What Small Business Owners Need to Know About the Supreme Court’s Tariff Ruling

For the last year, talks of tariffs have taken center stage in terms of economic policy. And in a major legal development affecting U.S. trade policy, the Supreme Court of the United States ruled on February 20 that President Donald Trump exceeded his authority when he imposed a broad set of tariffs under the International Emergency Economic Powers Act (IEEPA). The 6-3 decision dramatically limits the executive branch’s ability to use that emergency statute to set tariffs, reshaping the landscape for import costs and trade policy that many small businesses felt firsthand. Today, we’ll break down the decision and what impacts it might have on small business owners like you.

Why the Court Struck Down the Tariffs

At issue in the Supreme Court case was whether the IEEPA, a 1977 law giving the President broad emergency powers to regulate international economic transactions, actually authorizes the imposition of tariffs—a form of tax on imported goods. In its majority opinion, the Court found that:

• The text of IEEPA never mentions tariffs, duties, taxes, or similar revenue-raising tools, even though it authorizes import regulation.
• Ordinary statutory language like “regulate … importation” does not clearly delegate authority to impose taxes, and imposing tariffs is a form of taxation that the Constitution assigns to Congress (and not the executive branch).
• Allowing the President to use IEEPA for tariffs would represent an unprecedented expansion of executive power inconsistent with Congress’s role in trade and taxation.

As a result, the Court invalidated the use of this emergency statute as the legal basis for most of the tariffs imposed beginning in 2025.

What Tariffs Were Affected, and What Stays in Place

The ruling struck down the baseline 10 percent broad tariff and additional country-specific or “reciprocal” tariffs imposed under IEEPA on trading partners around the world, including duties on imports from China, Canada, Mexico, India, Brazil, and many others.

However, the Court’s decision did not affect tariffs imposed under other statutory authorities such as:

• Section 232 (national security tariffs on steel, aluminum, autos, etc.)
• Section 301 (unfair trade practice tariffs, like past China duties)
• Other existing trade remedies like antidumping and countervailing duties

Those tariffs remain in force because they were enacted under separate legal powers.

What This Means for Small Businesses

Potential Lower Import Costs

If the ruling is fully implemented, one of the most immediate is the reduction in average tariff rates. Analyses suggest that the trade-weighted average U.S. tariff could fall sharply, alleviating some of the import cost pressures that many small manufacturers, retailers, and restaurants faced when tariffs raised the price of raw materials, parts, or finished goods.

For small businesses that rely on imported items, whether it’s specialty equipment, inventory, or parts, lower effective tariffs could help reduce costs and improve pricing flexibility.

Possibility of Refunds for Past Tariff Payments

Although the Supreme Court invalidated the legal foundation for many tariffs, the ruling did not directly mandate refunds for duties already collected. Treasury data show that more than $130 billion in tariff revenue was collected under the emergency powers law before the ruling.

Small business coalitions and industry groups have already demanded refunds, arguing that importers paid those tariffs under an unlawful regime and that fast reimbursement could provide much-needed cash flow and financial relief.

However, legal experts caution the refund process could be complex and drawn out, potentially requiring individual claims or new legislation to simplify payouts.

Ongoing Uncertainty and Future Tariff Authority

Even with this ruling, uncertainty still remains. The president has already taken steps to impose new temporary tariffs under different legal frameworks, like the Trade Act of 1974, which grants other limited tariff authorities.

And because the Supreme Court’s decision focused strictly on the IEEPA question, not the broader system of trade authorities, future administrations or Congress could take further action to clarify or modify tariff powers.

For small business owners, that means keeping an eye on evolving trade policy and engaging with representatives on issues that affect supply chain costs and market access.

Bottom Line for Small Business

The Supreme Court’s ruling is a major legal milestone in U.S. trade policy. By limiting the executive branch’s ability to impose broad tariffs under a sweeping emergency law, the decision could eventually reduce import costs and remove a source of unpredictability for small businesses that depend on global supply chains. But the practical effects, especially regarding refunds for past tariffs, remain uncertain and will likely play out in courts or Congress over the coming months or years.

At the Financial Pantry, we’re committed to helping small business owners stay informed about the economic and policy issues that impact their everyday lives. Whether it’s tariff rulings, tax credits, hiring trends, or financing options, our blog is designed to make complex topics clear and actionable for owners like you. Visit ARF Financial today for the latest small business news, insights, and tools to support your growth and financial success.