SCOTUS Strikes Down Tariffs: The Decision, the Fallout, and Arizona’s Economic Stakes

By Dan Doherty. 

On April 2, 2025, dubbed “Liberation Day,” President Trump signed Executive Order 14257, declaring a national emergency over the United States’ trade deficit and invoking the International Emergency Economic Powers Act (“IEEPA”), the National Emergencies Act, and other authorities to authorize tariffs on foreign imports. President Trump claimed that “a lack of reciprocity,” “disparate tariff rates and non-tariff barriers,” and trade partners’ economic policies constituted an “unusual and extraordinary” threat to the national security and economy of the United States. 

Liberation Day triggered an immediate market selloff, with bond volatility surging and, on the equity side, the S&P 500 falling 5% on April 3—its steepest single-day decline since 2020. The following days and months were marked by pronounced uncertainty. The Trump administration initially insisted that tariffs were non-negotiable but later reversed course amid market instability. In the weeks that followed, the Trump administration announced new trade discussions and repeatedly signaled that frameworks were within reach. Deadlines were set, and at times extended, and negotiations continued until eventual agreements took shape. 

At a high level, the Trump administration sought to use tariff actions as leverage to reshape U.S. trade and manufacturing policy. Businesses, however, were left to absorb higher costs and navigate persistent uncertainty, forcing many companies to allocate capital on the basis of speculation or incomplete information and adjust supply chains in response to rapidly shifting legal frameworks. Smaller companies, lacking the flexibility and resources available to larger competitors, had fewer practical remedies and therefore relied, in part, on the legal system to clarify the scope of the executive’s authority to impose tariffs. 

Weeks after Liberation Day, two family-owned businesses that relied on international manufacturing partners filed suit, claiming that IEEPA does not authorize the President to impose import tariffs. In another lawsuit, several small businesses and a coalition of states, including Arizona, challenged President Trump’s tariff-related executive orders on similar grounds. Eventually, the United States Supreme Court granted review and consolidated the cases. 

SCOTUS Limits Executive Power  

On February 20, 2026, the Supreme Court ruled 6-3 that President Trump exceeded his executive authority under IEEPA when imposing broad global tariffs. The decision delivered a significant setback to one of President Trump’s hallmark economic policies, holding that IEEPA’s grant of power to “regulate . . . importation” does not encompass the authority to impose tariffs.  

Writing for the majority, Chief Justice Roberts reasoned that the power to impose tariffs is fundamentally a power to tax, which the Constitution grants exclusively to Congress rather than the President. He explained that although IEEPA grants the President certain powers to respond to national emergencies, the authority to impose taxes or tariffs is not among them. That omission, he emphasized, is significant: had Congress intended to delegate the power to levy tariffs under IEEPA, it would have done so expressly, just as it has in other tariff-specific statutes. Accordingly, the “clear congressional authorization” necessary for President Trump to “unilaterally impose tariffs of unlimited amount, duration, and scope” was absent here. 

Notably, in addition to Chief Justice Roberts’s majority opinion, six other Justices authored separate concurring or dissenting opinions. Even among those who joined the majority, their reasoning diverged based on their application of the major questions doctrine. Justice Kavanaugh’s dissent noted that “[t]he Court says nothing today about whether, and if so how, the Government should go about returning the billions of dollars that it has collected from importers.”

What Happens Next?

Because the Court declined to address how importers might recover the tariff payments they already made, importers now want an answer to the approximately $175 billion question: who, if anyone, is getting paid back? 

U.S. importers of record who directly paid the tariffs may be eligible for a refund, but businesses that did not make those payments themselves are not. Additionally, because U.S. Customs and Border Protection collects tariffs from importers at the border, downstream American consumers do not have a clear mechanism by which they would receive tariff-related refunds. Even when companies passed tariff-driven cost increases through higher retail prices to consumers rather than absorbing them internally, any refund would flow back to the importer, not to individual consumers. Of course, importers of record may face claims from end users pressing for a share of any refund. 

Ultimately, the question of who receives refunds and when will be resolved by the lower courts and U.S. Customs and Border Protection. Currently (as of March 3, 2026), there is no automatic refund mechanism for IEEPA tariffs paid and no dedicated portal for businesses to request reimbursement. Refunds are therefore unlikely to occur on their own, and businesses will need to take affirmative steps to preserve their claims, such as by filing refund requests with U.S. Customs and Border Protection and pursuing refund claims through the Court of International Trade. 

Are Tariffs Going Away?

No. Love them or hate them, tariffs are here to stay (for now). President Trump has already announced plans to impose 10% global tariffs under § 122 of the Trade Act of 1974. Furthermore, President Trump may claim authority to impose tariffs under § 232 of the Trade Expansion Act and § 301 of the Trade Act of 1974. 

Takeaways for Arizona Businesses and Consumers

Arizona’s growing role in global commerce makes the state sensitive to major shifts in federal trade policy and international relationships, potentially giving developments like the SCOTUS tariff ruling an outsized impact on its economy. Yet that same exposure creates meaningful upside: Arizona could disproportionately benefit from the ruling. 

For Arizona, where global supply chains, foreign investment, and long-term manufacturing projects anchor economic growth, greater predictability in federal trade policy can bolster investor confidence and support sustained capital commitments. The state’s recent performance reflects its capacity to deliver, having led the nation with $197.5 billion in international investment between 2020 and 2025. Moreover, Arizona’s import-dependent industries stand to benefit economically from a subsiding tariff regime in several reinforcing ways: (1) greater predictability and reduced fear of escalation; (2) potential tariff-related refunds; and (3) reduced cost pressures, all of which may translate into meaningful downstream gains, opening the door to new investment, expanded hiring, or even consumer savings. 

However, the ruling may not materially benefit Arizona in the short term. New tariffs will be imposed under different statutory authorities, meaning importers will continue to bear tariff costs. Market volatility could persist as firms await clarity on refund procedures, the scope of future presidential tariff authority, and the reactions of global trading partners. Continued uncertainty around tariff rates and trade policy more broadly could slow investment until clearer guidance emerges. The political reality is that tariffs will remain part of the policy calculus until there is meaningful congressional opposition to a tariff-based trade framework. 

Yet, tariff-related uncertainty is not new; Arizona companies have been navigating shifting trade policies for nearly a year. Taken together, the benefits of reduced cost pressures and the removal of a major presidential tariff tool may ultimately position Arizona to fare relatively well in the long term. By removing IEEPA-based tariffs from the executive toolkit, the ruling constrains the President’s ability to use emergency powers to impose tariffs and channels trade policy back into Congress’s domain–rooted in its constitutional authority to levy tariffs and regulate foreign commerce. That shift points toward a more deliberate legislative process, to the extent Congress chooses to exercise its authority. A stable framework would help provide the business certainty essential to Arizona’s long-term growth and its emergence as an innovation hub.