It’s been nearly a year since the first talk of tariffs from the Trump administration created general uncertainty in the auto industry. After several delays, they finally went active in April with a 25% charge on imported cars, followed by other tariffs on auto parts. We aren’t going to belabor all the subsequent tariffs, changes, more changes, and general chaos that followed.
Now, the US Supreme Court has ruled that tariffs imposed by President Trump under the guise of the International Emergency Economic Powers Act (IEEPA) were illegal. In a 6-3 decision, the high court ruled that Trump’s actions required congressional authorization, which did not take place.
“We claim no special competence in matters of economics or foreign affairs. We claim only, as we must, the limited role assigned to us by Article III of the Constitution. Fulfilling that role, we hold that IEEPA does not authorize the president to impose tariffs.”
-John Roberts, chief justice, US Supreme Court
So it’s back to business as usual for automakers, right? Actually, that probably won’t be the case.
The Supreme Court Ruling Has A Limited Effect On Automakers
The 170-page ruling applies to tariffs specifically applied using the IEEPA as a foundation. No president before Trump had used IEEPA to issue tariffs, but as Avalara explains, most tariffs affecting automakers are not rooted in the IEEPA, but rather Section 232. Section 301 targets specific products and materials related to national security and unfair trade practices. The IEEPA tariffs were responding to alleged national emergencies, such as reciprocal tariffs for the claimed drug crisis from Canada and Mexico.
The Start-Stop Feature That Everyone Hates May Quietly Fade Away
The 2009 Endangerment Finding and subsequent greenhouse gas standards in the US are officially repealed, relaxing requirements for engine emissions.
Tariffs based on Section 232 and Section 301 are still in place, and Trump wasn’t the first president to enact them for automotive production. President Biden used it to place tariffs on Chinese imports during his administration. But the new ruling should have at least some impact on the auto industry. Automotive News points out that approximately $8 billion in tariff costs came from the auto industry that is now deemed illegal. That’s not exactly nothing.
What Will Automakers Do Now?
CarBuzz reached out to all major auto manufacturers for a comment on the current ruling and how it might impact future plans. Nissan and Audi have thus far declined to comment. Stellantis deferred to the American Automotive Policy Council, which also declined to comment.
Ford offered the following statement:
“We are studying the effects of the Supreme Court’s decision and assessing its implications. We will continue to work with the Administration and Congress on policies that promote a strong and globally competitive US auto sector.”
Toyota’s statement:
“The Supreme Court’s ruling on IEEPA-related tariffs does not affect existing tariffs imposed under Section 232. Toyota remains committed to supporting US manufacturing, jobs, and long-term investment while working to improve affordability for customers. We are eager to see a renegotiated USMCA that strengthens North American competitiveness and delivers greater certainty for the industry.”
We are awaiting additional replies and will update this post as they come in.
Trump’s Plan To Lower New Car Prices: Let Them Use More Gasoline
Yes, that’s right. Because Americans always complain that gas and diesel are too cheap.
Even if the court’s decision has little effect, any help will likely be welcome news. Pretty much every automaker recorded a multi-billion dollar hit from tariffs as they tried to avoid passing the costs over to consumers already weary of record-high vehicle prices. Some found ways to mitigate the effects through cost-cutting measures in other areas. Others largely absorbed the costs and just took the financial hit. In a few cases, vehicle production was slashed. And while no automaker admits it, increases in destination charges are quite likely related to tariff costs.
With 2026 well underway, there’s still plenty of uncertainty in the auto industry. Whether this latest news brings some stability or more chaos remains to be seen.
Source: US Supreme Court
