned that Canada should brace for potentially disruptive new trade measures.

After the court heard arguments in November, Trump mentioned he would look for alternative methods if the ruling went against him.

Officials from the administration have noted they would explore other legal justifications to maintain as many tariffs as possible, including options based on national security or retaliation against unfair trade practices.

Still, these alternatives may not offer the same effectiveness or speed as IEEPA.

'PAY THE PIPER'

Governor Gavin Newsom of California urged the Trump administration to issue refunds to families and businesses impacted by the tariffs, remarking, "Time to pay the piper, Donald. These tariffs were nothing more than an illegal cash grab that hurt working families."

Senate Democratic Leader Chuck Schumer described the ruling as a "victory for the wallets of every American consumer."

Trump's ability to impose tariffs rapidly under a national emergency situation increased his leverage over other nations, prompting global leaders to rush to Washington for trade deals involving significant financial commitments.

Historically, IEEPA has been applied mainly for sanctions and asset freezes, not tariffs. The law doesn't specify tariffs, but the Justice Department argued it allows the president to "regulate" imports during emergencies.

The Congressional Budget Office estimated that if all current tariffs remain, they could generate approximately $300 billion annually over the next decade.

On April 2, a day dubbed "Liberation Day" by Trump, he imposed what he referred to as "reciprocal" tariffs on most U.S. trading partners using IEEPA in response to the national trade deficit, which had been ongoing for decades.

In early 2025, Trump used IEEPA to impose tariffs on China, Canada, and Mexico under the premise of a national emergency concerning the trafficking of fentanyl and other drugs into the U.S.

EXTRACTING CONCESSIONS

However, Trump’s use of tariffs has alienated numerous nations, including key allies. He has leveraged tariffs to demand concessions and renegotiate trade agreements, as well as to punish countries over other political issues.

The Federal Circuit Court sided with small businesses importing goods in one challenge and with several U.S. states in another.