The Supreme Court set off an economic earthquake on Friday, pushing aside most of President Donald Trump's tariffs with a ruling that could reshape everything from the price of a couch or an electronic toothbrush to the tax bill run up by some of the nation's largest corporations.
The high court ruled that the International Emergency Economic Powers Act (IEPPA) does not authorize Trump to impose levies, nullifying a major swathe of country-specific tariffs issued by the president on "Liberation Day," as well as a 10% tariff placed on all imports and a host of other measures.
In theory, the ruling will dial back the reach of U.S. tariffs, easing upward pressure on prices, while ending duty payments and delivering billions in tax refunds for importers, analysts said.
For now, however, immense uncertainty hangs over the path forward, since tariff refunds could face legal and logistical hurdles and the Trump administration will likely seek to revive the lost tariffs under alternative legal authorities, they added.
Dan Ives, a managing director of equity research at investment firm Wedbush, put it succinctly on Friday in a message to clients: "This will be a very noisy situation."
The stock market ticked up in early trading on Friday, but the move fell well short of the near-historic volatility in the weeks following Trump's tariff rollout last spring, suggesting a lack of clarity about what comes next, experts said.
Speaking at the White House on Friday, Trump sharply criticized the Supreme Court's decision, vowing to impose further tariffs under his remaining legal authority.
"The decision is incorrect, but it doesn't matter because we have very powerful alternatives," Trump said.
Here's what the Supreme Court's tariff ruling could mean for the economy:
What does the ruling mean for Trump's tariffs?
Most immediately, the Supreme Court ruling holds major implications for tariffs, which amount to taxes paid by importers for goods shipped into the U.S. Oftentimes, importers pass along tariff-related costs to consumers, raising retail prices.
If the Supreme Court had opted to uphold tariffs issued under IEPPA, the nation's effective tariff rate would have remained at 16.9%, the Yale Budget Lab said on Friday. Instead, the group said, the effective tariff rate will drop nearly by half, falling to 9.1%.
Some tariffs issued by Trump will be unaffected by Friday's ruling, including a 50% levy on all steel and aluminum products.
For his part, Trump will likely seek to reconstruct some of the invalidated tariffs under other legal authorities, some analysts told ABC News.
Trump has repeatedly defended his legal authority to impose the tariffs and warned of economic damage if they were to be struck down.
"If we don't win that case, we will be a weakened, troubled financial mess for many, many years to come," Trump said in October at a White House event. "And if we do, we're going to be the most powerful economic country in the world."
Trump retains the power to levy additional sector-specific tariffs and the authority to impose a 15% tariff for up to 150 days under the Trade Act of 1974, which allows the president to address trade disparities with other countries.
On Friday, Trump said he would sign an executive order enacting a new 10% "global tariff," invoking authority under Section 122.
Trump also vowed to initiate investigations as part of an effort to impose additional sector-specific tariffs.
"It's a little longer process," Trump said. "I tried to make things simple but they wouldn’t let us do that.”
Jason Miller, a professor of supply chain management at Michigan State University, told ABC News: "There's no doubt the president will do whatever he can to put these tariffs back in place."
What does the tariff ruling mean for shoppers?
Hours before the Supreme Court issued its ruling, a fresh set of government data, the Personal Consumption Expenditures (PCE) price index, showed year-over-year inflation stands at 2.9%, putting it nearly a percentage point above the Federal Reserve's target of 2%.
Affordability remains a concern for many Americans as the political calendar turns closer to election season.
The tariff ruling will at least temporarily remove tariffs that had placed upward pressure on prices for a wide range of imported products, including electronics, furniture, recreational equipment, perfume and household appliances, Miller said.
"My wife is doing a happy dance right now because it means South Korean beauty products are no longer subject to tariffs for the time being," Miller added.
The average household is expected to suffer losses totaling about $800 over a long-term period due to tariff-related price increases, the Yale Budget Lab found. Those projected losses dropped by half as a result of the Supreme Court decision, the group added.
Still, the ultimate effect on prices remains highly uncertain, since Trump could seek to put alternate levies on some products, and in the meantime, companies may retain elevated prices as they await the fallout, some analysts said.
"This is positive for consumers because tariffs are taxes that affect consumers," Miller said. "I can't tell you how positive it is because I don't know how the White House will respond in terms of using other avenues to try to make up for what just happened."
That uncertainty could end up undermining some of the benefits for consumers, Heather Boushey, a professor of practice at the University of Pennsylvania and a member of the White House Council of Economic Adviser under former President Joe Biden, told ABC News in a statement.
"The uncertainty of this chaotic trade policy will continue to impact consumers and businesses, cause confusion, and raise prices," Boushey said.
What does the tariff ruling mean for businesses?
The ruling on Friday places an immediate focus on tens of billions of dollars in tax payments that could be eligible for refunds.
Looking further ahead, the decision will likely produce winners and losers among U.S. businesses, some analysts said. A lower tariff burden could benefit a host of importers saddled with onerous duty payments, they said, but the move may hurt some U.S.-based manufacturers in industries that had been protected by the levies on goods shipped from overseas.
The court decision draws renewed attention to billions of dollars in taxes paid by importers on tariffs, which have now been deemed illegal. Importers may be given a refund, though the process could face logistical and legal hurdles. Many businesses already passed along a portion of the cost to consumers.
On Friday, Trump said he does not plan to voluntarily pay out refunds because the Supreme Court did not address those in its decision. "It will be litigated for the next two years," Trump said.
In all, 300,000 U.S. importers may be entitled to such refunds of IEEPA tariffs, according to the federal government. Importers have paid an estimated $175 billion in taxes tied to tariffs imposed under IEPPA, a Cato Institute analysis found.
"The federal government must refund the tens of billions of dollars in customs duties that it illegally collected from American companies pursuant to an 'IEEPA tariff authority' it never actually had," Scott Lincicome, vice president of general economics at the Cato Institute, told ABC News in a statement.
"That refund process could be easy, but it appears more likely that more litigation and paperwork will be required," Lincicome added.
The ruling will benefit firms in import-dependent industries, Miller said, noting it will reduce costs and potentially allow them to make additional investments.
Gary Shapiro, CEO of the Consumer Technology Association, applauded the ruling in a statement on Friday: "Innovation thrives on predictability, and this common-sense decision brings much-needed clarity for American businesses and consumers," Shapiro said.
On Friday, Trump defended his tariff policy, saying it had contributed to U.S. economic performance.
"We're doing so well as a country," Trump said, before noting additional tariff authorities "available to me as president of United States."