US Supreme Court rules Trump’s sweeping tariffs are illegal

Edited by Maxine Kelly and Philip Georgiadis in London and Peter Wells and Zehra Munir in New YorkFT ReportersThe US Supreme Court has ruled that Donald Trump’s sweeping tariffs are illegal, in a landmark rebuke to the economic centrepiece of the US president’s second term.America’s top court ruled in a six-three vote on Friday that Trump exceeded his authority in using the International Emergency Economic Powers Act to impose tariffs on dozens of US trading partners.In a ruling delivered on Friday, the Supreme Court said: “Our task today is to decide only whether the power to ‘regulate . . . importation,’ as granted to the President in IEEPA, embraces the power to impose tariffs. It does not.”The case against the administration was brought by groups of American businesses, joined by 12 US states, that argued they had been harmed by the tariffs.Trump returned to the White House last year vowing to use tariffs to remake a global trade order that he claimed had “ripped off” the US for decades.Trump announced his tariff regime on “liberation day” last April, sparking weeks of turmoil in financial markets and alarming US allies. Although he has since backed away from imposing some of the most severe duties, the US ended 2025 with an effective tariff rate of more than 10 per cent — the highest since the second world war.The ruling drew a muted reaction from investors, with the US dollar index briefly dropping before recovering. The S&P 500 and Nasdaq Composite remained modestly higher.Stock markets have recovered since “liberation day” to hit record highs, but polls indicate that many Americans think the tariffs are hurting the country’s economy.The US president did not immediately respond to the decision. A White House spokesperson did not immediately respond to a request for comment.Kate Duguid in New York Traders in the futures market were adding to bets on earlier interest rate cuts, with the odds of a reduction by 0.25 percentage points in June rising.Lauren Fedor in WashingtonDonald Trump was participating in a working breakfast with state governors at the White House when the Supreme Court ruling landed on Friday. The US president did not immediately respond to the decision, which will be widely seen as a blow to his sweeping trade agenda. A White House spokesperson did not immediately respond to a request for comment.Trump has repeatedly called for the Supreme Court, which currently holds a 6-3 conservative majority, to rule in his favour.In a speech in north-west Georgia on Thursday, Trump claimed the US government would take in “hundreds of billions of dollars” unless the court ruled against him.“We’re going to be taking in next year $900bn in tariffs, unless the Supreme Court said you can’t do it. Can you believe it? That I have to be up here, trying to justify that?” Trump said.Ian Smith in London and Kate Duguid in New YorkLong-term US borrowing costs have risen a little as the market anticipates that lower tariff revenues could mean more government debt issuance to fill the gap. The 30-year US Treasury yield rose 0.04 percentage points to 4.74 per cent.“The market is pricing in a bit more borrowing,” said Mike Riddell, a fund manager at Fidelity International.Traders in the futures market were adding to bets on earlier interest rate cuts, with the odd of a reduction by 0.25 percentage points in June rising.Gregory Meyer in New YorkShares of major retailers, some of the US’s largest importers, were mixed after the Supreme Court decision. Walmart fell 1.8 per cent and Home Depot rose 1.2 per cent. Costco, which had sued the Trump administration seeking reimbursement for tariffs, declined by 0.4 per cent.Kate Duguid in New YorkThe shares of US auto retails rose on the news, with Cars.com up 2 per cent and Penske auto group up 3 per cent. US apparel companies including Nike, Lululemon and Under Armour also rose.Lauren Fedor in WashingtonDemocratic lawmakers were quick to welcome the ruling on Friday.Richard Neal, the top Democrat on the House Ways and Means committee, called the decision a “victory for the American people, the rule of law, and our standing in the global economy”.“Congress writes trade law, and today’s ruling restores that fundamental truth,” Neal said in a statement. The Constitution is clear, and no president can invent powers they do not have.”Kate Duguid in New YorkMarket reactions to the Supreme Court decision were muted, with the US dollar index dropping briefly before recovering. Gold prices fell and the S&P 500 and Nasdaq Composite were slightly higher on the day.FT reportersDonald Trump has hit dozens of US trading partners with new tariffs while formalising recent trade deals with others, including the UK and EU. Analysts at Yale Budget Lab estimate that, overall, the US effective tariff rate is now at its highest level since the 1930s.Some content could not load. Check your internet connection or browser settings.Myles McCormick in Washington and Kate Duguid in New YorkEarlier on Friday, data showed that the US economy grew at an annualised rate of just 1.4 per cent in the fourth quarter, far below Wall Street expectations. Friday’s figure from the Bureau of Economic Analysis was sharply down from 4.4 per cent in the previous three-month period and fell well short of expectations of 2.8 per cent in a Bloomberg poll of economists. Growth was held back by a drop in government spending during the shutdown and a slowdown in consumer spending, the BEA said. That was offset slightly by an uptick in business investment.