Summary of the Decision and Its Impacts
In November, the U.S. Supreme Court heard oral arguments on whether President Trump lawfully used the 1977 International Emergency Economic Powers Act (IEEPA) to impose broad global tariffs. Lower courts had previously ruled that IEEPA was never intended by Congress to authorize tariffs.
Today, the Supreme Court issued its ruling—striking down President Trump’s global tariff program as an overreach of presidential authority under IEEPA. In a 6–3 decision, the Court held that the law does not give presidents the power to impose sweeping, permanent import levies. The ruling affects both the “reciprocal” tariffs Trump applied to nearly all trading partners and more targeted tariffs justified as combating fentanyl trafficking.
“The Supreme Court’s decision is one of the most significant economic rulings in years,” says Brian Kuehl, Pinion’s Director of Government and Public Affairs. “It constrains the executive branch’s ability to impose broad tariffs under emergency powers and immediately reshapes U.S. trade policy.”
While the Court invalidated the tariffs going forward, it did not decide the fate of the more than $130 billion already collected, nor did it rule on whether importers are entitled to refunds—potentially as much as $170 billion. Those questions now return to the lower courts.
The White House has said it plans to replace the tariffs using other legal tools. However, these alternatives—such as Section 122 of the 1974 Trade Act, which allows temporary import restrictions—are considerably narrower or more cumbersome than the sweeping powers Trump attempted to use under IEEPA. The administration has also floated using import licensing, though it is unclear whether the law allows licensing fees designed to raise revenue. Licenses without fees could still effectively impose import quotas.
High Stakes for American Ag
For American agriculture, the stakes are significant. The U.S. farm economy depends heavily on global markets: in 2024, exports totaled $176 billion, representing about 20% of U.S. farm revenue. Stable trade relationships are essential for selling U.S. agriculture.
Key trading partners—especially Canada and Mexico—also supply critical agricultural inputs. Canada provides nearly 90% of U.S. potash. Tariffs on fertilizers or other inputs can drive up production costs, threatening farm profitability. Although President Trump rolled back some tariffs on fertilizer components, frequent changes in tariff policy have created uncertainty for producers planning ahead.
Perhaps more critically, the rapid expansion of tariffs and continued trade uncertainty has pushed U.S. trading partners to diversify their supply chains and look for alternative agricultural suppliers. Brazil has been the primary beneficiary, emerging as a leading agricultural exporter of soybeans, cotton, beef, and chicken. Countries such as Argentina and Australia have also captured significant market share. Other nations are actively pursuing trade agreements without the United States. These shifts risk long‑term loss of U.S. market share.
“Although today’s ruling removes one major source of tariff authority, it does not eliminate broader trade uncertainty,” cautions Kuehl. “A range of other tariffs remain in place. For U.S. agriculture, that continuing uncertainty keeps global markets on edge and leaves producers vulnerable to sudden cost increases or retaliatory actions abroad.”
Pinion advisors will continue to monitor and communicate the potential impacts for producers. Reach out to a Pinion advisor with questions.
