What does the Supreme Court’s tariff decision mean for UK businesses?

A storm is brewing in the Atlantic after the latest twist in the trade saga.

Last updated: 25 February 2026

The US Supreme Court recently voted to strike down Donald Trump’s trade tariffs, initiated under the International Economic Emergency Powers Act (IEEPA) in early 2025. While the decision had been expected, the ensuing lack of clarity caused chaos for thousands of British businesses.

There is still much we don’t know. Would the UK’s existing trade agreement be honoured or replaced with blanket levies? Should the UK retaliate, and if so, how? Downing Street seems to have employed strategic ambiguity in its response, a tactic that has only muddied the waters further for British businesses that export goods and services across the Atlantic.

Why were tariffs deemed illegal?

Constitutional lawyers have long suspected ‘Liberation Day’ might end this way. For those of you unfamiliar with the American legal system, the consitution – the nation’s founding document – delineates a clear separation of powers between the executive branch (the president) and the legislative branch (Congress). Congress is viewed as having ‘power of the purse’, which means they get a vote on almost all spending decisions, apart from in truly exceptional circumstances.

The White House argued that America’s trade deficit with some of its largest partners represented a crisis worthy of executive action. To justify this, it wheeled out the IEEPA argument first used by the Jimmy Carter administration at the height of the oil crisis in the Middle East.

At the time, many people (including us) predicted this would be insufficient grounds to impose sweeping tariffs on most of the world, even in the context of a partisan bench. The justices’ arguments confirmed this. According to their published ‘opinions’, the kind of major tariffs used as a negotiating stick by the administration could only be legitimised by a vote in Congress. Six of the nine justices deemed it illegal.

Will there be a tariff refund/rebate?

The question of a potential refund was a key part of the government’s argument, albeit not an overly convincing one. Due to the nature of import levies, it would typically be required to refund importers who paid illegally inflated duties to bring goods into the country. Costco had already been suing the government over tariffs and FedEx followed suit shortly after the Supreme Court’s verdict.

If the administration was right about one thing, it was that the refund process would be terribly messy. First off, they would be on the hook for well over $100 bn, according to official estimates from US Customs and Borders. Secondly, it would be hard to keep track of all the corporate claims, schedule the payments, and ensure that Congress was aligned across all stages of the process.

For the time being, it feels unlikely that businesses will receive restitution. But this is a deeply problematic theme for Trump, particularly with regular Americans already burdened by the cost of living. It has escaped few peoples’ attention that companies would receive any rebates and not the customers who shouldered the brunt of the cost in the first place.

How will UK businesses be affected?

Across the Atlantic, the trade war was felt by every British business with ties to the United States. After coming through exhausting negotiations last year, there was little appetite for more confusion and disruption.

Mixed messaging from the White House hasn’t helped calm things down. Trump initially said he would slap tariffs of 15% to make up for the Supreme Court’s decision, but nobody seemed sure if this would apply to the UK, which previously faced levies of around 10% on most goods. The president eventually softened his decision to

But the damage was done. Amid mounting anger from within Britain, the prime minister left the option open for retaliation for the first time. That represents a risk for importers as well as exporters.

Overcoming tariff uncertainty

In our era of uncertainty and turmoil, it’s more important than ever to combat risk with comprehensive risk management. For exporters and importers, tariffs have the potential to erode profit margins and eat up the vital cash needed to achieve your objectives.

Smart Currency Business provides bespoke solutions that can shield your key financials from any tariff fallout. We take the time to understand your business, meaning we offer flexible advice that provides value well into the future.

To discover how we can help you, request a call back from a treasury expert or email us at [email protected].

Frequently Asked Questions

What are tariffs?

Tariffs are a financial levy imposed when goods are imported into a sovereign nation. They are often used to shield key industries from external competition and have been used throughout modern history across the world.

How do US trade tariffs impact the UK’s inflation and cost of living?

When the US imposes tariffs, it often leads to a “tit-for-tat” trade environment where the UK may feel pressured to retaliate with its own levies on American goods. This cycle increases the cost of raw materials and finished products, which is ultimately passed down to British consumers, further burdening the cost of living.

What is ‘strategic ambiguity’ in trade policy, and why does it affect UK businesses?

Strategic ambiguity is a diplomatic tactic where a government remains intentionally unclear about its planned response to a trade partner’s actions. For British exporters, this lack of clarity makes long-term budgeting and strategic decision-making nearly impossible, as they cannot predict whether their goods will face 10%, 15%, or 0% levies in the coming months.

Can UK businesses protect their profit margins against sudden trade policy shifts?

While trade policy is unpredictable, businesses can protect their margins by using comprehensive risk management solutions, such as forward contracts or currency hedging, to lock in exchange rates and costs. This prevents the “margin erosion” that occurs when sudden tariff announcements or retaliatory levies eat up the vital cash needed for business growth.