WASHINGTON, D.C. - Today, the Supreme Court of the United States ruled that under the International Emergency Economic Powers Act the President does not have the authority to impose tariffs, striking down a portion of President Trump’s signature economic agenda.

Joint Economic Committee Chairman David Schweikert had the following statement in response to today’s ruling.

“As our nation’s spending continues to grow, we must be honest about the math. To sustain essential programs and protect our fiscal health, we need a tax system that produces stable, predictable receipts without stifling growth. Today’s ruling underscores the uncertainty in our current tax framework, uncertainty that limits investment, hiring, and innovation.”

“To bring greater stability and competitiveness to our economy, and address tax arbitrage arising from other countries’ tax policies, I believe the U.S. should move toward a border-adjusted, destination-based cash flow tax. In line with the goals of tariffs, a DBCFT supports U.S.-based production and American workers. But tariffs distort markets and reduce overall output. A destination-based cash flow tax achieves these same objectives through a more economically rational, growth-oriented framework. This model encourages domestic investment, discourages offshoring, and provides the predictability businesses need to plan for the future. It also supports the predictability of tax receipts as federal spending continues to rise, reinforcing the fiscal stability our economy depends on, and I will be holding a hearing on this important topic in the coming weeks.”

“America’s long-term prosperity hinges on our ability to keep U.S. companies competitive both at home and globally. A destination-based cash flow tax strengthens that foundation.”

Background:

A Destination-Based Cash Flow Tax (DBCFT) changes how the U.S. taxes business activity by focusing on where products are bought and used, rather than where they are made. Under this system, imports would be taxed and exports would not. This shift — called a “border adjustment” — moves the tax base to what Americans consume here at home.

The DBCFT has two main parts. First, it’s a cash-flow tax, meaning businesses are taxed on what they earn minus what they spend. This includes immediate deductions for investments, which helps simplify the tax system and encourages companies to reinvest and grow. Second, it’s destination-based, meaning sales are taxed where the customer is, not where the product is made.

By taxing imports and exempting exports, the DBCFT is designed to strengthen U.S. competitiveness and reduce incentives for companies to move production overseas. Economists expect that the value of the U.S. dollar—or prices in the economy—would adjust to prevent long-term cost increases on imported goods.

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