SCOTUS Gives America a Tax Cut
TARIFFS ARE GONE, GG, GO BACK TO THE LOBBY
TRUMP’S TARIFFS GET STRUCK DOWN. START MY THEME MUSIC. IT IS TIME TO PARTY.
Wow! SCOTUS likes us again!
Guys, in a 6-3 decision, the Supreme Court came through for America and found one of the largest tax increases in American history unconstitutional. Let’s dive in.
How did they even do this?
So, the lineup was Chief Justice John Roberts, Elena Kagan, Sonia Stomayor, Ketanji Brown-Jackson, Amy Coney Barrett, and Neil Gorsuch. The dissenters were Brett Kavanaugh, Clarence Thomas, and Thomas Alito.
I will say off the bat, the dissenters should be embarrassed. Kavanaugh wrote a particularly nonsensical dissent, where he complained about the ramifications of the Court’s decision and how it would affect the economy. Suffice it to say, that is not the Supreme Court’s role and it would be unsurprising to hear Kavanaugh echo such a sentiment in another decision. SCOTUS cannot save America from itself, and it cannot bail out an Administration that did not have proper authority to enact tariffs.
I will say, the main opinion from the six justices is not even the best one in the decision. That comes from the three liberals, who said - through Kagan - that the President flat-out does not have the statutory authority to enact tariffs without approval from Congress.
I’ll quote Kagan below, but first I want to give some background. The main opinion found that Donald Trump’s tariffs were unconstitutional because the law he relied upon - The International Emergency Economic Powers Act (IEEPA) - only allows him to regulate things like imports, but did not allow him to enact taxes (that power belongs solely to Congress). Tariffs are taxes, so the IEEPA does not apply. The majority opinion gets all that right but additionally held that the “major questions” doctrine applied here, which is a rule the Supreme Court created itself.1
In summary, the major questions doctrine is an added layer of legal analysis that says when the Executive Branch asserts power over an issue of great political or economic significance, Congress has to give its explicit permission for the Executive to act. No vagueness and no half-arguments. No citations to old, weird laws where Congress ceded its authority one time. It has to be clear.
Since that didn’t happen here, the majority held that the major questions doctrine applied and the Trump Administration were anti-Dude: They did not abide.
The majority opinion is correct, but the three liberals said we didn’t even have to get that far. Here is Kagan:
Most important, IEEPA’s key phrase—the one the Government relies on—says nothing about imposing tariffs or taxes. That text authorizes the President, upon finding a foreign threat and declaring an emergency, to “regulate” the “importation” of foreign goods. And the meaning of “regulate,” both in common parlance and as Congress uses the word, does not encompass taxing. To “regulate,” according to the Government’s preferred definition, means to “fix, establish or control; to adjust by rule, method, or established mode; to direct by rule or restriction; to subject to governing principles or laws.” Nothing in that definition naturally refers to levying taxes. Nor does Congress ever use the word “regulate” in that way. Hundreds of provisions in the U. S. Code give agencies the authority to “regulate” one thing or another. Yet the Government cannot identify a single one that is understood to grant taxing power.
So, Kagan and the liberals got it right. But that doesn’t mean the majority got it wrong, either. After all, everyone got to the correct decision in the end.
I just happen to agree with the liberals that there is nothing in the IEEPA that even hints that POTUS has the ability to use the law to enact tariffs, emergency or not.
However, Roberts’s decision is an important check on Trump’s (or any other president’s) power to enact tariffs going forward. By applying the major questions doctrine, the Roberts Court has effectively negated Trump’s ability to use other laws to work around Congress’ legal authority. I have seen some people (including Trump himself) say that the Administration will simply use another law to enact tariffs.
I think they are all missing what this decisions lays out. Roberts essentially says that any and all tariff authority (with very few exceptions) has to come directly from Congress. That will affect Trump’s ability to use tariffs going forward.
So what happens to our money.
SCOTUS did not lay out what will happen to the taxes paid by importers, and that left some people confused. But I think the real answer is clear from their decision: Because the Administration’s tariffs were illegal, anyone affected will be able to seek restitution in court. Lots of companies have already started litigating, including big retailers.
The remedy here seems relatively simple to me: If people paid monies to the government based on an interpretation of a law that was unconstitutional, the government will have to pay those people back. I don’t think we’re going to have a general fund or anything available, but as people file various courts will award them their money.
Will it be chaotic and insane? Yes, but that is the Administration’s fault, not the Court’s.
In the long run, I think this decision will actually help the Trump Administration. I will tell everyone a story: Last year, while Elisabeth was pregnant, we got central air installed in our home because she didn’t want to go through a hot, Denver summer with just a swamp cooler2 keeping us from overheating.
When we were getting quotes from different companies, I kept hearing the same thing: “Tariffs are driving up our prices.” I am sure other Americans heard something similar throughout 2025, hence Trump’s huge drop in the polls after “Liberation Day.”
It isn’t some great mystery: Trump’s tariffs were a huge economic disaster and they brought a relatively healthy economy to a halt. And things have been getting worse: GDP growth in the fourth quarter of last year (usually a strong quarter thanks to the holidays) was a paltry 1.4%. An inflation readout from this morning also showed prices accelerating. Trump’s tariff agenda is largely to blame.3
In the short term, we might see some spikes of additional economic activity as many importers will revert to their old pricing schemes and that will help a lagging economy. But I do think a lot of the damage is already done. The trickiest part of an inflation crisis is that prices rarely come back down once retailers understand that people are willing to pay them. When people stop paying altogether, that’s usually when a recession hits.
Under Trump’s tariffs, we were seeing a mini-version of stagflation: Slowing economic growth with higher prices. I think that will ease up a little bit now. But in the long term, Trump’s tariffs have weakened our relationship with our trading partners and pushed our closest allies into the arms of China.
That damage will be lasting.
And it was all illegal from jump street. MAGA.
See you all next week.
This makes it sound worse than it is, but SCOTUS makes rules for itself all the time.
These aren’t popular in the Northeast because of all the humidity, but they are popular in the West.
I think Trump’s deportation scheme is also hurting the economy, but that is a longer Jackal.