Impact of Supreme Court Tariff Ruling on US Chemical Industry Dynamics

Numerous businesses in the United States, particularly in the chemical sector, are closely watching the upcoming decision from the US Supreme Court regarding tariffs that were enacted in 2025 by President Donald J. Trump on a wide range of imports.

Supreme Court’s Impact on Tariffs and Presidential Authority

The implications of the court’s ruling will extend beyond mere financial burdens associated with the tariffs. A ruling could potentially limit presidential authority to swiftly implement import duties. Conversely, it could affirm this power, potentially allowing future administrations to address global climate change through tariffs on imported goods that contribute to greenhouse gas emissions.

Moreover, the court’s decision might establish new legal precedents enabling the Environmental Protection Agency (EPA) to regulate greenhouse gas emissions under the existing Clean Air Act, or conversely, complicate future regulatory efforts.

Tariff Effects on the US Chemical Industry

While the overall impact of the tariffs introduced in April is perceived to be less detrimental to the chemical industry compared to other sectors, certain segments are indeed feeling the effects. Notably, large-volume chemical imports such as polymers and certain petrochemicals were excluded from these duties, along with the widely used herbicide glyphosate.

However, other areas within the US chemical industry are facing challenges due to tariffs on various commercial chemicals, including metals used as catalysts and specific imported pesticides.

For instance, the 2025 tariffs imposed on the agricultural herbicide dicamba imported from China and India add to existing US import duties, resulting in total tariffs of 56.5% from India and 43% from China, according to Jim DeLisi, an expert in monitoring chemical imports.

In response to these tariffs, some companies are actively seeking new suppliers from countries with lower tariff rates. Although switching suppliers may lead to cost savings, it often involves complex logistical and financial considerations as well as additional regulatory requirements.

As chemical companies navigate these challenges—whether by changing suppliers or maintaining existing import relationships—they are closely monitoring developments in the Supreme Court case.

Legal Background and Consolidated Lawsuits

The American Chemistry Council (ACC), the largest trade association for the US chemical industry, is keenly observing the Supreme Court proceedings. Although ACC is not directly involved in the two consolidated lawsuits contesting the tariffs (Learning Resources v. Trump and Trump v. V.O.S. Selections), it remains engaged with its members regarding potential outcomes.

This consolidated case revolves around the authority invoked by Trump for implementing the 2025 trade barriers under the International Emergency Economic Powers Act (IEEPA), which grants presidents significant power to impose sanctions on international trade following a national emergency declaration.

While previous presidents have leveraged IEEPA for sanctions, Trump is notably the first to apply it for tariffs after declaring national emergencies related to drug trafficking and perceived trade imbalances with countries like Canada, China, and Mexico.

Critics argue that IEEPA does not explicitly mention tariffs or levies. Historically, presidents have employed different legislative frameworks like the Trade Expansion Act of 1962 and the Trade Act of 1974 for establishing tariffs, which necessitate thorough investigations and processes before implementation.

Should the Supreme Court uphold Trump’s authority under IEEPA, it would enable future presidents to utilize import duties for various international issues, including climate-related initiatives discussed during oral arguments held on November 5.

Potential Climate Change Implications

Hypothetically, a future president could leverage IEEPA to impose tariffs aimed at mitigating climate change effects, potentially targeting products that contribute significantly to greenhouse gas emissions.

Justice Neil M. Gorsuch raised pertinent questions about the possibility of imposing substantial tariffs on gasoline-powered vehicles as a response to climate change threats if Trump’s use of IEEPA is validated.

Additionally, Justice Ketanji Brown Jackson inquired about the potential for legal challenges against tariffs established following a presidential declaration of climate emergency.

Major Questions Doctrine and Future Regulatory Power

The Supreme Court is also considering whether a legal doctrine known as the major questions doctrine applies to this tariff case. This doctrine restricts federal agencies from taking actions of significant political and economic impact unless explicitly authorized by Congress.

Trump contends that this doctrine does not pertain to presidential authority or foreign affairs, including tariff imposition.

If the court agrees with Trump, future presidents may be able to direct the EPA to take action on greenhouse gas emissions without adhering to the major questions doctrine.

The court’s ruling may also clarify what constitutes ‘vast political and economic significance,’ impacting how broadly this doctrine is applied in future regulatory contexts.

Financial Consequences and Timeline

Regardless of how these legal questions are resolved, a decision against Trump would annul the 2025 import tariffs set under IEEPA.

Businesses across various sectors have already incurred billions in tariff payments and could receive refunds if the Supreme Court rules against these tariffs, as noted by DeLisi.

He indicated that reclaiming these funds should be relatively straightforward due to detailed customs entry records. Given the substantial financial implications involved, it’s anticipated that the Supreme Court will address refund processes if it determines that Trump’s use of IEEPA for tariff imposition was invalid.

The Supreme Court is expected to announce its decision by June 2026.