The first year of the Trump administration saw much back and forth as the President put in place various tariffs on U.S. imports, including goods imported from historical trading partners such as Canada and Mexico. Most of these tariffs have now been struck down—the Supreme Court, in a 6-3 decision, ruled that Trump does not have the unilateral authority to issue such tariffs under the International Emergency Economic Powers Act (IEEPA).
Among the tariffs impacted by this ruling are “reciprocal” tariffs, i.e., the ones placed on individual countries. The Canadian tariffs were especially criticized by the construction industry—including staunch opposition from the National Association of Home Builders (NAHB)—as Canada is a key exporter of lumber that is used in home construction.
Members of the Federal Reserve have also pointed to tariffs as causing a one-time boost in inflation over the latter half of 2025 (though the impact has so far been less dramatic than some predicted), while some retailers had claimed the cost incurred from tariffs was driving up prices on consumer goods, weighing on prospective homebuyers who already face unaffordable homes.
“While the Supreme Court’s ruling reins in presidential authority to impose tariffs under IEEPA, President Trump still has wide latitude in setting tariff policy,” said NAHB President Bill Owens in a statement following the ruling. Indeed, in a press conference following the ruling, Trump announced he was enacting a new 10% global tariff under a different statue (per the Washington Post).
“With the nation facing a housing affordability crisis, NAHB urges the president to exempt building materials as part of his tariff strategy because they raise construction costs, impede supply chains and result in market and business uncertainty that make it difficult for builders to price their homes,” Owens’ statement continued. “NAHB will continue to work with the administration and Congress to remove regulatory obstacles that hinder the construction of new homes and apartments.”
Housing economists have found it difficult to assess the impact of tariffs on real estate, partially because the numbers kept changing. NAHB at one point estimated they would add around $10,000 to the cost of building a home. Other analyses projected that consumers were losing up to $4,000 in purchasing power from these import levies, and many real estate brokers cited tariff uncertainty as a factor in weak buyer demand last spring.
Per findings from the U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau, starts for new housing construction fell noticeably at the end of summer 2025. Tariffs were cited as one (though not the only) factor driving homebuilders’ caution by Realtor.com® Senior Economic Research Analyst Hannah Jones. While housing starts were found to have jumped up as of December 2025, homebuilders are still exercising caution, reflected in the uncertain tenor of Owens’ statement.
The legal reasoning
Chief Justice John Roberts, joined by Justices Amy Coney Barrett and Neil Gorsuch (both Trump appointees) ruled that the administration’s view that the President can institute tariffs under the IEEPA without congressional approval “would represent a transformative expansion of the President’s authority over tariff policy.”
The law gives the President authority to regulate imports and exports in times of national emergency, with the Trump administration claiming the U.S. trade deficit and drug trafficking from Mexico constitute such emergencies. However, no President before Trump has ever used that power to implement tariffs. The Supreme Court ruled that history is “telling” about how the scope of the law should be interpreted.
“That ‘lack of historical precedent,’ coupled with the breadth of authority that the President now claims, suggests that the tariffs extend beyond the President’s ‘legitimate reach,’” the decision concluded. Moreover, the parts of the opinion joined by the three liberal justices (Sonia Sotomayor, Elena Kagen and Ketanji Brown Jackson) found that, textually, “regulation” does not include the power to impose taxes.
Dissenting Justices were Samuel Alito, Clarence Thomas and Brett Kavanaugh. One of the chief concerns outlined in the dissent is that, if the tariffs were issued unlawfully, the U.S. government could be forced to refund the tariffs paid by importers.
“The United States may be required to refund billions of dollars to importers who paid the IEEPA tariffs, even though some importers may have already passed on costs to consumers or others,” wrote Kavanaugh. As of December 2025, CNBC reported that customs had collected an estimated $200 billion from tariffs.
