In a stunning reversal for President Donald Trump, a split U.S. Supreme Court on Friday, Feb. 20, ruled against his imposition of a sweeping regime of worldwide tariffs — taxes which are applied on imported goods — under the auspices of a law giving the nation’s chief executive special powers in times of national emergency.
What does it mean for Michigan? It’s complicated.
U.S. Rep. John Moolenaar, R-Caledonia, who leads a congressional committee aimed at blunting Chinese threats in the United States, suggested the decision could remove a tool Trump has in protecting national security and called on Congress to take action; meanwhile, the Michigan Smart Trade Alliance — an organization of Michigan retailers and business groups — said it underscores the need for “predictable trade rules that keep costs down and protect jobs.”
Gov. Gretchen Whitmer said Trump’s tariffs have hiked the cost of cars, groceries, energy, and housing, and done little, so far, to boost manufacturing, adding she hopes the administration and Congress come up with “a more commonsense, strategic trade policy.”
A spokesman for Ford Motor Co. said it was still “assessing the implications,” since the tariffs Trump has imposed directly on auto and auto parts imports fall under another law. Meghan MacDonald, who represents the Motor & Equipment Manufacturers Association, a suppliers trade group, still welcomed it as opening a path toward settling upended supply chains.
And where it leaves Trump and his threats to delay the opening of the new and much-anticipated Gordie Howe International Bridge between Detroit and Windsor, Ontario — since it’s potentially directly tied to his desire for Canada to make trade concessions connected to these and other tariff implications — is anyone’s guess.
What we do know is what Trump called the ruling: “ridiculous.” And he said he was moving to, within days, impose a 10% global import tariff in place of the ones reversed by the court, though that is under another measure, Section 122 of the Trade Act of 1974, which, as written, could limit how long they remain in effect. That section, which hasn’t been used before, could also be tested in court. Trump said he expects many of the trade deals reached between his administration and foreign nations — following imposition of the International Emergency Economic Powers Act of 1977 (or IEEPA) tariffs — will remain in place, however.
He also attacked the conservative justices who ruled against him as “fools and lapdogs … unpatriotic and disloyal to our Constitution” and saying they have been “swayed by foreign interest.” But he intimated he would accept the decision and use other authorities at his disposal. “I could charge more than I was charging,” he said, adding that trade investigations to impose more long-lasting tariffs would begin immediately.
With Chief Justice John Roberts writing the opinion, which saw five other justices (conservative Justices Amy Coney Barrett and Neil Gorsuch, and liberal Justices Ketanji Brown Jackson, Elena Kagan and Sonia Sotomayor) agree with the main holding that the International Emergency Economic Powers Act of 1977 (or IEEPA) “does not authorize the President to impose tariffs,” the administration’s yearlong campaign of imposing a broad regime of tariffs on imports from Canada, Mexico and countless other countries could be — at least temporarily — upended.
“What common sense suggests, congressional practice confirms. When Congress has delegated its tariff powers, it has done so in explicit terms, and subject to strict limits,” Roberts wrote, noting the House and Senate did not confer such broad tariff powers to the president under the IEEPA. Coincidentally, research from the Federal Reserve Bank of New York recently concluded that American import customers — businesses and households — are paying the majority of the cost of those widespread tariffs, not the nations they are being imposed upon.
On the other hand, there has clearly been evidence that the tariffs have resulted in billions of income for the government. (It leaves unanswered, for now, the question as to whether the United States has to pay back those tariff revenues; an analysis by the Wharton School at the University of Pennsylvania said the United States could be on the hook for paying back up to $175 billion and tariff revenues could fall by half. (That could exacerbate the deficit.)
But, to be clear: The Supreme Court decision effectively reversing the tariffs Trump has imposed under the IEEPA and claims of national emergencies involving drug trafficking, trade deficits and other crises is a blow to a central pillar of the administration’s agenda, affecting hundreds of billions — if not more than $1 trillion — in potential revenue over the next decade, at least for now.
It could also theoretically reduce upward price pressure on consumer items like shoes and electronics and raw materials for manufacturing, depending on what happens with the new tariffs Trump announced, how long they remain in effect and whether others are imposed.
Ultimately, it is a turnabout that is significant politically but one that could have limited impact on Michigan and the domestic auto industry centered in the state for various reasons. Here’s a quick rundown of what such a decision might and might not mean:
This doesn’t directly impact the tariffs on imported autos and auto parts
That’s right. Those tariffs — which stand at 25% for imported autos and auto parts unless they are compliant with the preexisting North American trade deal with Mexico and Canada or covered by newer deals like those negotiated with the European Union, Japan and South Korea — were imposed beginning last April under Section 232 of the Trade Expansion Act of 1962, relying largely on a study done in Trump’s first term saying they were necessary to protect national security.
As said previously, the Supreme Court decision concerns the sweeping so-called reciprocal tariffs and drug-trafficking tariffs Trump claimed authority to impose worldwide in 2025 under the IEEPA.
That statute gives the president wider authority to take immediate action after declaring a national emergency than Section 232 does. But it has never been used before to justify imposing tariffs — a tax typically left to Congress unless it has specifically provided that authority to the White House (such as under Section 232 mentioned above).
That’s not to say there is no effect on automakers: CBT News, which reports on the auto industry, cited data from the Center for Automotive Research in Ann Arbor in November saying the automakers could be hit with as much as $900 million in costs for related machinery and raw materials under the IEEPA tariffs (which seems like a lot but compared with the entire auto industry, it isn’t, given that billions are invested in production each year). And that’s at a time when the industry, according to Patrick Anderson, principal and CEO at the Anderson Economic Group with offices in East Lansing and Chicago, is struggling under lost investments in electric vehicles and a multimillion-dollar drop in both import and export values. “The industry’s been hammered by tariffs,” he said.
Trump can find other ways to impose tariffs
Throughout his 2024 quest to regain the presidency, Trump argued repeatedly that tariffs — which are taxes importers pay on goods brought into the country from other nations and which economists generally argue will eventually drive up consumer prices — were good for the nation after decades of efforts to lower free trade barriers. By raising them, he said, the United States could insist on better trade deals, force companies to return manufacturing to the United States and reap billions in revenue for the nation.
In November, Trump said it would be an “economic disaster” if the Supreme Court overturned the IEEPA tariffs in the consolidated case challenging his authority and brought by a couple of small businesses (and also involving several states, though Michigan isn’t among them).
But there are numerous other authorities Trump has — barring an unlikely move by a Republican-led Congress to rein him in — to push his tariff agenda:
It might be expected that a stock market gain, if one is spurred by a Supreme Court decision, might bolster arguments against reimposing tariffs if they are reversed and that such a change might put pressure on the Trump administration to lower tariffs on autos and auto parts. But Anderson of the Anderson Economic Group said that’s unlikely.
“He has ample authority to impose tariffs and this president is definitely going to be imposing them throughout his term,” Anderson said. “He’s ideologically committed to this.”
At MichAuto, the auto-focused, Detroit Regional Chamber-affiliated economic development group, Executive Director Glenn Stevens Jr. said the decision “correctly recognizes that the law was misapplied,” and that there are hopes that if the administration looks for other ways to reimpose them it does so with the harm they can cause in mind.
“Michigan’s businesses are disproportionately negatively impacted by tariffs, especially in our automotive, manufacturing, and agriculture sectors,” Stevens said. Trump’s move to reimplement them immediately, however, suggests he is not likely to accept that argument.
But what does it mean for the new Detroit-Windsor bridge?
Nothing? Everything? Who knows.
When Trump on Feb. 9 suddenly threatened to delay the opening of the Gordie Howe Bridge — which Canada paid for upfront and had spent decades getting approvals for — it caught pretty much everyone who had been lobbying for it on both sides of the border, including a lot of business types in southeast Michigan, entirely by surprise.
But Trump’s message posted on his Truth Social site that day complained that Canada has treated the United States unfairly in terms of trade in dairy and agricultural imports and exports and, presumably, other goods. Much, if not most, of that (as well as autos and auto parts) is wrapped up in the U.S.-Mexico-Canada trade deal Trump signed during his first term in office and which is up to be renegotiated.
But the clear rejection of Trump’s contention that he could use the IEEPA to declare emergencies such as those involving Canada — which some critics have argued were artificial and which the U.S. House, despite a Republican majority, recent voted to overturn — remove one method by which the administration could unilaterally impose tariffs on items outside the tri-lateral USMCA, potentially blunting, at least somewhat, the ability to make trade demands.
Expect the situation to remain confusing, to say the least
Trump’s embrace of setting new and higher tariffs as a way to project and protect American dominance around the world has upended the world economic order, not least of all due to an on-again, off-again trade war with some of the nation’s biggest trading partners, including China, Mexico and Canada.
But the effects, good or bad, haven’t been in any one direction. Inflation continues to rise but not nearly as broadly or as fast as some predicted under the Trump tariff regime (though some items, like orange juice and beef, have risen substantially). And there is new research suggesting that the effects of Trump’s tariffs have been dampened upfront based on when they were announced and what products were already on their way to the United States at the time (and wouldn’t be hit immediately by them) and other factors such as increased compliance with the U.S.-Mexico-Canada trade agreement (which exempts items from tariffs).
Other research suggests historical impacts of tariffs may be less inflationary than originally thought but producing more unemployment as some companies have, in the past, scaled back operations presumably due to increased costs. (It’s also worth noting that research indicates autos and auto parts are expected to see more of the tariff costs passed onto consumers, however.)
Further complicating matters — and the question of whether an adverse ruling on Trump’s tariffs might lower prices on some consumer items (think clothes from Vietnam or olive oil from Italy) — is how quickly the Trump administration can move to permanently reinstate those tariffs (as well as potentially pay back the billions already collected from importers if they challenge in court), as well as what exemptions remain in place. Trump has already moved to drop tariffs on some items — beef, coffee, bananas — as Democrats have railed that he hasn’t done enough to address rising costs.
All of which is to say that while the court’s decision is a significant development — and an indication of the court’s independence — it may not have the immediate or lasting impact some may think. Said Anderson, “I urge people not to prematurely celebrate the end of tariffs.”
(This story has been updated to add new information.)
Free Press staff writer Jamie L. LaReau contributed to this article.
Contact Todd Spangler: tspangler@freepress.com. Follow him on X @tsspangler.
This article originally appeared on Detroit Free Press: Supreme Court stops Trump tariffs: What it means for Michigan, autos
Reporting by Todd Spangler, Detroit Free Press / Detroit Free Press
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