The Supreme Court’s ruling leaves Trumponomics facing major challenges

The decision by the US Supreme Court to rule most of Donald Trump’s “liberation day” tariffs illegal will have far-ranging consequences for the president’s economic agenda. Although the administration will find other ways to increase tariffs, their usefulness as a weapon of economic warfare will be diminished. And the issue – among the most unpopular of the president’s economic policies – will cause him serious political damage.

Trump’s first move following the ruling has been to impose a 15% tariff^[1] on all imports. Imposed under a little-used law, the tariff rate is fixed and time-limited to 150 days before needing congressional approval. It would take only a few Republicans to block its extension^[2]. And the midterm elections are looming.

Using a flat-rate tariff means that some countries that settled earlier and got a better deal – including the UK^[3] – are now worse off, while others that had a higher tariff rate imposed on them have, at least for now, benefited. It also could mean that those that pledged to invest hundreds of billions in the US economy – including Japan and the EU – may now question whether their commitment still stands.

Trump’s ability to threaten instant retaliation to any country that crosses him will also be constrained by the other two legal routes he can use to raise tariffs. Both provisions would require time-consuming, detailed investigations into specific industries or countries, and rates once fixed cannot as easily be changed.

The domestic political fallout from the Supreme Court decision is also substantial. Two thirds of the US public disapprove^[4] of Trump’s tariff policy, with large sections believing that his tariffs are inflationary.

Democrats are already calling for the money raised to be returned to consumers. And businesses, including small firms hit hard by the tariffs, are suing the government^[5]. If the US government can no longer rely on the income from tariffs – which rocketed to US$287 billion^[6] (£211 billion) this year – it would put further pressure on the fast-growing federal budget deficit. This is already US$2 trillion and projected to rise to US$3 trillion^[7] by the 2030s, as a result of Trump’s large tax cuts.

Nor have Trump’s tariffs achieved their objectives. The trade deficit^[8] was slightly larger in 2025 than the year before, with US$1 trillion more goods being imported than exported. Tariffs have not boosted jobs: manufacturing employment fell by 80,000^[9] and unemployment is up to 4.3% compared to 4% in January 2025^[10].

The bigger problem for the president is the overall performance of the economy. The Republicans have only a narrow majority in the House of Representatives, and most observers are predicting that the Democrats will gain control in November. Trump’s ratings on his performance on the economy have been slipping, with 55% now disapproving^[11]. And 65% disapprove of his handling of inflation^[12].

He now faces an uphill struggle in the State of the Union address to convince the public that the economy is back on track under his leadership.

There is still debate over how much the tariffs have contributed to inflation, but the US economy is only growing at 2.2% a year^[13], its slowest rate since 2020.

Inflation^[14] is the main concern of US voters, with figures putting the rate at 2.9%^[15] – well above the Federal Reserve target of 2%. Estimates by economists suggest that companies are increasingly passing on the cost of tariffs^[16] to consumers, which may well be driving inflation. Recent job figures^[17] may have provided some more positive news, but voter worries about high prices may be hard to shift.