The US Supreme Court on Friday (February 20) struck down President Donald Trump’s sweeping global tariffs, ruling that his use of emergency powers to impose broad import taxes was illegal. The decision, handed down in a 6-3 vote, leaves the White House facing the prospect of refunding tens of billions of dollars to importers.
Over $175 billion at risk
Economists at the Penn-Wharton Budget Model (PWBM) estimate that more than $175 billion in tariff collections could be subject to refunds if the International Emergency Economic Powers Act (IEEPA)-based tariffs are invalidated. The model, led by senior economist Lysle Boller, cross-references import data across 11,000 product categories and 233 countries to produce its forecasts.
“Total receipts under IEEPA since February 2025 are around $179 billion,” Boller said. “Refunds of this magnitude would exceed the combined fiscal 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 daily revenue from IEEPA tariffs at $500 million and accounts for abrupt changes, such as reductions from trade deals and punitive duties, including a 40% levy 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.
Treasury ready to cover refunds
US Treasury Secretary Scott Bessant has said the Treasury can handle potential refunds, citing large cash balances planned for March ($850 billion) and June ($900 billion). He had then expressed confidence that the Supreme Court would uphold the tariffs.
Recent customs receipts have surged since the imposition of Trump’s tariffs, rising roughly $20 billion per month from pre-tariff levels, with January total collections reaching $27.7 billion.
As of December 2025, Treasury data shows more than $133 billion in IEEPA tariffs had been collected, with estimates of potential refunds reaching $170 billion, more than half of the revenue generated by the levies.
Tariffs declared illegal
The ruling focused on the International Emergency Economic Powers Act (IEEPA), the 1977 law Trump invoked to levy “reciprocal” tariffs on nearly every US trading partner, as well as targeted duties on China, Mexico, and Canada over drug trafficking 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 constraints. It did neither here.”
Roberts and the majority pointed out that IEEPA makes no explicit reference to tariffs and that the Constitution gives Congress, not the president, the authority to levy taxes.
The dissent
Justice Brett Kavanaugh, in dissent, warned that undoing the tariffs could create complications.
“As was acknowledged at oral argument, the refund process is likely to be a ‘mess,’” Kavanaugh wrote.
Global and domestic reactions
The ruling drew attention from US business groups and foreign governments. The National Retail Federation welcomed the decision, calling it “much-needed certainty” for American firms and urging the lower courts to ensure a seamless process for refunding importers.
European and North American trading partners also reacted. Britain said it would work with the US to assess trade impacts, while Canada called the decision confirmation that Trump’s tariffs were “unjustified.”
