Details on the ruling

The Trump administration has been using an interpretation of the International Emergency Economic Powers Act (IEEPA), a 1977 law, to impose its tariffs.

The administration has argued that the law's language authorizing the president to "regulate … importation" grants him full powers over tariff rates and has pointed to the trade deficit the United States has run each year since 1975 as the "emergency" justifying the tariffs.

The court disagreed, ruling that the IEEPA doesn't authorize "the President to impose whatever tariff rates he deems desirable." The court also noted that the IEEPA says the president may only use his emergency powers "to deal with an unusual and extraordinary threat with respect to which a national emergency has been declared."

The court also said that the administration's tariffs on Mexico, Canada, and China — which it justified citing an emergency over illegal migration and drug trafficking from Mexico and Canada and China's alleged role in facilitating the production of fentanyl — were also illegal, saying they failed to meet the IEEPA's requirement that they "deal with an unusual and extraordinary threat."

Instead of addressing the objective of stopping illegal cross-border trafficking in people and drugs, the tariffs were designed to "create leverage" to get other governments to do so, the court said.

The ruling applies to the 10% tariffs that were imposed on all foreign products as well as the higher tariffs applied to goods from dozens of other countries and the tariffs on Mexico, Canada, and China. However, the ruling does not apply to sector-specific tariffs, such as ones on automobiles, auto parts, steel, and aluminum.

The ruling provides the administration with 10 days to halt the collection of the tariffs. The administration has already filed plans to appeal the decision.

Reaction

"Foreign countries' nonreciprocal treatment of the United States has fueled America's historic and persistent trade deficits," said Kush Desai, a White House spokesperson. "These deficits have created a national emergency that has decimated American communities, left our workers behind, and weakened our defense industrial base — facts that the court did not dispute. It is not for unelected judges to decide how to properly address a national emergency. President Trump pledged to put America First, and the Administration is committed to using every lever of executive power to address this crisis and restore American Greatness."

Some legal experts have said that even if the Trump administration appeals the ruling all the way up to the Supreme Court, it's likely the lawsuits against the tariffs will still succeed.

Tim Meyer, co-director of the Center for International and Comparative Law at Duke University Law School who clerked for Supreme Court Justice Neil Gorsuch, said President Trump is "overwriting" legislation that Congress passed to implement tariffs.

"When the White House is itself touting this as the largest tax increase in American history, I think that's going to make the justices sit back and think the Constitution gives Congress, and Congress alone, the authority to levy duties, impose tariffs and to regulate foreign commerce," Meyer said.

How healthcare leaders are navigating the uncertainty

The potential for tariffs, especially pharmaceutical tariffs, alongside potential cuts to Medicaid and the Affordable Care Act through Congress's recent budget bill, have created uncertainty in the healthcare industry that healthcare leaders are attempting to navigate.

"The surge in pharmacy imports shows the urgency that hospitals are taking in mitigating tariff impacts.  It reminds me of COVID when everyone was buying loads of toilet paper — it is only a temporary solution, not a long-term strategy, and doesn't solve all your problems.  If hospitals haven't started having conversations about how to navigate these murky waters, they need to soon," said Kazahaya.

"This is just another example of trying to predict the unpredictable," he added. 

In an effort to navigate the volatility, Robert Fries, CFO at Children's Health, said his organization has "moved beyond the traditional annual budget process. We now rely on a dynamic rolling forecast updated quarterly, paired with a playbook that outlines specific actions we can take — both incremental and structural — when external shocks occur. Our playbook equips us to manage everything from minor disruptions to major funding shifts."

Similarly, Nick Olson, CFO at Sanford Health, said that Sanford is utilizing "a continuous planning approach, updating our financial projections every couple of months to ensure we are fully aware of the latest potential impacts of these headwinds so we can adjust our plans accordingly."

Olson added that Sanford is approaching budgeting and planning "with a disciplined, three-pronged strategy rooted in integrated care delivery, philanthropic support, and financial diversification."

Michael Burke, CFO at Westchester Medical Center Health Network, said, "Internally, we're stress-testing different policy scenarios so we can act quickly if circumstances change, while we maintain our focus that we are always keeping the patients at the center of everything we do."

*Advisory Board is a subsidiary of Optum. All Advisory Board research, expert perspectives, and recommendations remain independent.