The US Supreme Court struck down President Donald Trump’s sweeping global tariffs on Friday (20 February), ruling that his use of emergency powers to impose broad import taxes was illegal. The decision, handed down by a 6-3 vote, leaves the White House facing the prospect of returning tens of billions of dollars to importers.
More than $175 billion is at risk
Economists at the Penn-Wharton Budget Model (PWBM) estimate that more than $175 billion in tariff collections could be returned if tariffs based on the International Emergency Economic Powers Act (IEEPA) are repealed. The model, led by senior economist Lysle Boller, cross-references imported data from 11,000 product categories and 233 countries to generate its forecasts.
“Total revenue under the IEEPA from February 2025 is around $179 billion,” Boller said. “Reimbursements of this magnitude would exceed the combined 2025 budgets of the Department of Transportation ($127.6 billion) and the Department of Justice ($44.9 billion).
How the tariffs were calculated
The PWBM model estimates IEEPA’s daily tariff revenue at $500 million and takes into account sudden changes such as reductions in trade agreements and punitive tariffs, including a 40% tax imposed on Brazil last year. Customs data as of mid-December 2025 show $174.49 billion collected under IEEPA tariffs, roughly 70% of total tariff revenue for fiscal years 2025 and 2026.
Cashier ready to cover refunds
US Treasury Secretary Scott Bessent said the Treasury Department would handle potential refunds, citing large cash balances projected for March ($850 billion) and June ($900 billion). He then expressed confidence that the Supreme Court would uphold the tariffs.
Recent tariff receipts have surged since the imposition of Trump’s tariffs, rising about $20 billion a month from pre-tariff levels, with total collections reaching $27.7 billion in January.
As of December 2025, Treasury figures show more than $133 billion in IEEPA tariffs have been collected, with estimates of potential refunds reaching $170 billion, more than half of the revenue generated by the levies.
The tariffs were declared illegal
The decision focused on the International Emergency Economic Powers Act (IEEPA), a 1977 law that Trump has invoked to impose “reciprocal” tariffs on nearly every US trading partner, as well as targeted tariffs on China, Mexico and Canada over drug-smuggling concerns.
Chief Justice John Roberts, writing for the majority, emphasized: “When Congress grants the power to impose tariffs, it does so clearly and with careful limitations. It has done neither here.”
Roberts and the majority pointed out that the IEEPA does not specifically mention tariffs and that the Constitution gives Congress, not the president, the power to levy taxes.
Disagreement
In dissent, Justice Brett Kavanaugh warned that repealing the tariffs could cause complications.
“As acknowledged at oral argument, the refund process is likely to be a ‘mess,'” Kavanaugh wrote.
Global and domestic responses
The decision drew attention from American business groups and foreign governments. The National Retail Federation welcomed the ruling, calling it “much-needed certainty” for American businesses and urging lower courts to ensure a smooth process for refunds to importers.
European and North American business partners also responded. Britain said it would work with the US to assess the impact on trade, while Canada called the decision confirmation that Trump’s tariffs were “unjustified”.
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