I. Background: The Trump Administration's Tariff Policy and its Controversy
On April 2, 2025, President Trump, upon returning to the White House, signed an executive order invoking the International Emergency Economic Powers Act of 1977, declaring a national emergency with "unusual and extremely serious threats." He subsequently imposed "reciprocal tariffs" on all trading partners, ranging from 10% to 50%, aiming to reduce the US trade deficit, protect domestic industries, and gain leverage in international negotiations. The Trump administration claimed this move was to address global trade unfairness and protect the interests of American businesses and workers, but its policy has sparked widespread controversy and legal challenges since its inception.
In fact, this was not the first time the Trump administration had implemented tariff policies. During his first term, he imposed tariffs on major trading partners such as China, the EU, and Japan, triggering global trade frictions and leading to a slowdown in global trade growth and supply chain disruptions. Upon his return to power in 2025, Trump continued his "tariff-first" economic policy and further expanded its coverage, applying "reciprocal tariffs" to all trading partners in an attempt to consolidate his political support base through more aggressive trade protection measures.
However, this policy suffered from significant legal flaws and practical difficulties from the outset. Legally, the U.S. Constitution explicitly states that the power to impose tariffs belongs to Congress, and the president does not have the authority to unilaterally decide on tariff policy. Furthermore, the International Emergency Economic Powers Act (IEEPA) primarily aims to limit the president's emergency economic powers in non-emergency situations. Its powers mainly include regulating international trade and implementing economic sanctions, but it does not address tariff collection. The Trump administration was the first U.S. government to invoke this law to impose comprehensive tariffs on other countries, a move widely considered an overreach of authority.
In practice, the tariff policy has not achieved the results the Trump administration anticipated. Instead, due to the U.S. domestic market's high dependence on imported goods, the tariff costs have largely been passed on to American businesses and consumers. A report from the Federal Reserve Bank of New York indicates that approximately 90% of the costs of tariffs imposed by the Trump administration in 2025 will be borne by American businesses and consumers. The Yale Budget Lab estimates that retaliatory tariffs will cost American households between $1,300 and $1,700 annually. Simultaneously, the tariff policy has triggered retaliatory measures from major U.S. trading partners. The EU, Canada, Mexico, and other countries have imposed tariffs on U.S. exports, severely impacting U.S. export companies and further exacerbating domestic economic pressures.
Against this backdrop, several U.S. state governments and business groups have filed lawsuits challenging the legality of the Trump administration's tariff policies. On May 28, 2025, the U.S. Court of International Trade issued its first ruling, prohibiting the implementation of the Trump administration's executive order imposing tariffs under the International Emergency Economic Powers Act, ordering its revocation and permanent injunction. The Trump administration subsequently appealed, and on May 29, the U.S. Court of the Federal Circuit granted its request, temporarily suspending the ruling and allowing the tariffs to continue. After nearly nine months of proceedings, the U.S. Supreme Court issued its final ruling on February 20, 2026, confirming that the Trump administration's tariff policy was illegal, laying the legal foundation for subsequent court orders to refund tariffs.
II. Core Reasons for the Court's Order to Refund Tariffs
The core reason the U.S. court ordered the Trump administration to refund tariffs lies in the serious legal flaws and violations of constitutional principles inherent in its tariff policy, as well as procedural irregularities during its implementation. This can be analyzed from three perspectives: legal basis, checks and balances, and policy rationality.
(I) Insufficient Legal Basis: Lack of Clear Authorization for Tariff Imposition
This is the core reason for the court's ruling ordering the Trump administration to refund tariffs. The U.S. Supreme Court's ruling explicitly stated that the International Emergency Economic Powers Act (IEEPA) does not grant the president the power to impose large-scale tariffs, and the Trump administration's invocation of this act to implement its tariff policy constituted an "overreach of executive power."
The International Emergency Economic Powers Act (IEEPA), passed by the U.S. Congress in 1977, was enacted in the mid-1970s to limit presidential emergency powers in response to previous presidential abuses of the Total Emergency Economic Powers Act (TWEA) to impose economic sanctions. The core purpose of this act is to restrict the president's economic emergency powers in non-national emergency situations, allowing the president to declare a national emergency and implement economic sanctions such as investigations, controls on foreign currency transactions, and asset freezes only when the nation faces an "unusual and extremely serious threat." However, it makes no mention of tariffs.
Article I, Section 8 of the U.S. Constitution explicitly states that "Congress shall have the power to set forth and impose tariffs, taxes, import duties, and goods duties," meaning that tariffs are the exclusive power of Congress, and the president has no right to unilaterally impose tariffs. The Trump administration's attempt to bypass Congress by invoking the IEPA to declare a national emergency and subsequently implement large-scale tariffs clearly violates the constitutional principle of the separation of powers. The Supreme Court's ruling emphasizes that the president's executive power must be exercised within the framework of the Constitution and the law; even in a state of emergency, the scope of power cannot be arbitrarily expanded, nor can it encroach upon the exclusive powers of Congress. Furthermore, the Trump administration failed to follow the necessary legal procedures when implementing its tariff policy. According to the International Emergency Economic Powers Act, a presidential declaration of an emergency must be renewed annually to maintain its validity, and a detailed report explaining the reasons for and specific measures must be submitted to Congress before implementation. However, after declaring a national emergency in April 2025, the Trump administration failed to submit a complete report to Congress in a timely manner and failed to update the emergency declaration periodically as required. This procedural illegality further undermined the legitimacy of its tariff policy.
(II) Failure of Checks and Balances: Excessive Expansion of Executive Power Leads to Judicial Intervention
The United States practices a system of separation of powers, with the legislative, executive, and judicial branches being independent and mutually checking and balancing-a core principle of the American constitutional system. The Trump administration's tariff policy is essentially a manifestation of the excessive expansion of executive power and its erosion of legislative power. The court's order to refund tariffs is precisely a check on executive power by the judiciary, a concrete manifestation of the separation of powers principle.
Since Trump first took office, he has repeatedly attempted to expand executive power and bypass Congress to implement his policies; the tariff policy is a typical example of this. Trump believed that Congressional legislative procedures were cumbersome and inefficient, unable to quickly address the "trade crisis" facing the United States. Therefore, he forcibly implemented tariffs through executive orders, attempting to seize control of tariff policy. This approach severely undermined the balance of the separation of powers, provoking strong opposition from Congress and the judiciary.
In this tariff lawsuit, even the two conservative justices nominated by Trump himself did not side with the Trump administration, but voted in favor of ruling that the tariff policy was illegal. This result demonstrates that in the US constitutional system, regardless of political stance, the judiciary consistently upholds legal principles and checks the expansion of executive power. The Supreme Court's ruling clearly sends a signal: presidential power is not unlimited and must be bound by the Constitution and laws, respecting the exclusive power of Congress. Any attempt to bypass Congress or abuse executive power will be corrected by the judiciary.
Furthermore, the Trump administration also ignored judicial procedures and refused to cooperate with court investigations during the implementation of its tariff policy. After the Court of International Trade initially ruled the tariff policy illegal, the Trump administration not only refused to implement the ruling but also delayed the process through appeals, attempting to maintain the implementation of the tariff policy. This disregard for judicial authority further solidified the court's determination to order the return of tariffs and highlighted the crucial role of the judiciary in restraining executive power.
(III) Unreasonable Policy: Damaging Domestic Interests and International Image
Besides legal issues, the Trump administration's tariff policy itself was seriously unreasonable. Its implementation not only failed to achieve its intended goals but also harmed the interests of American businesses and consumers, damaging America's international image. This was one of the key reasons the court ordered the return of tariffs.
Domestically, the tariff policy led to increased production costs for American businesses and a heavier burden on consumers. The United States is a highly import-dependent country; many companies rely on imports for raw materials and components. The tariffs directly increased procurement costs and squeezed profit margins. For example, American automakers import a large number of components; after the tariffs were imposed, their production costs rose sharply, forcing them to raise car prices, with consumers ultimately bearing this cost. Simultaneously, the tariff policy also led to retaliatory measures from trading partners against American exporters, resulting in a significant decline in exports. Many companies were forced to reduce production and lay off employees, further exacerbating domestic employment pressures.
From an international perspective, the Trump administration's tariff policies disrupted global trade order and damaged relations between the United States and its allies. Under the guise of "reciprocal trade," the Trump administration imposed tariffs on all trading partners, including traditional US allies such as the EU, Japan, and Canada, provoking strong resentment from these countries. The EU subsequently imposed tariffs on US agricultural and energy exports, hindering US agricultural exports and causing significant losses for many American farmers. Furthermore, the tariff policies disrupted the stability of global supply chains, forcing many multinational corporations to adjust their supply chain layouts and relocate production bases to other countries, further weakening the US's dominant position in global supply chains.
During the trial, the court fully considered the unreasonableness of the tariff policies and their negative impacts, concluding that the Trump administration's tariff policies were not only illegal but also damaged the US domestic public interest and international image. Therefore, the court ruled that the administration must refund the illegally imposed tariffs to compensate businesses and consumers for their losses.
III. Reactions from All Parties: Divergent Positions of the Government, Businesses, State Governments, and the International Community
The US court's ruling ordering the Trump administration to refund tariffs triggered strong reactions from various parties. The Trump administration, domestic businesses, state governments, and the international community all expressed their positions, resulting in clear divisions.
(I) The Trump Administration: Refusal to Accept the Ruling and Attempts to Obstruct the Refund Process
The Trump administration strongly opposed the court's ruling, explicitly refusing to accept the outcome and attempting to obstruct the tariff refund process through various means. Trump himself posted on his social media platform, Real Social, stating that the Supreme Court's ruling was "wrong" and a "betrayal of American interests," insisting that his tariff policy was to protect the interests of American businesses and workers, and resolutely opposing the refund of any tariffs.
Trump administration officials also repeatedly stated that refunding tariffs would place enormous financial pressure on the US government and could even trigger a new economic recession. US Treasury Secretary Bessant stated after the ruling that the decision-making power regarding tariff refunds should be left to lower courts, and the government would not proactively advance the refund process. Meanwhile, the Trump administration also argued in court that refunding all tariffs would take up to 4,431,161 hours (equivalent to 506 years) to manually process all refund requests, thus delaying the refunds.
Furthermore, the Trump administration attempted to circumvent the court ruling by reimposing the tariff policy through other means. After the Supreme Court ruled the tariff policy illegal, Trump immediately invoked Section 122 of the Trade Act of 1974, announcing a 10% tariff on all goods imported into the US for 150 days, which was subsequently raised to 15% within 24 hours. The Trump administration claimed this move was to address the US "balance of payments crisis," but economists generally believe that the current US trade deficit does not constitute a balance of payments crisis, and the Trump administration's actions still have legal flaws, representing an attempt to circumvent the court ruling and continue to implement trade protection policies.
(II) US Companies: Actively Seeking Refunds
For US domestic companies, the court ruling is undoubtedly a major positive development. Since the Trump administration implemented its tariff policies, American businesses have suffered enormous losses, especially manufacturing companies reliant on imported raw materials and components, importers, and export-oriented agricultural and energy companies, all facing rising costs, reduced orders, and declining profits.
Following the ruling, numerous American companies filed lawsuits seeking to recover losses incurred from the high tariffs. Statistics show that well-known companies such as Costco, FedEx, and Nintendo have filed lawsuits in the Court of International Trade, attempting to recover illegally paid tariffs. Atmus Filtration, an American importer, stated in court documents that it had paid $11 million in illegal tariffs and hopes to recover the full amount.
American business groups also expressed support for the court's ruling. The U.S. Chamber of Commerce, the National Association of Manufacturers, and other organizations issued statements saying that the Supreme Court's ruling "upheld the dignity of the law and the principle of separation of powers," demanding that the Trump administration immediately implement the ruling, refund the tariffs as soon as possible, and alleviate the burden on businesses. At the same time, business groups also called on the Trump administration to abandon its aggressive trade protection policies and resolve trade disputes through negotiation to create a stable business environment.
However, many businesses also expressed concerns about the refund process. Because the court ruling did not specify the concrete procedures and timeline for refunds, and the Trump administration attempted to obstruct refunds, many businesses worried that the process would be lengthy and complicated, and they might not even be able to recover the full amount of tariffs they paid. Furthermore, the costs incurred during the refund process, such as interest and processing fees, might also be borne by businesses, further increasing their burden.
(III) State Governments: Significant Divergence, Some States Jointly Oppose New Tariffs
State governments across the United States showed significant divergence regarding the court ruling and the Trump administration's tariff policy. States heavily affected by the tariff policy, especially those reliant on imports and exports, supported the court ruling, while some traditionally Trump-supporting agricultural and industrial states opposed it.
Oregon, California, and New York, states heavily reliant on imports and exports, are the main victims of this tariff policy. Ordinary families and businesses in these states have borne a significant portion of the tariff costs. Oregon estimates that if the Trump administration's new tariffs are fully implemented, the average household in Oregon could incur additional costs exceeding $1,000 per year. Therefore, these state governments not only supported the court's ruling but also actively promoted tariff refunds. Oregon was the first to file a lawsuit against the Trump administration's new tariff policy, followed by 23 other states, including Arizona and New York, forming a 24-state coalition against the federal government.
The legal arguments of these state governments were very clear: Trump's new tariff policy still violated the Constitution, undermined the separation of powers, and also violated the Federal Administrative Procedure Act. They demanded that the court rule the new tariff policy illegal and prohibit its implementation. Furthermore, these state governments also demanded that the Trump administration promptly refund the illegally imposed tariffs to compensate for the losses suffered by their businesses and consumers.
Meanwhile, some traditionally Trump-supporting agricultural and industrial states, such as Iowa and Ohio, although also affected by the tariff policy, believed that Trump's tariff policy was intended to protect domestic industries. Therefore, they opposed the court's ruling and supported the Trump administration's reimplementation of the tariff policy, attempting to protect the interests of their businesses and workers through tariffs.
(IV) International Community: Welcomes the Ruling and Calls on the US to Maintain Global Trade Order
The international community generally welcomed the US court's ruling, believing that it would help alleviate global trade frictions and maintain the stability of the global trade order. Major U.S. trading partners issued statements supporting the ruling and urging the Trump administration to respect the court's decision, abandon protectionist trade policies, and resolve trade disputes through negotiation.
The EU stated that the Trump administration's tariff policies have severely damaged trade relations between the U.S. and Europe, causing significant losses to EU businesses. European Commission President Ursula von der Leyen issued a statement calling the Supreme Court's ruling "a positive sign," demanding that the Trump administration immediately implement the ruling, refund illegally imposed tariffs, and cease implementing new tariff policies. Furthermore, the EU announced that the European Parliament's International Trade Committee meeting, originally scheduled for February 24, 2026, would be urgently moved forward to February 23 to reassess the 2025 trade agreement reached between the U.S. and Europe. Committee Chairman Franz Lange stated that he would propose that the European Parliament suspend ratification of the U.S.-EU trade agreement until the U.S. clarifies its tariff policy.
China, Japan, Canada, and other countries also welcomed the court's ruling. A spokesperson for the Chinese Foreign Ministry stated that the US tariff policy not only harms the interests of Chinese companies but also those of US domestic businesses and consumers, disrupting the global trade order. The Supreme Court's ruling aligns with the common expectations of the international community. China hopes the US government will respect the court's decision, abandon trade protectionism, and work with other countries to maintain the stability and prosperity of global trade.
Furthermore, international organizations also expressed their support for the ruling. The Director-General of the World Trade Organization (WTO) stated that the Trump administration's tariff policy violated relevant WTO rules and undermined the global multilateral trading system. The Supreme Court's ruling helps correct this error, and China hopes the US government will abide by international rules and promote the liberalization and facilitation of global trade.
IV. Profound Impact: Multiple Shocks on the US Domestically and Globally
The US court's ruling ordering the Trump administration to return tariffs is not only a significant practice of the separation of powers within the US domestic system, but also a major shock to the global trade order and supply chain structure. Its impact will permeate the US domestic political, economic, and legal spheres, and extend globally. This can be analyzed from both domestic and international perspectives.
(I) Impact on the US Domestically: A Triple Transformation of Politics, Economy, and Law
1. Political Level: Constraints on Executive Power, Weakening Trump's Political Influence
This ruling severely constrains the Trump administration's executive power and further weakens Trump's political influence. Trump has consistently made tariff policy one of his core political propositions, catering to populist sentiments among some Americans and maintaining his political approval ratings through trade protection policies. However, the Supreme Court's ruling not only declares the illegality of his tariff policy but also exposes his abuse of executive power, severely damaging his political image.
Furthermore, the ruling exacerbates domestic political divisions within the US. Trump's supporters argue that the court ruling constitutes "judicial interference in politics" and "political suppression" of the Trump administration, while opponents believe it upholds the dignity of the law and the principle of separation of powers. This divergence has further exacerbated partisan polarization within the United States, making the political landscape more complex. Simultaneously, the joint lawsuit filed by 24 states against the federal government reflects the power imbalance between the federal and state governments, further weakening the federal government's authority.
This ruling also has a significant impact on Trump's political future. If the Trump administration cannot effectively address the consequences of the ruling and reimplement its tariff policies, his approval ratings may plummet, affecting his future political strategy and potentially even his 2028 presidential campaign.
2. Economic Perspective: Short-Term Relief for Businesses, Long-Term Fiscal and Supply Chain Challenges
In the short term, the court ruling will alleviate the burden on American businesses and consumers. Tariff refunds will reduce costs and increase profit margins for import-dependent companies, while also lowering the prices of imported goods and easing the financial burden on consumers. According to the Cato Institute, the tariff refunds amount to a staggering $175 billion. If successfully processed, this will effectively alleviate the financial pressure on American businesses, encourage expanded production, increase employment, and contribute to the recovery of the US economy.
However, in the long term, the US economy will face a series of challenges. First, there is the fiscal pressure. The $175 billion in tariff refunds will place a significant financial burden on the US government. Coupled with the potential for the Trump administration's new tariff policies to be implemented smoothly, US government revenue will be affected, potentially leading to a further expansion of the fiscal deficit. Furthermore, the interest expenses incurred during the tariff refund process cannot be ignored. The Cato Institute estimates that the longer the tariff revenue remains with the US Treasury, the more interest accumulates. US taxpayers may have to bear up to $700 million in interest payments each month, and if the refund process continues for several years, the interest expenses will exceed $25 billion.
Second, there is the pressure of supply chain adjustments. In the nearly one year since the Trump administration's tariff policies were implemented, many multinational corporations have adjusted their supply chain layouts and moved production bases to other countries to circumvent tariffs. While the court ruling eased tariff pressure, businesses will face time and costs in adjusting their supply chains, making a return to normalcy difficult in the short term. This will have a long-term impact on US manufacturing and the global supply chain landscape. Furthermore, the Trump administration's attempt to reimplement new tariff policies will increase business uncertainty, leading to decreased investment and further affecting the long-term development of the US economy.
3. Legal Perspective: Strengthening the Separation of Powers and Clarifying the Boundaries of Executive Power
This ruling further strengthens the principle of the separation of powers in the United States and clarifies the boundaries of presidential executive power. The Supreme Court's ruling explicitly states that the president's executive power must be exercised within the framework of the Constitution and laws, and cannot arbitrarily expand its scope or encroach upon the exclusive powers of Congress. This ruling will have a significant binding effect on future US government administrative actions; any future president attempting to bypass Congress or abuse executive power to implement policies will face judicial constraints.
In addition, the ruling improves the US tariff legal system. This case clarifies the scope of application of the International Emergency Economic Powers Act, emphasizing that the exclusive power to impose tariffs belongs to Congress, providing a clear legal basis for future US government tariff policy formulation. Meanwhile, the ruling also provides legal protection for businesses and individuals to safeguard their rights. If governments implement illegal tariff policies again in the future, businesses and individuals can protect their legitimate rights through legal channels.
(II) Global Impact: Reshaping Trade Order and Adjusting Supply Chain Structure
1. Global Trade Order: Alleviating Trade Friction and Promoting the Recovery of the Multilateral Trading System
The Trump administration's tariff policies have been one of the main causes of global trade friction in recent years. Its imposition of tariffs on all trading partners has damaged the global multilateral trading system, leading to a slowdown in global trade growth. The US court ruling ends the Trump administration's illegal tariff policies, effectively alleviating global trade friction and creating favorable conditions for the restoration of the global trade order.
First, the ruling will promote the easing of relations between the US and its other trading partners. Previously, the US had serious disagreements with allies such as the EU, Japan, and Canada over tariff policies, leading to escalating trade friction. After the ruling, the US government was forced to return tariffs and cease implementing illegal tariff policies, which will help repair relations between the US and its allies, promote the resumption of trade negotiations, and reach new trade agreements.
Second, the ruling will promote the recovery of the global multilateral trading system. The Trump administration's tariff policies violated WTO rules and undermined the authority of the global multilateral trading system. The court ruling, in essence, is a rejection of trade protectionism, helping to uphold the WTO's core position and pushing countries back to multilateral trade negotiations to jointly maintain the liberalization and facilitation of global trade.
However, it is important to note that the Trump administration's attempt to reinstate tariffs by invoking the Trade Act of 1974 means the risk of global trade friction remains. If the Trump administration's new tariff policies are implemented, they could trigger renewed global trade friction and cause new shocks to the global trade order.
2. Global Supply Chains: Alleviating Short-Term Pressure, Facing Long-Term Restructuring
The Trump administration's tariff policies disrupted global supply chains, forcing many multinational corporations to adjust their supply chain layouts, shifting production bases to other countries to avoid tariff costs. The US court ruling will alleviate short-term pressure on global supply chains, providing some buffer space for companies to adjust their supply chains.
For multinational corporations reliant on the US market, tariff refunds will reduce their costs, allowing them to reassess their supply chain layouts. Some companies may relocate production bases back to the US or maintain their existing supply chain structures, which will help alleviate tensions in the global supply chain. Simultaneously, the removal of tariffs will promote the free flow of goods globally, contributing to the recovery and stability of the global supply chain.
However, in the long term, the global supply chain landscape may undergo permanent changes. Although the Trump administration's tariff policies have been ruled illegal, protectionist sentiment remains within the US. The US government may implement trade protection policies through other means in the future, increasing operational uncertainty for businesses and prompting them to further diversify supply chain risks, driving the global supply chain towards diversification and regionalization. Furthermore, the trade relations between the US and its trading partners remain uncertain, which will also affect the layout and stability of the global supply chain.
3. Global Economy: Short-Term Boost to Confidence, Long-Term Uncertainty Remains
The US is the world's largest economy, and changes in its tariff policies have a significant impact on the global economy. The US court ruling will boost global market confidence in the short term, promoting global economic recovery. The cancellation and refund of tariffs will alleviate the burden on American businesses and consumers, promoting the recovery of the US economy, which in turn will drive global economic growth. Simultaneously, the ruling will also ease global trade frictions, boosting global trade and injecting momentum into the global economic recovery.
However, in the long term, the global economy still faces numerous uncertainties. First, the Trump administration's attempt to reimpose new tariff policies could reignite global trade frictions, impacting global economic growth. Second, the increasing fiscal pressure on the US government may lead to austerity measures, affecting global economic liquidity. Furthermore, the restructuring of global supply chains requires time and resources, which will also have a certain impact on the long-term development of the global economy.
V. Future Outlook: Uncertainty Regarding the Refund Process and Policy Direction
While the US court ruling ordering the Trump administration to refund tariffs clarified the illegality of the tariff policy, the subsequent refund process and the future direction of US tariff policy remain highly uncertain, primarily in the following aspects:
(I) Tariff Refund Process: Lengthy and Complex, Difficult for Businesses to Protect Their Rights
Currently, although the US court ruling requires the Trump administration to refund tariffs, it has not specified the specific procedures, timetable, or methods for the refund. The refund process will face numerous obstacles. First, the Trump administration is attempting to obstruct the refund, delaying the process by claiming that "manually processing refunds would take 506 years," and Trump himself explicitly opposes tariff refunds, potentially interfering with the refund process through various means. Second, the specific refund procedures will be determined by US Customs and Border Protection and lower courts, but these agencies are known for their low efficiency and are influenced by political factors, which may lead to a lengthy and complex refund process.
Analysis suggests that refunds may take 12 to 18 months to reach importers, after which importers can then pass the money on to consumers. Furthermore, the refund process faces numerous technical hurdles, such as the need for manual review of tens of millions of tariff payments and verification of relevant information, which will further prolong the refund time. For businesses, successfully recovering tariffs requires submitting extensive supporting documentation, incurring high litigation costs, and the success rate is likely to be low.
In addition, issues such as the allocation of interest and handling fees for tariff refunds remain unclear. The Cato Institute points out that consumers may not receive a full refund, and since consumers are also taxpayers, they will also have to bear the interest and handling fees incurred during the refund process, further increasing their burden.
(II) The Future of US Tariff Policy: The Trump Administration May Continue to Pursue Trade Protection
Although the Supreme Court ruled that the tariff policy implemented by the Trump administration under the International Emergency Economic Powers Act was illegal, the Trump administration has not abandoned its trade protection policies but has attempted to reimpose tariffs through other legal grounds. Currently, the Trump administration has invoked Section 122 of the Trade Act of 1974 to announce a 15% tariff on goods imported into the US from around the world, attempting to maintain its trade protection policies.
However, the Trump administration's new tariff policy still has legal flaws. Section 122 of the Trade Act of 1974 was originally intended only for situations involving a severe international payments crisis in the United States. However, the current U.S. trade deficit does not constitute an international payments crisis. Economists generally believe that the Trump administration's move is an abuse of the law. Furthermore, the new tariff policy has triggered strong opposition from U.S. businesses and state governments. Twenty-four states have jointly sued the federal government, demanding a ruling that the new tariff policy is illegal. This means that the new tariff policy may also face the risk of being ruled illegal by the courts.
In the future, the Trump administration may continue to seek other legal grounds to implement trade protection policies, or negotiate new trade agreements with other trading partners to maintain the core objectives of its tariff policy. In addition, protectionist sentiment persists within the United States. Even if the Trump administration cannot implement the new tariff policy, future U.S. governments may continue to pursue trade protection policies, which will have a long-term impact on the global trade order and supply chain structure.
(III) U.S. Domestic Political Landscape: Increased Partisan Conflict and Strengthened Checks and Balances
This ruling will further exacerbate partisan conflict within the United States. Trump's supporters argue that the court ruling constitutes "judicial interference in politics" and is a form of "political suppression" of the Trump administration by the Democrats, while the Democrats view the ruling as a manifestation of "upholding the dignity of the law and the principle of separation of powers." This divergence will further influence US congressional and presidential elections, making the US political landscape more complex.
Simultaneously, the ruling will further strengthen the US system of separation of powers, with stricter checks and balances on executive power by the judiciary. In the future, presidential executive actions will be subject to stricter legal constraints, and any attempt to bypass Congress or abuse executive power will face judicial correction. Furthermore, the power imbalance between the federal and state governments will become more pronounced, with state governments potentially seeking more power to constrain federal policies.
(IV) Global Trade and Supply Chains: Short-Term Relief, Long-Term Risks Remain
In the short term, the US court ruling will alleviate global trade frictions and promote the recovery and stability of global supply chains. Trade relations between the US and its trading partners will be repaired to some extent, and the free flow of global goods will be promoted, which will contribute to the global economic recovery.
However, in the long term, numerous risks remain in global trade and supply chains. The Trump administration's attempt to reinstate new tariff policies could reignite global trade frictions. Protectionist sentiment persists within the US, and future US administrations may continue to pursue protectionist policies. Restructuring global supply chains requires time and resources and is likely to be influenced by geopolitical factors, leading to a more complex supply chain landscape. Furthermore, the global economic recovery faces numerous uncertainties, such as inflation, energy crises, and geopolitical conflicts, which will also affect the stability of global trade and supply chains.
VI. Conclusion
The US court's order for the Trump administration to return tariffs represents a significant step in the implementation of the separation of powers within the US system and a major blow to trade protectionism. The core reason for this ruling lies in the Trump administration's tariff policies lacking clear legal authorization, violating constitutional principles of power division, and harming the interests of US businesses and consumers, thus disrupting global trade order. The ruling has triggered diverse reactions from the US government, businesses, states, and the international community, profoundly impacting US domestic politics, economy, and law, and significantly disrupting global trade order and supply chain structures.
However, many uncertainties remain regarding future developments. The tariff refund process may be lengthy and complex, with businesses and consumers facing numerous difficulties in obtaining full refunds. The Trump administration's attempt to reimpose tariff policies based on other legal grounds could reignite trade frictions. Domestic partisan divisions and power struggles within the US will likely intensify, further jeopardizing the stability of global trade and supply chains.
For the US, this ruling serves as a reminder that its government must respect the Constitution and laws, adhere to the separation of powers, and refrain from abusing executive power. It also necessitates abandoning aggressive trade protectionist policies and resolving trade disputes through negotiation to protect the interests of domestic businesses and consumers and promote the healthy development of the US economy. Globally, this ruling creates favorable conditions for easing global trade frictions and maintaining global trade order. Countries should seize this opportunity to strengthen multilateral trade cooperation, promote the liberalization and facilitation of global trade, jointly address the numerous challenges facing the global economy, and build a more stable, fair, and inclusive global trading system.
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