The United States Supreme Court on Friday ruled that the White House does not have the authority to impose sweeping tariffs under a federal emergency powers law.
In a 6-3 decision, the Court ruled that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose tariffs. Chief Justice John Roberts writes in the majority’s opinion that IEEPA does not reference tariffs or duties and “until now, no President has read IEEPA to confer such power.”
With overturned tariffs, the construction industry could see “modest but meaningful reduction” in materials price escalation, said Anirban Basu, chief economist for Associated Builders and Contractors, at the same time acknowledging the uncertainty that follows.
“Of course, the administration has signaled that plans are in place to replace at least some of those tariffs through other means, so the benefits could be short-lived and completely counteracted by heightened uncertainty during the transition from one tariff mechanism to another,” Basu said. “That, combined with the fact that the Section 232 tariffs on raw inputs like steel and aluminum will remain in place,” means the ruling could ultimately be less consequential for construction-related industries, he added.
While the Supreme Court ruling invalidated tariffs imposed under IEEPA, other statutory tariff authorities (namely Section 232 and Section 301) remain in effect and may continue affecting import costs for building materials, including doors, windows, lumber and metals used in frames and hardware. Those include Section 232 tariffs on aluminum, steel, copper, wood products imposed under the Trade Expansion Act of 1962, and Section 301 tariffs on Chinese goods carried over from the President’s first term and imposed under the Trade Act of 1974.
Following the decision, National Association of Home Builders (NAHB) chairperson Bill Owens noted the president’s ability to impose tariffs by other means, while urging the administration to forego building materials in any future measures.
“While the Supreme Court’s ruling reins in presidential authority to impose tariffs under IEEPA, President Trump still has wide latitude in setting tariff policy,” Owens said. “With the nation facing a housing affordability crisis, NAHB urges the president to exempt building materials as part of his tariff strategy because they raise construction costs, impede supply chains and result in market and business uncertainty that make it difficult for builders to price their homes.”
Officials for the National Association of Manufacturers (NAM) said the decision highlights a need for clear, durable and consistent U.S. trade policy. Manufacturers depend on stability to make long-term investment, hiring and supply chain decisions, they added, suggesting that ongoing legal or policy uncertainty undermines American competitiveness.
Others called for the administration to return tariff revenues to the American companies that paid them.
“Putting those dollars back into the hands of job creators will immediately strengthen cash flow, unlock capital investment and provide a meaningful boost to the broader economy,” read a statement from the National Association of Wholesaler-Distributors (NAW). “Wholesaler-distributors operate on thin margins while keeping America’s supply chains moving. Returning tariff funds will allow distributors to reinvest in inventory, infrastructure, technology and workforce growth. A prompt, orderly refund process will deliver real economic impact.”
The ruling is a blow to one of the administration’s signature policies, but the White House plans to pursue duties through alternative authorities, such as Section 232 of the Trade Expansion Act of 1962. The administration has also announced a 15% blanket global tariff, under Section 122 of the Trade Act of 1974, which allows tariffs up to 15% but requires congressional approval to extend them after 150 days.
In the meantime, officials with Hinckley Allen, a law firm operating in the construction industry, say that contractors should “consider how a rapid change in material prices would be treated under their existing contracts, including price escalation and force majeure provisions, and how they will address any resulting price uncertainty moving forward.”