By Brooke Thomson
President and CEO

The 3,400 member companies of Associated Industries of Massachusetts are gratified by the US Supreme Court ruling that the president does not have the authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA) of 1977. The tariffs imposed in 2025 represent the largest US tax increase as a percentage of GDP since 1993 and have burdened Massachusetts employers with increased costs, disrupted supply chains and retaliation in overseas markets.

Massachusetts companies export some $77 billion worth of goods each year to 210 markets globally, and support one of five jobs in the commonwealth. Massachusetts imports declined from $3.6 billion when any of the tariffs were announced in April 2025 to a little more than $3 billion in November.

It is our firm hope that the ruling will reinvigorate international trade and confirm the status of our commonwealth as a global center of economic growth and opportunity.

The court did not weigh in on whether or how the federal government should provide refunds to the importers who have paid the tariffs, estimated in 2025 at more than $200 billion.

In the wake of the high court ruling, President Donald Trump announced plans to levy 10% tariffs on all nations, replacing part of the overturned tariffs. The new tariffs, imposed under Section 122 of the Trade Act of 1974 are sweeping, but limited – the law says the president can impose a tariff of up to 15% for 150 days to address trade deficits or a dollar crisis. But the measure cannot exceed that time period without congressional approval.

The Trump Administration has indicated that it will seek other legal means as well to defend the tariffs that are a centerpiece of its economic policy. The laws the administration might use include Section 301 of the Trade Act of 1974, Section 232 of the Trade Expansion Act of 1962, Section 201 of the Trade Act of 1974 and Section 338 of the Tariff Act of 1930. All of those statutes are more restrictive than IEPPA.

The bottom line for employers is that the tariffs issue will continue to be tied up in litigation for the immediate future.

The Supreme Court agreed with challengers that IEEPA did not give President Trump the power to impose the tariffs.

“Based on two words separated by 16 others in … IEEPA – ‘regulate’ and ‘importation—the President asserts the independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time,” Chief Justice John Roberts wrote. “Those words,” he continued, “cannot bear such weight.” “IEEPA,” Roberts added, “contains no reference to tariffs or duties.” Moreover, “until now no President has read IEEPA to confer such power.”

In a part of the opinion joined by Justice Neil Gorsuch and Justice Amy Coney Barrett, Roberts said that Trump’s reliance on IEEPA to impose the tariffs violated the “major questions” doctrine – the idea that if Congress wants to delegate the power to make decisions of vast economic or political significance, it must do so clearly. “When Congress has delegated its tariff powers,” Roberts said, “it has done so in explicit terms, and subject to strict limits,” a test that Trump’s tariffs failed here.

Concern about tariffs has dominated employer sentiment as measured by the AIM Business Confidence Index, which showed a pessimistic reading for 10 consecutive months last year. One small AIM manufacturing member paid $9,000 in tariffs last summer for a piece of machinery that was critical to its operations.

Another member told us last month that “The incoming tariffs have many of our customers afraid to place orders.”

To be fair, at least one manufacturing member reported an uptick on orders from customers who previously purchased goods outside the US.

Tariffs reduce available quantities of goods and services for US businesses and consumers, resulting in lower income, reduced employment, and lower economic output. The tariffs imposed last year amount to an average tax increase per US household of $1,100 in 2025 and $1,400 in 2026. The Tax Foundation estimates that the levies will reduce US GDP by 0.5 percent, all before foreign retaliation.

As of September 1, threatened and imposed retaliatory tariffs affected $223 billion of US exports based on 2024 US import values. Combined, the US-imposed tariffs and the threatened and imposed retaliatory tariffs reduce long-run US GDP by 0.7 percent.