Trump tariffs ruled illegal: How court decision could affect crypto market

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Trump tariffs ruled illegal

What the U.S. Supreme Court decided

On Friday, the U.S. Supreme Court ruled that Donald Trump violated federal law when he unilaterally imposed broad tariffs on nearly all U.S. trading partners. The court’s main conclusion was clear: the president cannot introduce tariffs of “unlimited amount, duration, and scope” without explicit authorization from Congress. The justices stated directly that the administration failed to identify any such clear legal mandate in the statute it relied on.

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The ruling concerns tariffs introduced under the 1977 International Emergency Economic Powers Act (IEEPA), a law designed for extraordinary economic powers during national emergencies. Trump declared the U.S. trade deficit a “national emergency” and separately cited the threat of fentanyl trafficking as justification for the measures. The court found that this emergency framework was not intended to give the president the authority to impose tariffs on such a scale, and that it “falls short” of providing the necessary legal basis.

The decision does not fully close the issue. The next stage will be practical: determining which tariffs are covered by the ruling and what happens to them. One of the most sensitive questions is whether importers will receive refunds. The justices effectively left that issue to lower courts, meaning there may be no fast, automatic repayment process. According to Penn Wharton economists, more than $175 billion may have been collected under these IEEPA-based tariffs, and that figure could now become the subject of separate legal disputes.

Crypto market reaction

Immediately after the ruling was published, the crypto market moved into modest gains. Major cryptocurrencies — Bitcoin, Ethereum, Solana and XRP — turned positive, and buyers began returning to the market.

At the same time, broader demand for risk assets strengthened, while the U.S. dollar weakened. Bloomberg reported that the dollar index declined and U.S. Treasury yields rose — a signal that investors may be pricing in reduced tariff pressure on the economy. In such conditions, crypto often receives an additional boost: some capital rotates back into BTC and large-cap altcoins, while traders unwind defensive positions.

It is important to note that the market did not react to the full cancellation of all tariffs. Instead, the rally was driven by the fact that the core mechanism used to impose them was ruled unlawful. This reduces the likelihood of sudden decisions in which tariffs are introduced quickly and without lengthy procedures. For crypto, that matters: fewer political shocks typically make it easier for the market to maintain positive momentum.

How Trump’s tariffs hit crypto before

For crypto, tariffs are not an abstract political topic — they have become a direct market trigger. In the fall, the theme had already caused sharp sell-offs. On the night of October 10–11, the market experienced one of the largest crashes in recent years. Total crypto market capitalization dropped sharply within minutes, liquidations approached $20 billion, and some altcoins collapsed by 30% to 90%. On several exchanges, trading pairs effectively stopped functioning properly due to overload, API disruptions, interface issues and liquidity withdrawal.

According to trader accounts, stop-loss orders failed to execute, trades froze, and market makers pulled liquidity — creating the “empty order book” effect. In such conditions, prices can fall far below any protective levels simply because there are no bids left in the book. Meanwhile, liquidation engines continued to run automatically, wiping accounts even for traders using minimal leverage and holding spare USDT on the same account.

Tariffs were not the only factor behind the crash, but they were one of the main catalysts. Market participants argue that the shock hit two vulnerabilities at once: excessive leverage and a sudden spike in global uncertainty after Trump’s announcement of 100% tariffs on imports from China. That combination derailed Bitcoin’s attempt to hold higher levels and triggered a familiar chain reaction: BTC drops first, altcoins follow, and the liquidation cascade turns into a full-scale sell-off.

What to expect next

Over the past months, there have been several similar market dislocations: tariff threats and actions by the Trump administration repeatedly triggered sell-offs in crypto. The pattern was consistent — rising uncertainty, accelerating declines and cascading liquidations. That is why the U.S. Supreme Court ruling matters not as a political headline, but as a factor that changes the speed and scale of potential shocks.

Introducing global tariffs “in one step” will now be harder. The court effectively said such measures require direct congressional authorization, not a broad interpretation of emergency powers. This reduces the risk of sudden tariff shocks and gives markets more time to adjust. However, uncertainty has not disappeared entirely: the administration still has alternative legal tools it may try to use, meaning the tariff issue could return to the agenda.

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