What Supreme Court ruling against Trump tariffs means for your money

The Supreme Court struck down a centerpiece of President Donald Trump’s tariff agenda on Friday — and that could be good news for consumers’ wallets, according to economists.

But much of the financial impact will depend on what the Trump administration does next, economists said.

A tariff is a tax on imports. Tariffs imposed by Trump have made a wide range of goods, including furniture, clothing, food, electronics and cars, more expensive, according to the Yale University Budget Lab.

“Ultimately, this showed up as a price increase for consumers,” said Rathna Sharad, CEO of FlavorCloud, a cross-border shipping and logistics firm.

The Tax Foundation estimated in a study published Feb. 6 that Trump’s tariffs cost each U.S. household $1,000 in 2025 and would cost each household $1,300 in 2026.

Now, economists say consumers’ cost burden may fall.

The Yale Budget Lab estimated Friday that the cost of tariffs to the average household will drop by about half in 2026, to about $600 to $800, due to the Supreme Court ruling, according to John Ricco, the group’s associate director of policy analysis. The remaining half is due to other tariffs on the books that the Supreme Court ruling didn’t affect.

These costs fall harder on lower-income households than higher earners, according to its analysis.

The Tax Policy Center estimated in December that if the Supreme Court ruled against Trump, the cost of tariffs to households would fall by $1.4 trillion over 10 years, and would save families an average of $1,200 in 2026.

However, the analyses from the Yale Budget Lab and the Tax Policy Center assume that the tariffs the court ruled on aren’t replaced with other tariffs. Trump administration officials had previously said they would install new levies, using different legal pathways, to achieve roughly the same outcome.

Trump used the International Emergency Economic Powers Act of 1977, or IEEPA, to impose tariffs broadly on U.S. trading partners, pushing up the nation’s tariff rate to its highest since before World War II. It was the first time a president had used the law to levy tariffs.

In a 6-3 decision, the high court ruled that IEEPA doesn’t authorize the president to impose tariffs.

“The Government reads IEEPA to give the President power to unilaterally impose unbounded tariffs and change them at will,” according to the court’s opinion in the case, Learning Resources, Inc. v. Trump.

“That view would represent a transformative expansion of the President’s authority over tariff policy,” according to the opinion. “It is also telling that in IEEPA’s half century of existence, no President has invoked the statute to impose any tariffs, let alone tariffs of this magnitude and scope.”

In announcing the tariffs last year, Trump said an influx of illegal drugs from Canada, Mexico and China had created a public health crisis, and that large and persistent trade deficits had undermined U.S. manufacturing.

He declared national emergencies and used IEEPA to levy tariffs on imports to manage the perceived crises, including a 10% baseline tariff on all U.S. trading partners and even higher duties on select nations.

Before the ruling, the Trump administration said it would use other pathways to impose new tariffs — and get to the “same place” — should the Supreme Court strike down IEEPA tariffs.

Just hours after the Supreme Court ruling, Trump said he will sign an executive order imposing a new 10% “global tariff.” Trump will leverage Section 122 of the 1974 Trade Act to do so.

Section 122 caps the maximum tariff rate at 15% and only for 150 days, but can be done without congressional approval, Paul Ashworth, chief North America economist at Capital Economics, wrote in a research note Friday.

Trump might also later invoke Section 338 of the 1930 Smoot-Hawley Tariff Act, which lets the president levy tariffs of up to 50% on nations that “discriminate” against the U.S., Ashworth wrote. However, such a move would also likely invite legal challenges, he said.

Or the president may rely on “old tariff workhorses” such as Section 232 of the 1962 Trade Expansion Act, which rests on national security grounds, and Sections 201 and 301 of the 1974 Trade Act, which rest on anti-competitive grounds, Ashworth wrote.

Indeed, the Trump administration has used Section 232 to put product-specific tariffs on steel, aluminum, copper, cars, trucks and wood products.

Prior to the Supreme Court ruling, the U.S. average effective tariff rate was 16.9%, the highest since 1932, according to Yale University Budget Lab’s Ricco.

Without the IEEPA tariffs, and after accounting for the imposition of a new 10% global tariff, the effective tariff rate is now 12%, according to Capital Economics — still significantly higher than the roughly 2% rate before Trump started his second term in office.

It would have been 9.1% had Trump not announced any new tariffs on Friday, according to the Budget Lab

The consumer burden doesn’t fall to zero because the Trump administration already had other tariffs on the books that rely on different legal authorities — and many stand on firmer legal ground, economists said.

The tariffs that are still on the books affect households differently based on income, economists said.

For example, the bottom tenth of households by income would lose $430 due to tariffs in 2026, about 1.1% of their after-tax income, according to the Yale Budget Lab. By comparison, the top tenth of households would lose about $1,800, accounting for a smaller share of their income, about 0.8%, the analysis found.

Consumers would feel these price increases most when buying metal products, electronics and vehicles, it found.

It’s unclear what the ruling means for potential tariff refunds that the Trump administration may have to pay to businesses and consumers.

“The Supreme Court did not rule on whether the administration must refund the more than $130bn in tariffs already paid under those [IEEPA] declarations, which will likely trigger a prolonged legal battle,” Michael Pearce, chief U.S. economist at Oxford Economics, wrote in a note Friday.

There are ample questions so far left unanswered about potential tariff refunds, such as who is eligible and how they would be able to apply, said FlavorCloud’s Sharad.

“The refunds are going to be really difficult, because there’s no precedent to this,” Sharad said.

However, consumers may be left out of the equation, she said.

“Likely, consumers are not going to see relief from the refunds,” she said. “They will see relief in terms of prices.”

Additionally, it’s unclear how the Supreme Court ruling might affect so-called tariff “dividend checks” that Trump had proposed sending to households using tariff revenue.

Mark Zandi, chief economist at Moody’s, said it’s unlikely consumers will get such checks. That would have been the case even if the Supreme Court had ruled in the Trump administration’s favor, he said.

“This would require legislation, and I don’t see Congress passing it,” Zandi wrote in an e-mail.