The US Supreme Court has ruled against Donald Trump’s decision to impose a raft of global tariffs.
Six of the court’s nine judges voted to overturn the signature economic policy, handing the president a significant loss.
The judgment was in response to an application brought by businesses affected by the tariffs from 12 mostly Democrat-run states.
The applicants challenged the way the US president imposed the sweeping country-specific taxes.
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Traditionally, tax-raising measures like tariffs are taken through Congress but the president wished to bypass that process.
But the majority judgment found the US constitution “very clearly” gives Congress that power.
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“The framers did not vest any part of the taxing power in the executive branch,” US Chief Justice John Roberts wrote.
This case is the first challenge to a major part of Mr Trump’s agenda to be ruled on by the Supreme Court.
His agenda may still continue, just under a different legal pretext.
But advancing tariffs under different laws may limit the speed of implementation and the severity of the sanctions regime.
Responding to the decision, Mr Trump said it was “a disgrace”.
He said he was “ashamed of certain members” of the Supreme Court for not “having the courage to do what’s right” for the US.
And he thanked the three justices who voted in his favour before saying that foreign countries “who have been ripping us off for years” are now “dancing in the streets”.
His administration had argued that a 1977 law allowing the president to regulate importation during emergencies also allowed him to set tariffs.
Other presidents have used the law to impose sanctions before, but Mr Trump was the first president to invoke it for import taxes.
What are tariffs?
From 2 April last year, a day described by Mr Trump as “Liberation Day”, countries across the world were hit with taxes on their exports.
The tariffs were brought in via executive order from Mr Trump, who invoked the International Emergency Economic Powers Act to do so.
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The Act is a 1977 law meant to be used during national emergencies, which Mr Trump applied as he said the country was in a national emergency because of US trade deficits.
It was also this law that was used to apply levies on Canadian, Chinese and Mexican goods and services entering the US, although Mr Trump’s national emergency rationale was the trafficking of the drug fentanyl into the US.
What does it mean for the economy?
What happens next remains to be seen.
The decision immediately lowers the effective tariff rate sharply, from 12.8% to 8.3%, according to Michael Pearce, the chief US economist at Oxford Economics.
Many companies, including wholesale chain Costco, have already gone to court seeking tariff refunds.
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Justice Kavanaugh wrote in the dissent: “The Court says nothing today about whether, and if so how, the government should go about returning the billions of dollars that it has collected from importers.
“But that process is likely to be a ‘mess’, as was acknowledged at oral argument.”
That uncertainty is likely to remain, potentially eliminating any economic benefit from the removal of tariffs.
