Brookings experts on the Supreme Court’s tariff decision

On February 20, 2026, in Learning Resources Inc. v. Trump, the Supreme Court ruled that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose sweeping, open-ended tariffs—striking down the legal foundation for a central pillar of the administration’s trade strategy. The decision removes the fastest tool for imposing broad country-level duties, but it does not end the tariff debate. Other statutory authorities remain in play, and businesses and trading partners are left to assess what comes next. Below, Brookings scholars examine the ruling’s legal, economic, fiscal, and geopolitical implications—and what it means for the future of U.S. trade policy.

The Supreme Court’s decision in Learning Resources, Inc. v. Trump has clear ramifications for President Trump’s aggressive use of tariffs. But it may have implications for other aspects of his economic agenda as well.

The majority concluded that the International Emergency Economic Powers Act (IEEPA)’s delegation of the authority to “regulate…importation” to the president does not include the power to impose revenue-raising tariffs, as the latter is an exercise of the taxing power provided to Congress by the Constitution’s Taxing Clause. The majority explained that this “was…the most important of the authorities proposed to be conferred upon the Union” by the Framers, and that the Constitution thus ensures that only the House can “propose the supplies requisite for the support of government” by initiating “Bills for raising Revenue[.]” If Congress intended to delegate such foundational authority, the six majority justices conclude, “it would have done so expressly”—a standard they conclude IEEPA does not meet, albeit for different reasons. Nor do they find IEEPA’s status as an emergency statute nor the tariffs’ nexus to foreign affairs—factors leaned on heavily by the dissenters—meaningful enough to conclude otherwise.

But if President Trump lacks the statutory authority to raise revenue through tariffs, how can he require Nvidia to give 25% of its sales to the U.S. government to secure an export license? Or compel Ukraine to share proceeds from its mineral wealth for continued security assistance? Or the various other questionable revenue-raising actions his administration has considered or pursued?

The Learning Resources case doesn’t answer these questions directly. But the majority’s approach suggests that the bar for finding that any statute authorizes these actions is a high one. In this sense, it may be the beginning of the end for these other Trump initiatives as well.

In its 6-3 decision, the Supreme Court struck down the centerpiece of President Trump’s economic agenda. Press coverage has focused on the ruling’s economic impact, but the Court’s decision and accompanying opinions will also matter for Congress and especially GOP lawmakers.

First, the Court rebuked Trump’s unfettered exploitation of presidential power: Six justices upheld lower court decisions that he had stretched the International Emergency Economic Powers Act (IEEPA) far beyond its limits. In doing so, the Court did what Congress rarely does: It stood up for Congress’s Article I authority, especially its powers of the purse.

As Justice Neil Gorsuch put it, the framers designed Congress to reflect the “combined wisdom of the people’s elected representatives, not just that of one faction or man.” Power grabs by a president do not make the executive stronger if he lacks a legal basis for his actions (or at least one sufficient to convince a Court majority).

Second, Trump has already doubled down on his trade war—boasting that other legal authorities will restore lost tariff revenue and leverage. But tariffs are unpopular. In one recent survey, over 60% of Americans disapproved of them, including nearly a quarter of Republicans and three-quarters of pivotal, swing vote independents. And even Republicans cite the economy as one the country’s most important problems. With midterms approaching, that could put GOP lawmakers in a tough spot.

House Speaker Mike Johnson’s (R-LA) tried to squelch tariff-related votes for much of 2025, but slim bipartisan majorities in both chambers have supported curtailing some of the tariffs. Democrats are likely to force more such votes, putting Republicans on the spot: Stay loyal to Trump and share the blame for the economy or align with public discontent?

What’s more, the Trump administration is eyeing  “Section 122” tariffs, which last only 150 days and require a vote to extend (which Senate Democrats could filibuster) from Congress to extend them. Some Republicans may balk if Democrats portray these tariffs as a regressive tax on constituents. As political scientist David Mayhew argued decades ago, lawmakers are rewarded (or blamed) for the positions they take, not the policy outcomes that follow.

Third, the conservative justices are not unified around the “major questions doctrine”—a Roberts’ Court-era doctrine requiring clear congressional statutory authority for executive actions of major political or economic significance. During the Biden administration, conservative justices leaned on the doctrine to wipe out several major presidential priorities and push Congress to legislate more precisely.

This time, only three conservative justices promoted the doctrine in striking down IEEPA tariffs (provoking disagreement from the three liberal justices). Justice Kavanaugh dissented, arguing that the doctrine doesn’t apply in emergencies or foreign affairs. Justice Thomas also dissented, maintaining IEEPA tariffs were kosher and the doctrine irrelevant. Justice Barrett questioned her colleagues’ reasoning.  

On presidential power, even Trump appointees disagree about restraining an imperial president and nudging Congress to act.

The Supreme Court’s decision striking down the administration’s IEEPA tariffs may reduce tariff rates, at least temporarily. But uncertainty remains, and that has been the central issue. The challenge has not just been the size of the tariffs but the instability surrounding them.

Over the past year, businesses were forced to make hiring, pricing, and investment decisions against a backdrop of rapidly shifting trade policy, layered onto other sources of policy volatility. Rates changed with little notice, creating planning challenges for firms managing inventory, contracts, and payroll.

The effects were significant. The U.S. average effective tariff rate climbed to nearly 17%, the highest since the early 1930s. Research from the Federal Reserve Bank of New York found that nearly 90% of those costs were borne by American firms and consumers. The Tax Foundation estimated tariffs added about $1,000 to household costs in 2025 and as much as $1,300 in 2026. The Court’s ruling does not automatically unwind those costs or reverse the business decisions already made in response.

Notably, small businesses helped lead the legal challenge because those pressures translated into real tradeoffs. A survey by Main Street Alliance found that 81.5% raised or considered raising prices, 41.7% delayed or considered delaying expansion, and nearly one-third anticipated layoffs. In industries like construction, stacked uncertainty from trade policy and immigration enforcement has compounded labor shortages and cost pressures.

The ruling also lands amid sustained political pressure around affordability, which may shape how aggressively trade tools are redeployed. Even if tariff rates decline, businesses must now assess whether alternative authorities will be used to reimpose them. For the real economy, restoring stability may matter as much as reducing tariffs themselves.

By limiting IEEPA as a tariff tool, the Supreme Court ruling ultimately strengthens the U.S. approach to China. It pushes trade policy back toward its proper legal and institutional channels, focusing Washington on core trade and national security issues with China rather than wielding tariffs as ad-hoc leverage across a broad range of foreign policy disputes.

Many existing U.S. tariffs on Chinese goods, such as steel and auto parts, are not based on IEEPA. They rely on authorities like Section 232 for national security and Section 301 for unfair trade practices. These mechanisms cannot be imposed through a simple executive order. They require formal investigations conducted by specialized agencies such as the Bureau of Industry and Security or the Office of the U.S. Trade Representative, along with public notice and comment. This process helps to ensure tariffs are evidence-based, strategically targeted, and aligned with national interests rather than arbitrary or reactive.

Just as important, removing IEEPA as a tariff justification limits self-inflicted harm by the United States. Last April’s “Liberation Day” tariffs prompted strong retaliation by China, turmoil in financial markets, and needless strain among U.S. allies and trading partners. Broad tariffs on key trading partners, which in some cases reduced the gap with tariffs on China on a relative basis, undermined efforts to coordinate trade action on China. Tariffs remain an important tool for managing the relationship with China. The ruling ensures they are deployed deliberately and rationally rather than as a blunt instrument for foreign policy writ large.

One area where the Supreme Court decision constrains the Trump administration is its ability to use emergency tariffs as leverage to compel cooperation on fentanyl, fentanyl precursors, and counternarcotics efforts more broadly. In early 2025, the Trump administration announced tariffs on China, Mexico, and Canada, framing the measures as a response to illicit fentanyl flows into the United States and to deficiencies in precursor chemical controls. But as I detailed in my December U.S. Senate testimony, China outmaneuvered the United States in the fentanyl-tariff war by imposing its own countertariffs, restricting access to rare earth minerals, and boycotting the imports of politically-salient goods, such as soybeans.

The fentanyl and precursor-related commitments that China put on the table in October 2025 were essentially the same as those it had already promised the Biden administration and started implementing in late 2024, while the big holes in its fentanyl precursor control law enforcement—the sales of unscheduled precursors by Chinese traders to Mexican cartels—remain unaddressed. The Trump administration may need to rely more on creative cooperation and bargaining, rather than punishment, to gain China’s cooperation. But punitive options remain—such as restricting visas for Chinese officials and business community members.

Canada’s inclusion in the fentanyl tariffs was always odd—the volume of illicit fentanyl heading from the U.S. to Canada is an order of magnitude larger than the reverse, and both amounts are small. Still, the Trump administration has been wielding two other big clubs with respect to fentanyl cooperation with Mexico and Canada: renegotiation/ abrogation of the U.S.-Mexico-Canada trade Agreement (USMCA) and U.S. military strikes, perhaps unilateral, in Mexico. If implemented, either step would harm U.S. interests and undermine cooperation with our neighbors on fentanyl enforcement, precursor control, and broader anti-crime objectives.

Over the last year, the Trump administration has turned tariff policy into one of the largest and most volatile tax increases in modern history. Budget estimates projected that the administration’s tariff policies would raise around $3 trillion over the next decade—on par with major tax legislation and large enough to meaningfully affect long-term debt projections. At that scale, concentrating such significant revenue authority in the hands of a single decision-maker carries substantial implications. What was once a marginal trade instrument has become central to the fiscal outlook.

This is what makes the Supreme Court’s recent IEEPA decision more than a technical legal dispute. The Constitution assigns the power to tax to Congress, which has historically delegated limited tariff authority to the executive branch. But imposing broad, economy-wide tariffs on scores of countries pushed that delegation toward its limits. Multi-trillion-dollar tariffs are not simply trade tools—they are tax policy, and tax policy at that scale requires clear congressional authorization.

The administration has presented tariffs as a tool to bring manufacturing back to the United States and reduce trade deficits while also touting them as a major, ongoing source of revenue. Those goals conflict. Tariffs raise revenue precisely because imports continue. If imports fall substantially—because production shifts domestically or trade contracts—revenue declines. At the same time, tariffs have been imposed, suspended, and revised as negotiating tools in pursuit of broader economic or geopolitical objectives. Tariffs cannot simultaneously eliminate imports, fund government, and serve as adjustable negotiating leverage. That volatility weakens their reliability as a long-term revenue source.

Meanwhile, the economic evidence remains sobering. Tariffs operate like taxes on domestic consumers and businesses. Research points to substantial pass-through to U.S. prices, slower growth, and regressive effects across the income distribution.  Aggregate trade deficits have not noticeably narrowed over the past year—a reminder that they reflect national savings and investment dynamics, not tariffs—and manufacturing employment has remained broadly flat, with little evidence of a tariff-driven revival.

The broader lesson is institutional. When tariffs are modest, questions about delegation may seem technical. When they rival major tax legislation in revenue impact, they are fiscal policy by another name. The Court’s decision does not end the tariff debate. But it does reinforce a foundational principle: if the United States is going to raise trillions of dollars through import taxes, that choice must be made clearly and deliberately by Congress.  

When we focus on the implications of the Supreme Court’s decision striking down President Trump’s sweeping tariffs for democratic institutions and governance, four points stand out.

First: Based on the administration’s legal victories on procedural issues during the first year of the president’s second term, it was possible to conclude that the Court’s conservative majority was putting partisan politics ahead of judicial responsibility. The Court’s tariff decision weakens this claim. Not only did three conservative justices join the three liberals in a broad, unequivocal rejection of the administration’s position, but also, two of the three conservatives were Trump appointees. The Court is still able to function as the independent third branch of government the Founders envisioned. Its decisions in the remainder of the current term will determine whether this display of independence extends to other key cases.

Second: While President Trump is not the only recent president to expand executive power at the expense of Congress, he has gone the farthest. By reasserting the dominant role of Congress in matters of taxation, the Court has drawn a line against further executive aggrandizement in this area.

Third: While President Trump denounced the decision and rebuked conservative justices who supported it, he accepted it as binding and moved immediately to replace policies based on IEEPA with others drawing on different legal authorities. The speed of this shift means that the administration had prepared for the possibility of an adverse ruling and had made a considered judgment not to reject or resist it. Because tariffs are so central to Trump’s economic agenda, there is reason to believe that the administration will comply with the Court’s decisions across the board, averting what some feared would be a constitutional crisis.

Fourth: Although President Trump invoked Section 122 of the Trade Act of 1974 to impose 10% global tariffs (soon raised to 15%), these tariffs must end in 150 days unless Congress votes to extend them. Not only does this requirement recognize the central constitutional role of the legislative branch in taxation but it will also require members of the House and Senate to take responsibility for the votes they may well be asked to cast just a few months before the 2026 midterm elections. Accountability of elected officials to the people is at the core of our constitutional system, and the Court’s decision has helped fortify it.

The European Union (EU), America’s largest commercial partner, is struggling to make sense of Washington’s trade “chaos.” EU leaders are relieved by the Supreme Court’s ruling that Trump exceeded his authority under the International Economic Emergency Powers Act of 1977 (IEEPA). But they are troubled by Trump’s reaction to the ruling, which could further escalate transatlantic trade frictions.

One area of concern is Trump’s decision to impose blanket 15% tariffs under Section 122 of the U.S. Trade Act of 1974. If these duties stack on top of already existing levies, EU companies would be subjected to higher surcharges that those agreed to by the U.S. and the EU last July.

A second concern is the president’s intent to order further investigations into unfair trade practices under Section 301 of the same act. He could target EU practices that he and his acolytes have long considered discriminatory, such as the bloc’s agricultural subsidies, restrictions and taxes on U.S. digital companies, and value-added-tax exemptions to EU exporters.

The EU is also worried that Trump might impose additional national security-related tariffs under Section 232 of the Trade Expansion Act of 1962. In the July arrangement, Washington did not exempt the EU from such levies, which include a 50% tariff on steel, aluminum, copper, and their derivative products. Europeans are concerned he could use this authority to raise these levies even higher or.

Given these uncertainties, the European Parliament pulled the emergency brake—it suspended the process for considering tariff reduction commitments the European Commission made with the Trump administration last July. The EU’s executive arm, the European Commission, has also insisted that the administration clarify what it plans to do. Europeans who believe the July deal was not in EU interests want to challenge the administration.

The prevailing sentiment, however, is to ride out the storm. In the end, Ukraine’s fate hangs as much on transatlantic cooperation as on the brave efforts of the Ukrainian people. Europeans are desperate to ensure that Washington’s trade chaos does not morph into a full-blown transatlantic security crisis.

Post-SCOTUS ruling, most analysts are rightly shifting their attention to established trade measures permitting more narrowly levied tariffs. But a bipartisan bill awaiting a Senate vote could be even more consequential.

The Sanctioning Russia Act, which enjoys near-unanimous support in the Senate, admirably aims to punish the Russian economy for its horrific invasion of Ukraine. However, this bill would also quietly grant the White House sweeping authority to levy tariffs on a wide swath of our trading partners.

Specifically, the bill would provide presidential discretion to levy 500% tariffs—effectively an embargo—on any country importing Russian crude or refined product. While there would be some limits on executive branch authority, the bill would create a newfound tool for the president in his trade arsenal.

Those assuming the president would equally apply these tariffs are not paying attention. India was assessed a 25% incremental tariff for importing Russian crude, while China—which imports even more—faced no such retaliation. The same is true for the collection of countries that imported Russian refined oil products.

There is massive potential to upend U.S. trade if Congress grants this new authority to the president. Last year, roughly 40 countries imported oil from Russia—including China, Germany, and Japan. Collectively, countries importing Russian oil represented around 40% of U.S. imports.

To be clear, punitive measures on the Russian economy are almost always welcome. But Congress should be wary of surrendering its taxing authority to an administration which has prioritized global trade wars over punishing the Russian economy.

The Supreme Court’s decision on IEEPA eliminates the pathway the president has used to impose open-ended tariffs overnight—his most immediate tool for wielding tariffs as a geopolitical threat. It does not, however, eliminate the executive’s ability to reshape the tariff regime without Congress.

Section 122 of the Trade Act of 1974 has already been invoked as a temporary bridge to maintain higher tariffs. Other statutory authorities—most prominently Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974—provide established pathways for imposing tariffs on a more sustained basis. Unlike IEEPA, these authorities either contain statutory limits or require investigations, consultations, and formal findings before action is taken. They impose procedural or temporal constraints, but they do not prevent an administration determined to act from steering those processes toward a chosen outcome.

Yet, absent new congressional direction—and without consensus around a renewed multilateral framework—these statutory authorities have become the default tools for shaping the tariff regime. When narrow authorities are used to refashion the tariff regime as a whole, litigation, administrative strain, and uncertainty predictably follow.  Because neither Trump’s tariffs nor a return to the World Trade Organization-centered system commands broad political support—and no alternative framework has emerged—the current approach rests on contested and contingent foundations. 

That leaves each administration to decide which tariffs to retain, modify, or dismantle. The result is a trade regime that is more costly to administer, more expensive for businesses to navigate, more vulnerable to special interest influence, and less coherent as a governing framework.

A more stable approach would require an articulation of how economic performance, strategic competition, domestic politics, and foreign policy fit together in modern U.S. trade strategy—and legal authorities aligned with key principles. Until such a framework emerges, U.S. trade policy will continue to turn on executive discretion exercised through statutes never intended for systemic redesign—leaving businesses and allies uncertain about the direction of U.S. policy at a moment strategic clarity is most needed.

Trumponomics pairs massive tax cuts disproportionally favoring the wealthiest with tax hikes through tariffs that are ultimately borne by American consumers and businesses. The Supreme Court’s ruling strikes down many of Trump’s tariffs, returning tariff power to Congress. The Republican controlled Congress can’t agree on much, but they passed the first part of the plan, slashing taxes. Trump’s tariffs are politically unpopular, and Congress is unlikely to bring them back. What will this mean?

While Trump exaggerates the magnitude of both tax cuts and tariffs, particularly the amount of revenue tariffs bring in, tariffs at those rates raise significant revenue. The Congressional Budget Office projected tariffs to reduce the deficit by $3 trillion through 2035, if left in place at Trump’s levels. For perspective that would be more than 5 times the total revenue the gas tax and other fees dedicated to fund America’s highways and transit lines are projected to raise over the same time period.

Unless Congress chooses to raise taxes, or slash spending, the elimination of these tariffs will exacerbate already historically large peace-time deficits. Much like a person who overeats today but promises to exercise tomorrow, America is bloating itself on debt. The practical implication of the Court’s ruling will be to make it harder to do one form of exercise, which for all its flaws (and tariffs have many) is likely to mean the problems of obesity in how the government operates will worsen.

The majority’s legal analysis in Learning Resources v. Trump, handed down on Friday, February 20, and President Trump’s immediate jump to the Trade Act of 1974 follow logic we anticipated in a joint paper we published just prior to oral argument. What is surprising is less the result for tariffs than the potential legal implications for other Trump initiatives.

Trump had imposed country-specific “reciprocal tariffs” under the “emergency” provisions of the International Emergency Economic Powers Act of 1977 (IEEPA) to pursue two objectives: (1) responding to what he described as trade deficits that had “led to the hollowing out” of the American manufacturing base and “undermined critical supply chains” and (2) leveraging tariffs to achieve non- trade-related goals, including stemming the flow of drugs and immigrants into the U.S., pressuring Denmark to sell Greenland to the U.S., and deterring countries from buying Iranian oil.

Six Supreme Court justices have now ruled that Congress didn’t grant him such broad authority under IEEPA. All rejected the president’s reading of IEEPA under ordinary principles of statutory construction. Three of the six, including Chief Justice John Roberts, also invoked the so-called “major questions doctrine” (MQD) to bolster their conclusion.

Predictably, the president immediately reacted to the ruling by pursuing the first objective under different statutes, where his authority is arguably clearer, but with strings. He began by slapping a 10% tariff, lifted to 15% over the weekend, on imports from all countries under Section 122 of the Trade Act of 1974, 19 U.S.C. § 2132. He has also initiated investigations to impose additional tariffs or duties under other trade provisions. All of this will take time, but the president could eventually cobble together a patchwork of tariffs resembling what he did using IEEPA.

Trump appears most worried that depriving him of IEEPA-based tariffs will hobble attempts to leverage concessions on non-trade related matters. Indeed, this is the consequence of the court’s opinion about which he seems most upset. The difficulty should not be overstated. Trump can still threaten to impose tariffs under other statutes and postpone action until he gets what he wants. In the meantime, businesses and consumers must live with continued uncertainly. Congress could end this with new legislation. But given its current composition, there is little chance of this happening.   

The opinion’s biggest news may be that three conservative Justices—Chief Justice Roberts, along with Justices Neil Gorsuch and Amy Coney Barrett—have concluded that the MQD applies in reviewing statutory delegations of power to the president, not just to unelected bureaucrats. The doctrine requires especially clear statutory authority to support “unheralded” and “transformative” administrative initiatives of exceptional political and economic significance. It is not enough to uphold unduly aggressive uses of delegated authority that broad statutory wording, read literally, might cover them.

Yet tariffs are hardly the only subject on which Trump has ordered unprecedented moves based on uncertain legal text. His unilateral attempts to restructure the civil service and reorganize executive branch agencies stand on uncertain ground. Tariffs have little political support beyond Trump. It remains to be seen whether the Roberts court will display the same level of vigilance when the president’s moves have wider political support, especially among conservatives, than do his tariff policies.

The February 20, 2026, Supreme Court ruling banning President Trump’s sweeping use of tariffs under the International Economic Emergency Powers Act is welcome news. The main reason is that, while Trump deserves some credit for elevating national economic, industrial, and technological capabilities to a higher importance in policy debates, the wholesale and idiosyncratic use of tariffs against friend and foe and neutral alike risks upsetting not just the global economic system but America’s system of alliances and the trust it has built with most countries around the world for decades.

We do need to be more activist, in the 2020s and beyond, in a number of domains of national economic policy. The laissez-faire trade economics that many of us studied that simply emphasized the comparative advantage and efficiency gains from trade was likely always incomplete and is even less suited to today’s more competitive and geopolitically fraught environment. At the same time, efforts to bolster key industries should be targeted, avoiding broad sanctions or sweeping tariffs.

To be more specific, these are some of the areas where a degree of national or state economic policy is now important, and President Trump should be commended if he tries to focus his trade protection efforts more narrowly in service of these kinds of goals:

• Domestic production of semiconductors
• Domestic (or friendly) mining and refining of rare Earth minerals and associated magnets
• Similar efforts for other crucial minerals to include coltan, copper, titanium, and other key elements of America’s now-enfeebled National Defense Stockpile
• Pharmaceuticals and their key precursors, especially those for which a sudden supply cutoff could jeopardize many American lives quickly, as Marta Wosinska argued along with Tom Wright and Mark Muro and myself in a paper last fall
• Certain other chemicals crucial to modern agriculture
• Some types of castings and forgings, as the Department of Defense has articulated in recent years, as well as some types of optics crucial in modern weapons
• Certain other electronics such as large transformers crucial to the power grid
• And, of course, those areas of the economy where American workers have suffered due to unfair labor or environmental practices abroad and could compete effectively if given a level playing field.

That’s already a lot.  I wish the president well in targeting future efforts into these areas.

By striking down President Trump’s tariffs under IEEPA, the Supreme Court is giving the current administration a chance to restore stability and economic rationale to U.S. trade policy. One of the most enduring engines for economic growth has been the removal of trade barriers to foster closer economic integration across countries. Economic theory, backed up by a plethora of empirical evidence, clearly shows that higher levels of cross-border trade leads to more economic prosperity for participating countries in the form of higher GDP growth, lower consumer prices, increased competition in the marketplace, and more market access abroad. In fact, the U.S. has been one of the largest beneficiaries of freer trade across the world in the past decades.

The recent turn by the U.S. towards protectionism is therefore deeply concerning for the long-term prospects of the U.S. economy and the standing of the U.S. as global economic power. Cross-border trade is a two-way street, and the damage by the administration’s tariff policy to the standing of American exporters in markets around the world has been substantial. Similarly, higher prices due to tariffs are starting to be passed onto consumers, hitting low-income families in the U.S. the hardest. Instead of doubling down on tariffs through other legal means, the administration should heed the Supreme Court’s decision—as well as emerging market signals—and implement a time-tested approach to trade policy by removing trade barriers and strengthening economic integration, at least with our allies.

While the Supreme Court’s IEEPA decision was a significant blow to the Trump administration’s trade policy, U.S. allies and partners in the Indo-Pacific are taking a circumspect approach to their existing trade deals. Their responses now factor in: domestic political support for the existing trade deal with the Trump administration, the difference between their previously negotiated tariff rate and the rate under the president’s latest Section 122 announcement, and the completeness, or lack thereof, of an existing deal.

For South Korea and Japan, negotiated deals with the Trump administration landed the allies at 15% tariff rates, roughly equivalent to the rates under the president’s latest announcements. With IEEPA no longer on the table, it is unclear how President Trump could make good on his recent threat to raise the Republic of Korea’s rate to 25%. For these major manufacturing economies, Section 232 sectoral tariffs and the prospect of broader Section 301 tariffs matter just as much as the overall baseline, and these remain unchanged. Moreover, in both of these allies’ domestic politics, there has been a strong preference for squaring away trade relations with the United States for the sake of keeping a critical security and economic relationship intact.

In Southeast Asia, previous deals and framework arrangements clustered around 19%, meaning these partners do relatively better under President Trump’s new Section 122 tariffs than they did previously. The biggest open questions in Asia are likely to face those partners whose negotiations are not yet settled—India, where a significant and robust trade deal was delayed for many months by a leader-level downturn in relations, and Vietnam, where a near-deal was scuttled in July and a replacement has been elusive. And of course, China’s overall tariff rates come down under the ruling, which saps some of President Trump’s leverage ahead of his April visit.

The Supreme Court’s 6-3 decision invalidating President Trump’s use of tariffs under the 1977 International Emergency Economic Powers Act (IEEPA) adds uncertainty to the tariff fiscal projections, yet does not alter them substantially. The recent Congressional Budget Office (CBO) baseline estimated that continuing the IEEPA and other recent tariffs would raise $2.4 trillion over the decade, or $3.0 trillion including other effects such as resulting net interest savings. This figure is smaller than the gross increase in customs revenues because tariffs produce offsetting losses in other revenue categories, such as when businesses deduct the cost of tariffs paid.  

The loss of the IEEPA tariffs still leaves President Trump able to employ other tariff laws based on criteria such as national security (Section 232), unfair trade practices (Section 301), and imbalances of international payments (Section 122). Indeed, Trump responded to the court decision by announcing a replacement of the IEEPA tariffs with a broad 15% tariff under Section 122. These additional tariff laws come with their own statutory restrictions that will likely invite additional court challenges, leaving their long-term sustainability unsettled. Section 122 tariffs also face a 150-day limit unless Congress votes to renew them. 

Yale Budget Lab calculates that the loss of IEEPA tariffs reduces the effective tariff rate from 16% to 9.1%—yet the Section 122 tariffs push that rate back up to 13.7%. Yale calculates that this would bring a net loss of 16% of tariff revenues from the level projected with IEEPA. Applying that percentage to CBO’s $2.4 trillion ten-year revenue estimate reduces it to $2.0 trillion if the policy is extended. And while such a straight extension of Section 122 is unlikely, the likelihood of the White House continuing to respond to court and Congressional barriers with other legal workarounds suggests that such revenue estimates most likely approximate the path forward. 

Asian countries will interpret the Supreme Court’s decision to strike down IEEPA tariffs as a major defeat for President Trump’s ambitions to wield unchecked power over tariffs. But don’t expect an unwinding of the trade deals the administration has negotiated over the past year—even though they contain onerous concessions from massive investment pledges (Japan, South Korea, Taiwan) to one-way alignment on economic security policies (Malaysia, Cambodia). Regional leaders are proceeding with caution since the Supreme Court left intact tariffs that did not originate from emergency powers. Moreover, the Trump administration lost no time in rolling out its Plan B: A 10% global tariff to apply for the next 150 days using the authorities of Section 122 to tackle balance of payments problems, while it readies scores of sectoral tariffs (for national security purposes under Section 232) and country-specific duties (to combat unfair trading practices under Section 301).

The specter of a beefed-up Section 301 will touch a special nerve in Asia. This tool has long been deemed an epitome of U.S. unilateral trade power—to determine cheating by others and impose at its own discretion a tariff penalty. The pantheon of fierce trade battles between the United States and many Asian counterparts is filled with 301 actions (against Japan on semiconductors in the late 1980s, for instance). Now, USTR Greer has previewed a 301 process on steroids: targeting most major trading partners and covering a broad remit—from industrial overcapacity, digital services taxes, drug pricing, ocean pollution, and more. With little hope for a judicial rollback of such tariffs, U.S. trade partners will find a more insidious form of protectionism in Trump’s Plan B.