Supreme Court’s tariff decision clouds trade outlook

WASHINGTON — The Supreme Court’s decision to block US President Donald Trump’s use of an emergency law to unilaterally impose sweeping tariffs on US trading partners was praised by US agriculture and food industry stakeholders, but they conceded that it may not significantly change the trajectory of the global trade war.

The court ruled that the International Emergency Economic Powers Act (IEEPA), enacted in 1977, does not authorize the president to impose tariffs. In what has been an unprecedented use of the statute, the Trump administration has used it to impose tariffs on various countries in recent months.

The high court’s 6-3 decision, which was announced Feb. 20, delivered a blow to the president in a case centered on one of his signature economic policies. Trump’s taxes on imported goods that were implemented last spring have alienated trading partners, affected financial markets and caused global economic uncertainty.

Most countries impacted by the tariffs have imposed counter-tariffs on imported US goods, including various agricultural commodities.

In its decision, the Supreme Court emphasized that tariffs are fundamentally taxes, and taxation authority belongs to Congress. In response to the decision, Trump imposed a 15% global tariff under Section 122 of the 1974 Trade Act. These tariffs can remain in place for 150 days but can be extended by Congress.

It remains to be seen how effectively Trump can implement his tariff policy following the court’s decision.

Dan Basse, president and founder of Chicago, Illinois, US-based AgResource Company, said the decision has stripped Trump of a significant amount of leverage regarding the imposition of tariffs on other countries.

“He’s really lost a big hammer,” the veteran economist said. “You go back to last April when he took the Chinese tariff levels up to 150% through the IEEPA — that is no longer available. This does change things because he is not going to have the kind of power he’s had to impose tariffs at those levels. That said, he will try to find ways to circumvent the court.”

If anything, the court’s decision will likely bring more formality and order to the negotiating process, Basse said.

 “I think these trade deals are finally going to have to be more correctly written down and codified,” he said. “A lot of times, because of the IEEPA, you could have a handshake and a wink and say: ‘You’re going to have to do what I say because if you don’t, I’m going to hit you with a higher tariff later.’ I think now when the US is negotiating, particularly with a country like China, it will have to actually negotiate, work through the details and write them down.”

Unfortunately, the court’s decision does not remedy the uncertainty that the global agribusiness and farming sector has been dealing with since Trump took office in January 2025, Basse said, adding that the ruling may add even more uncertainty in the near term.

“That will cause agriculture and a lot of other US industries more concern going forward because we just don’t know what the future looks like,” he said. “Although the administration is saying it hopes that people abide by existing trade deals, that’s even more uncertain without IEEPA in place. We’ll need some time to go by to see where all this is when the dust settles.”

As of August 2025, more than 60% of goods imported by commercial bakers were subject to tariffs, up from less than 40% in 2024, and average duties increased to 19% from 8% the prior year.

| Photo: ©GRISPB – STOCK.ADOBE.COM

Perhaps no segment of the US ag sector was more pleased with the decision than soybean producers and traders, who saw a 13% drop in soybean exports in 2025 compared with the previous year. Although China, by far its largest customer, agreed to begin importing US soybeans in late 2025 after months of not taking in shipments from what has typically been its largest supplier, it was only a fraction of its typical annual intake.

But it isn’t just exports that soybean farmers are worried about; they also have been severely impacted by the rising costs of key imported products needed for soybean production.

“The case at the Supreme Court has been closely followed by soybean farmers who have seen the cost of inputs rise over the past year due to tariffs,” said Scott Metzger, president of the American Soybean Association (ASA). “US soybean growers are reliant upon imports for critical farming tools like fertilizer, seeds, pesticides and agriculture equipment.

“Moving forward, certainty and dependable market access are essential for US soy to remain competitive globally. Because farmers are caught in a cost-price squeeze and ag input costs remain high, we urge the president to refrain from imposing tariffs on agricultural inputs using other authorities.”

House Agriculture Committee ranking member Angie Craig of Minnesota praised the Supreme Court’s decision but bluntly stated that the tariffs “have already caused lasting damage to farm country.”

“While Trump promised to deliver a ‘Golden Age’ for agriculture, his tariffs cost our farmers billions in lost revenue and handed our export markets to agricultural competitors like Argentina and Brazil,” Craig said. “These losses will take years to recover from. Congress must provide struggling farmers and families with meaningful relief, and the Agriculture Committee should prioritize helping American farmers survive by focusing on a truly bipartisan farm bill that addresses the current challenges our growers are facing.”

Rob Larew, president of the National Farmers Union, had a similar reaction to the decision, noting that “many family farmers and ranchers have already felt the consequences of this tariff agenda.”

“We urge the administration not to pursue similar tariffs under other authorities, and we call on Congress to exercise its oversight role to ensure trade policy supports — not undermines — America’s family farmers and ranchers,” he said.

The baking industry also weighed in on the issue, with Eric Dell, president and chief executive officer of the American Bakers Association (ABA), saying the court’s decision “provides important clarity for the commercial baking industry.”

“This ruling is significant for the commercial baking sector given industry businesses’ reliance on global supply chains for ingredients, packaging and equipment,” Dell said. “According to ABA analysis, 63% of all imports used by commercial bakers come from Canada, Mexico, the European Union and China. Tariffs have added an estimated $744 million annually to the cost of imported ingredients and supplies, while imported finished baked goods have faced an additional $2.6 billion in estimated annual costs.”

Dell said that as of August 2025, more than 60% of goods imported by commercial bakers were subject to tariffs, up from less than 40% in 2024, and average duties increased to 19% from 8% the prior year.

“Although November exemptions have provided targeted ingredient relief and finished baked goods from Canada and Mexico currently appear to be entering duty-free, trade policy volatility continues to affect predictability and planning across the industry,” he said.

Basse said protectionist trade policies will probably continue to rule the day for at least another three years.

“My guess is (tariff-relief) is at least an election away; we’ll see how the mid-terms play out and kind of go from there,” he said. “We may need to get to the next presidential election. I know the grain industry is just yearning to get back to the days of commercial trade where there’s some certainty and we could all react to economics rather than geopolitics.”

Even before the latest Trump trade war saga, China was shifting away from the United States as an agricultural trading partner and making significant long-term investments in Brazil and other countries to ensure a steady and reliable flow of grain and oilseeds.

The United States’ share of global wheat, corn and soybean exports has declined to 17%, compared with 73% at its peak in 1973, Basse noted.

“Increasingly trade has become less important to the US farmer and domestic drivers such as E15 (ethanol) and renewable diesel have become more important,” he said. “I think those trends are likely to be maintained as the US is no longer the low-cost producer, so we find ourselves in a very difficult position. Longer term, I think what Trump is doing will not help us regain market share in certain sectors.”