Dollar tumbles after US Supreme Court rules Trump 'National Security' tariffs unlawful

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The US Supreme Court (SC) issued a ruling on Friday, declaring President Donald Trump's sweeping application of an archaic trade law to impose tariffs using stretched "national security" claims was broadly unlawful.

The US Supreme Court struck down President Donald Trump's entire tariff policy.
The Trump administration is expected to move quickly to find another legal framework to impose tariffs at whim.

The Trump administration will now have to go back to the drawing board to find a new legal precedent to broadly apply to whiplash tariff imposition as a negotiating tactic rather than a reasoned economic strategy.

The Supreme Court's decision did not directly address refunds of tariffs collected since the kick-off of Trump's sweeping 'Liberation Day' tariffs announced in early 2025; legal progress will continue to grind forward as the Trump administration looks for a way to re-impose tariffs using alternative justifications, and also figure out a way to avoid having to pay back tariff receipts.

US Dollar market reaction

The US Dollar tanked on the news, tumbling one quarter of one percent and driving the US Dollar Index (DXY) into new lows for Friday below 97.75.

DXY 15-minute chart

Tariffs FAQs

What are tariffs?

Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.

What is the difference between taxes and tariffs?

Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.

Are tariffs good or bad?

There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.

What is US President Donald Trump’s tariff plan?

During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.