Supreme Court Blocked Tariffs, Yet Consumers Won't See Savings

KEY TAKEAWAYS

• The Supreme Court ruled that most tariffs imposed under President Donald Trump in 2025 were illegal.
• Despite the ruling, uncertainty and shifting trade policies could keep prices elevated.

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Most of President Donald Trump’s sweeping tariffs have been overturned—but that doesn’t mean prices will fall in accordance.

Last week, the Supreme Court ruled that most of the tariffs imposed under the Trump administration were illegal. In a 6-3 decision, Supreme Court justices said the International Emergency Economic Powers Act (IEEPA) of 1977, which the president used to implement about 75% of the tariffs in 2025, does not give the president the authority to enact these import taxes. Tariffs on specific items, such as automobiles and steel, remain in place.

An analysis released Friday morning by the Yale Budget Lab found that the ruling would have cut the average tariff rate on all imports almost in half, to 9.1%. Price increases from tariffs were also expected to slow from 1.2% to 0.6%, and the income loss for a typical household from tariffs would have been cut in half, to about $618.

But later that day, Trump announced he would impose a 10% global tariff under a different legal mechanism. The administration also said it will begin investigating other countries to determine if it can impose tariffs on them for unfair trade practices under Section 301 of the Trade Act of 1974. These investigations could take months.

Why This Matters

Inflation has been elevated for several years, making it harder for households to afford essentials and keeping interest rates high. The Trump administration’s tariff policy could keep pushing prices up in 2026.

What Does This Mean For Prices?

Trump’s tariffs were one factor driving persistent inflation in 2025, economists said, as U.S. companies and consumers bore the majority of the costs.

Ongoing uncertainty about U.S. trade policy means prices are unlikely to go down in the near future, or at all, said Ebehi Iyoha, assistant professor in the Entrepreneurial Management Unit at Harvard Business School.

“Even though the tariffs have been ruled unenforceable … businesses will still be worried about future changes in trade policy in the U.S.,” Iyoha said in an interview before Trump announced the global tariff. "That will likely mean that most businesses will not want to take action too quickly in any particular direction.”

And while some businesses may eventually receive a government refund for income lost due to import taxes, that’s unlikely to push prices lower anytime soon. That process will cost businesses money and time, “so it’s unlikely that they’re going to reduce their prices in the near term as a result.” Iyoha said.

Some bigger companies, like Walmart, which have larger cash reserves and staffing, will be able to absorb some of the costs and may attempt to “gain a competitive edge by trying to hold off on increasing prices in the near term," he said. But they’re unlikely to cut prices as a result.

What This Means For Your Finances

Even if you think prices may fall in the short run due to the Supreme Court’s shutdown of Trump’s taxes—or rise due to the Trump administration’s response—now is not the time to make rash decisions with your finances, financial experts said.

Consumers shouldn’t panic-buy or rush to purchase high-priced items that they don’t need because they’re worried they’ll become more expensive, said Harmon Kong, a certified financial planner and founder of wealth management firm Apriem Advisors.

“It’s more time just to digest … and see how things play out,” Kong said. “Because I don’t think anyone really knows.”

RELATED EDUCATION

The Basics of Tariffs and Trade Barriers

Which Countries Have the Highest Tariffs?

The most immediate impact of the Supreme Court’s ruling is the volatility in the stock market, said Sergio Altomare, chief executive officer of Hearthfire Holdings, a real estate private equity and development firm.

The major stock indexes rose Friday in the wake of the decision, then fell Monday in part due to the uncertainty in tariff policy. On Tuesday, they rebounded.

"Broadly speaking … there is going to be volatility. You’re going to see that. Do not panic,” Altomare said. “I would not be making any structural decisions within an [investment] portfolio based on the [Supreme Court’s] decision.”

Maintaining some form of liquidity, meaning funds that are readily accessible, is key, Kong said. This will be especially true if trade policies continue to change. That could put more companies on edge and prompt more hiring freezes or layoffs.

“You can control your spending, but to some extent, you can’t really control if the economy goes bad,” Kong said. “It’s really important that consumers take a hard look at their finances and make sure they have emergency funds set aside in case.”

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