By Isnaini Azizah 
In a landmark decision that significantly alters the landscape of American trade law and executive power, the Supreme Court ruled on Friday that President Donald Trump’s country-specific "reciprocal" tariffs are unconstitutional. The 6-3 ruling represents a major victory for a broad coalition of consumer-facing companies, retailers, and international trade advocates who have spent years battling the administration’s aggressive use of executive orders to reshape global commerce. However, the victory for the private sector is only partial, as the Court simultaneously preserved the administration’s ability to levy duties under separate national security justifications.
The case centered on the administration’s extensive use of the International Emergency Economic Powers Act of 1977 (IEEPA). Historically, the IEEPA has been a tool for presidents to impose economic sanctions, freeze foreign assets, and respond to unconventional threats from abroad. The Trump administration, however, broke decades of legal precedent by utilizing the act to justify a sweeping tariff agenda aimed at correcting trade imbalances through "reciprocity"—the practice of matching the tariff rates of trading partners on a country-by-country basis.
Writing for the majority, the Court clarified that while the IEEPA grants the President broad authority to regulate international commerce during a declared national emergency, it "does not authorize the President to impose tariffs." The decision emphasizes the constitutional principle that the power to "lay and collect Taxes, Duties, Imposts and Excises" resides exclusively with Congress under Article I, Section 8. By striking down the IEEPA-based tariffs, the Court has effectively dismantled the legal foundation for the "eye-for-an-eye" trade strategy that defined much of the administration’s second-term economic policy.
Despite the significance of the ruling, the legal victory does not provide a blanket reprieve for all industries. The Supreme Court’s decision specifically targets tariffs enacted under IEEPA but leaves untouched those implemented under Section 232 of the Trade Expansion Act of 1962. Section 232 allows the executive branch to impose duties on imports that are deemed a threat to national security. Because the Trump administration has increasingly pivoted to framing essential industries—such as steel, semiconductors, and aluminum—as critical components of the national defense infrastructure, many of the most burdensome levies remain in full effect.
As the dust settles on the ruling, several key sectors of the American economy find themselves in a state of bifurcated reality: enjoying relief from general reciprocal duties while remaining shackled by national security-linked costs.
The Automotive Industry: A Multi-Billion Dollar Calculation
For the American automotive sector, the Supreme Court’s decision provides some clarity but little immediate financial relief. The industry has been grappling with billions of dollars in added costs due to a complex web of tariffs on both finished vehicles and the thousands of components required to build them. In 2025, the administration implemented a broad 25% tariff on imported vehicles and specific auto parts, citing the erosion of the domestic industrial base as a national security risk.
Because these 25% duties were largely processed under Section 232, they are expected to remain active despite Friday’s ruling. General Motors, the nation’s largest automaker, recently projected that it would face between $3 billion and $4 billion in tariff-related costs in the current fiscal year alone. Similarly, Ford Motor Company indicated that its net tariff impact for 2026 would likely hover around $2 billion.
The industry’s reliance on global supply chains makes it particularly vulnerable. While the administration has struck side deals with the United Kingdom and Japan to lower certain levies to between 10% and 15%, and is in ongoing negotiations with South Korea, the lack of a total rollback means that consumer prices for new vehicles are unlikely to drop in the near term. Analysts suggest that until the Section 232 designations are successfully challenged or rescinded by the executive branch, the "automotive tax" will continue to weigh on the transition to electric vehicles, which rely heavily on imported minerals and electronic components.
Pharmaceuticals: Tariffs as a Bargaining Chip
The pharmaceutical industry occupies a unique position in this trade war. President Trump has frequently used the threat of massive tariffs—sometimes suggesting rates as high as 250%—as a lever to force drugmakers to lower domestic prices and move manufacturing facilities back to U.S. soil.
While many of these threatened tariffs have not yet been fully realized, the administration has already initiated a Section 232 investigation into the pharmaceutical supply chain. By characterizing the U.S. dependence on foreign-made active pharmaceutical ingredients (APIs) as a national security vulnerability, the administration ensured that these potential duties would be insulated from the Supreme Court’s IEEPA ruling.
In a move to avoid the looming 200% to 250% levies, several major pharmaceutical players, including Merck, Bristol Myers Squibb, and Novartis, entered into a strategic agreement with the White House in December. The deal grants these companies a three-year exemption from pharma-specific tariffs in exchange for voluntary price reductions and guaranteed investments in domestic manufacturing plants. For these companies, the Supreme Court ruling is largely academic; their fate is currently tied to the contractual agreements they signed to avoid the "nuclear option" of Section 232 duties.
The Furniture Crisis: Inflation and Insolvency
Perhaps no industry has felt the sting of the trade agenda more acutely than the furniture and home goods sector. Unlike the tech or auto sectors, which often have higher margins to absorb costs, the furniture industry operates on thinner lines and is highly sensitive to shipping and material costs.
Last autumn, the administration applied 25% duties to a wide array of household items, including sofas, kitchen cabinetry, and vanities, under the umbrella of Section 232. These tariffs were justified by the administration as a means of protecting the domestic timber and upholstery industries. Following Friday’s ruling, these duties remain firmly in place. To make matters worse for retailers, these tariffs are scheduled to climb to 50% by 2027.
The economic fallout has already been catastrophic for some legacy brands. American Signature Furniture, the parent company of Value City Furniture, shuttered its operations late last year, citing the "insurmountable pressure" of high interest rates, inflationary cooling of consumer spending, and the heavy burden of import duties. For smaller, independent furniture retailers, the Supreme Court’s failure to address Section 232 tariffs may signal a continued wave of consolidations and bankruptcies.
Food and Consumer Goods: The Aluminum Factor
In the aisles of American grocery stores, the impact of the trade war is measured in the price of a soda can or a roll of aluminum foil. Under Section 232, steel and aluminum imports continue to carry significant tariffs, which were hiked to 50% by the Trump administration last year.
This has created a sustained cost increase for beverage giants like Coca-Cola, PepsiCo, and Keurig Dr Pepper, all of whom rely on aluminum for packaging. Reynolds, a leader in consumer aluminum products, has also had to navigate these surging input costs. While the Supreme Court’s ruling strikes down the reciprocal duties that might have applied to the finished goods of some international food brands, the underlying "material tax" on the packaging remains.
There have been some minor reprieves for the sector, though they came from the Oval Office rather than the courtroom. Late last year, the President issued executive orders exempting hundreds of agricultural products—including staples like coffee, spices, and bananas—from the broader tariff lists. Additionally, a 10% tariff on Brazilian pulp, essential for the production of paper towels and diapers, was rescinded in September. These exemptions provide a small measure of relief for households struggling with "sticker shock," but they do little to offset the broader structural costs of the remaining Section 232 duties.
Legal and Economic Outlook
The Supreme Court’s 6-3 decision marks a pivotal moment in the ongoing debate over the "Unitary Executive" theory and the limits of presidential power in the economic sphere. By ruling that the IEEPA cannot be used as a backdoor for revenue-raising trade policy, the Court has reasserted the role of Congress in the nation’s "power of the purse."
However, legal experts warn that the ruling may simply encourage the executive branch to lean more heavily on the Section 232 national security loophole. If any product—from a microchip to a dining room table—can be argued to have a "national security" implication, the President may still retain the ability to bypass the IEEPA restrictions.
For the global markets, the ruling provides a mixed signal. It suggests that the most volatile and "reciprocal" elements of the trade war may be cooling, but it also confirms that the era of low-tariff globalism has been replaced by a new regime of "Securitized Trade." Companies must now navigate a landscape where trade policy is determined not just by economic theory, but by the strategic definitions of national defense. As the 2026 fiscal year continues, the focus for corporate lobbyists and trade attorneys will undoubtedly shift from the IEEPA to the halls of the Commerce Department, where the next generation of Section 232 investigations is already underway.