Legal and economic aspects of the Supreme Court’s upcoming tariff decisions

Among the numerous legal challenges to the actions taken by the Trump administration, two cases the Supreme Court will hear in November have been top of mind for many in the business community and for investors. Both involve the authority of President Trump to impose tariffs under the International Economic Emergency Powers Act (IEEPA).¹ Not since the 1930s has the United States imposed tariffs of such magnitude. In this case, it has done so on the authority of one man, the President, not by legislation enacted by Congress. In this essay, we address whether the Court is likely to hold that the tariffs are lawful and the economic consequences regardless of the judicial outcome.

Trump v. V.O.S. Selections consolidates two lawsuits, one brought by small businesses and one by a dozen states, in which the U.S. Court of Appeals for the Federal Circuit, sitting en banc on its own initiative, affirmed a ruling by the Court of International Trade setting aside “five Executive Orders that imposed tariffs of unlimited duration on nearly all goods from nearly every country in the world.”² The second case on the Court’s docket, Learning Resources v. Trump, started as a filing in the U.S. District Court of the District of Columbia by two small businesses that make most of their products in China, Taiwan, Korea, Vietnam, Thailand, and India.³ Having initially declined in June to expedite a petition for certiorari before judgment from the plaintiffs in Learning Resources, the Supreme Court granted that petition on September 9, the same day that it granted a similar petition for certiorari from the government in V.O.S. Selections, as well as a request from both parties in the latter case to expedite consideration. It then consolidated the two cases, indicating it would consider them together.

Phrased most starkly, the question at the heart of the tariff cases seems to answer itself: Is it plausible that a statute in which the words “tariff” or “duty” do not appear nonetheless grants authority to presidents to unilaterally and comprehensively revise the U.S. schedule of tariffs to be imposed on virtually every country in the world? The obvious “no” is underscored by the absence in the statute of any constraints in terms of decisional process or time limits. That such powers would be available whenever the president exercises an all-but-unreviewable discretion to announce an “unusual and extraordinary threat” to the United States hardly suggests any real protection against abuse. It is not an exaggeration that so broad a reading of the statute would all but entirely transfer the full scope of Congress’s tariffing power under the Constitution from the legislative to the executive branch.

As it happens, however, there is enough complexity to the legal arguments in these cases that their outcome is at least somewhat uncertain. The uncertainty is compounded by the contradictory push and pull of “extralegal” factors that perhaps should not sway the Court but may well do so.

Unlike some other recent controversies involving the Trump administration, such as disputes over a president’s power to fire independent agency members, these cases do not involve the constitutional powers of the presidency. The Trump administration has not argued in either matter—and there would be no basis for arguing—that Article II of the Constitution confers tariffing authority on the president directly, just as Article II gives presidents the pardon power or the power to negotiate treaties. The Constitution explicitly vests only in Congress the authority to lay taxes and duties, as well as to regulate U.S. commerce with foreign nations.⁴ As a consequence, whatever authority the president has must be based on some statute Congress has enacted. As we discuss below, there are statutes other than the IEEPA on which other presidents have relied and which Trump has invoked on other occasions. In the current cases, however, Trump has cited only the IEEPA as authority, and it is on the IEEPA on which all the challenged orders in these cases depend.⁵

After reviewing the lower courts’ decisions, along with other applicable law, we conclude that, on balance, the lower courts have a better reading of the limits of the IEEPA than does the administration. Nonetheless, other factors could tip a majority of the Court to uphold the president’s authority. Regardless, and perhaps surprising to some, we think it yet more uncertain whether the Court’s decision, whatever it is, will necessarily have much economic impact at the end of the day. That is because even if the Court upholds the lower courts’ rulings against the president, he likely has the requisite authority under other trade laws essentially to reimpose the IEEPA tariffs going forward, albeit with some procedural speedbumps. The only immediate, major consequence if the president loses these cases is that his administration will have to rebate roughly $130 billion in tariff duties by the end of the year. The amount could be higher if the Court issues its decision thereafter. Meanwhile, the immediate economic impact of the Trump tariffs, under whatever authority they are issued, is also modest in the short run, largely because there has been little retaliation, relative to the extensive retaliation in response to the Smoot-Hawley tariffs during the Depression. The one exception to watch, however, is whether and to what extent China sharply reduces exports of rare earth minerals down the road, once the recently negotiated truce on that issue between the U.S. and China expires. That could have a noticeable impact not only on the U.S. economy generally but also on our defense industries and thus national security.  

Parsing the words of IEEPA

The portions of the IEEPA on which these cases turn are Sections 702 and 703, which are codified at sections 1701 and 1702 of Title 50 of the United States Code. Section 1701 sets out the conditions under which the president may exercise the powers specified in section 1702:

(a)  Any authority granted to the president by section 1702 of this title may be exercised to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the president declares a national emergency with respect to such threat.

(b)  The authorities granted to the president by section 1702 of this title may only be exercised to deal with an unusual and extraordinary threat with respect to which a national emergency has been declared for purposes of this chapter and may not be exercised for any other purpose. Any exercise of such authorities to deal with any new threat shall be based on a new declaration of national emergency which must be with respect to such threat.

Subject to limits not relevant to these cases, the peacetime authorities that IEEPA permits when the above conditions exist are set forth in Section 1702(a)(1)(A)-(B):

(1) At the times and to the extent specified in section 1701 of this title, the president may, under such regulations as he may prescribe, by means of instructions, licenses, or otherwise …

(B) investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest by any person, or with respect to any property, subject to the jurisdiction of the United States … . ⁶

It is the language in boldface—the authority to “regulate … any … importation … of … any property in which any foreign country or a national thereof has any interest”—on which the Supreme Court will focus because this is the only language in the IEEPA or any statute that authorizes the current Trump tariff proclamations (although, as we discuss below, if Trump loses at the Supreme Court he almost certainly will invoke other statutory authorities).

Three judicial opinions in the lower courts have concluded that the tariffs are unlawful but on different grounds. In V.O.S. Selections, Inc. v. United States,⁷ the Court of International Trade (CIT) found that some of Trump’s orders lacked an adequate basis in the emergency conditions required by section 1701 of the IEEPA for triggering presidential power, while others were preempted by the Trade Act of 1974.⁸ The CIT’s reasoning is highly vulnerable to challenge, however. It appears to second-guess presidential determinations of national security conditions to which the Supreme Court is routinely deferential.⁹

Although the U.S. Court of Appeals for the Federal Circuit mostly affirmed the CIT judgment, it took a very different tack—analyzing whether and under what conditions, if any, the key IEEPA language authorizes Trump’s tariff orders at all.¹⁰ As explained below, its analysis is much stronger. The U.S. District Court for the District of Columbia took a similar approach to the Federal Circuit’s in Learning Resources, Inc. v. Trump.¹¹ As a result, it is unlikely that the Supreme Court will approve some of the Trump orders and not others; they are likely to stand or fall together.

In essence, both the Federal Circuit and the district court in Learning Resources conclude that, in context, the power “to regulate” in IEEPA does not imply tariffing power. Both courts found the comparison between IEEPA and other revenue statutes instructive. All but one of the other legislative acts that confer tariffing authority on the president refer explicitly to “tariffs” or “duties.” The only exception, the Trade Expansion Act,¹² gives the president the power to “adjust” the imports of certain articles, which the Supreme Court has construed to include a tariffing power. But despite the government’s argument that “adjust” is synonymous with “regulate,” the Federal Circuit disagreed. It noted that the word “adjust” appears in a law concededly dealing with tariffs and duties, and that inferring a power to tariff from the power to “adjust” imports under the Trade Expansion Act was backed by both the overall statutory context and extensive legislative history.

The Federal Circuit also noted that, in every statute that confers tariffing power on the president, “Congress has provided specific substantive limitations and procedural guidelines to be followed in imposing any such tariffs.” The court, therefore, found it “unlikely that Congress intended, in enacting IEEPA, to depart from its past practice and grant the president unlimited authority to impose tariffs. The statute neither mentions tariffs (or any of its synonyms) nor has procedural safeguards that contain clear limits on the president’s power to impose tariffs.”¹³ Both courts likewise thought it relevant that the Constitution gives Congress its powers, respectively, to “collect taxes, duties, imposts and excises” and to “regulate commerce with foreign nations” in different clauses.¹⁴

Three other technical arguments support these courts’ parsing of the text. First, of the eight administrative moves that IEEPA allows—namely, to “investigate, block … , regulate, direct and compel, nullify, void, prevent or prohibit,” the seven verbs other than “regulate” clearly have nothing to do with the raising of revenue. It is a well-accepted “canon of statutory construction” that any word in a list draws meaning from whatever category of words surrounds it.¹⁵ To take a nonlegal example, we know that, if a medical professional treats “corgis, boxers, and poodles,” it is clear that “boxers” are dogs and not pugilists. So, according to this principle, “regulate” most naturally means “impose sanctions on” and not “raise revenue from.” None of the other terms in the list refers to finance.

The second technical argument involves the so-called anti-redundancy canon of statutory construction. If the verb “to regulate” is broad enough to cover tariffs, it is capacious enough to cover everything else in the list as well. It may be that the Court will regard an overlapping of terms in the IEEPA as reflecting a congressional intention to communicate an exceptionally broad and inclusive scope of presidential authority. Yet courts ordinarily disfavor statutory interpretations that render key terms redundant.¹⁶

Finally, if “regulate” permits presidents to impose tariffs on imports, it would also permit presidents to impose surcharges on every other kind of transaction mentioned in the statute, that is, “any acquisition, holding, withholding, use, transfer, withdrawal, transportation, … exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest.” This interpretation would purport to empower presidents to impose duties on exports, which the Constitution explicitly forbids,¹⁷ and would allow duties or surcharges to be added to virtually any transportation or bank transaction involving foreign goods. Such a reading is counterintuitive, at the very least.

In the Federal Circuit case, however, Judge James Taranto wrote a dissenting opinion for himself and three other judges that offers three counterarguments. First, he notes tariffs and duties have always been recognized as a way of regulating commerce. Taranto quotes the early Supreme Court decision in Gibbons v. Ogden, which stated that “duties may often be, and in fact often are, imposed on tonnage, with a view to the regulation of commerce” and that “[t]he right to regulate commerce, even by the imposition of duties, was not controverted” by the Framers of the Constitution.¹⁸ Second, comparing IEEPA to the universe of all emergency power statutes, Taranto asserts it is not unusual for broad emergency powers to be conferred without time limits or decisional process requirements. Neither of these ripostes, however, directly rebuts the majority’s textual arguments based on comparing IEEPA to explicit tariffing statutes, nor do they contravene the technical statutory constructions we elaborate above.

The most important of the dissent’s arguments is instead based on the history of IEEPA’s drafting. The IEEPA is a successor statute to the 1917 Trading with the Enemy Act (TWEA). Congress enacted the TWEA to deal with threats to the American economy in connection with America’s entry into World War I. Like the IEEPA, Section 5 of the TWEA, under specified conditions, allowed presidents to:

investigate, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest … .¹⁹

This language is identical to that in Section 1702 of the IEEPA. As explained in the Federal Circuit’s majority opinion, presidents after World War II repeatedly “used TWEA to impose economic sanctions on foreign adversaries, regulate foreign exchange, and control exports based on several declarations of national emergencies.”²⁰ Its most notable modern use was President Nixon’s proclamation in 1971 temporarily imposing a 10% ad valorem duty in lieu of then existing statutory tariff rates on all dutiable articles imported into the United States.²¹ The Nixon order went far beyond our foreign adversaries—and thus far beyond the originally contemplated scope of the TWEA—and his proclamation did not explicitly rely on that statute. In litigation, however, the Justice Department urged that the TWEA authorized the measures Nixon took, and the Court of Customs and Patent Appeals—predecessor to the Federal Circuit— upheld the initiative on TWEA grounds in a case called Yoshida Int’l v. United States (Yoshida II).²²

In 1976 and 1977, Congress undertook three important steps to reform the authorization for presidential emergency powers. In September 1976, it enacted the National Emergencies Act²³ to revise the framework for the presidential exercise of emergency powers in peacetime. In December 1977, Congress then amended the TWEA’s Section 5 authorities to limit their availability to wartime²⁴ and enacted the IEEPA, including the language under which the Yoshida II court had upheld Nixon’s tariffs. Because Congress was aware of the Yoshida II decision and borrowed for the IEEPA the TWEA language used to uphold Nixon, it is Taranto’s argument that “IEEPA embodies an eyes-open congressional grant of broad emergency authority in [a] foreign-affairs realm.”²⁵ Moreover, he adds, it would be awkward now in cases of wartime to treat the power “to regulate” exports under the TWEA as including the power to tariff but to read the identically worded IEEPA to exclude tariff authority.

The seven Federal Circuit judges in the majority, however, countered Yoshida II a weak precedent. Some witnesses at congressional hearings that are part of IEEPA’s legislative history called into question whether Yoshida II was correctly decided. Moreover, prior to Yoshida II, Congress had essentially ratified the kind of surcharge Nixon imposed by giving presidents similar power via a newly enacted Trade Act of 1974 instead of IEEPA. The Trade Act specifically allows a president “to deal with large and serious United States balance-of-payments deficits,” but only through temporary import surcharges, which are not to exceed 15% ad valorem and not to extend for a period lasting beyond 150 days, unless Congress extends that period.²⁶ With regard to the Trump orders, the Court of International Trade inferred that the Trade Act’s narrowing conditions actually displaced any authorities presidents might otherwise have had to respond to balance-of-payments deficits under more general emergency statutes.²⁷ Without specifically endorsing that interpretation, the Federal Circuit majority stressed that the Court of Customs and Patent Appeals had gone to considerable lengths in Yoshida II to emphasize the narrowly cabined exercise of power it was upholding and to insist its rationale was not giving the president an unbounded tariff authority. Given all of these factors—and Congress’s general intention in 1976 and 1977 to discipline the presidential use of emergency authority—the majority declined to be guided by Yoshida II.

Nondelegation and the major questions doctrine

Beyond the arguments focused precisely on the wording of the IEEPA, there remains an overarching question whether the Trump administration is simply asking for too sweeping an interpretation of the powers granted to it by Congress. Under the so-called nondelegation doctrine, Congress is not permitted to give the executive branch unbridled power to define a law’s reach. To do so would represent a transfer of legislative power from Congress to the executive, which the Constitution does not permit. Of course, Congress routinely gives the executive branch a wide scope of discretion in implementing statutes. But the nondelegation doctrine demands that any statute granting discretion to the executive branch must also contain, at least implicitly, an “intelligible principle” that marks the boundary between permissible and impermissible exercises of that discretion. It makes no difference that presidents would happily receive unbounded discretionary power; Congress, at least in principle, is forbidden to confer it.

The petition for certiorari in Trump v. V.O.S. Selections raises the issue of excessive delegation, namely, “If IEEPA authorizes the tariffs, whether the statute unconstitutionally delegates legislative authority to the president.” The plaintiffs below had argued, in other words, that reading IEEPA as broadly as Trump wants would mean that the IEEPA contains no “intelligible principle” that would limit its use for the imposition of tariffs. Four of the seven judges in the Federal Circuit majority voted for a concurring opinion which agreed with the plaintiffs’ constitutional argument.²⁸

It is unlikely, however, that the Court will hold (a) that IEEPA allows tariffing but (b) in doing so, violates the nondelegation doctrine. On one hand, at least four current justices have expressed discomfort that the “intelligible principle” requirement historically imposed by the Court is actually too lax.²⁹ They would seem to prefer a version of the nondelegation doctrine that goes even further in demanding that Congress enact specific limits on whatever administrative power it vests through a regulatory statute. Such an attitude would seemingly support the plaintiffs on this issue. But in the entire course of American history, the Court has struck down statutes for violating the nondelegation doctrine only twice—both times in 1935. Conversely, the Court has repeatedly validated broad grants of authority notwithstanding the doctrine, most recently in a 2025 decision upholding the Federal Communications Commission’s statutory discretion to structure the Universal Services Fund.³⁰ That decision not only reaffirmed the “intelligible principle” rule but also held that no more stringent rule applies to revenue-raising statutory authority.³¹ In addition, there is authority for the proposition that broad delegations to the president are less troublesome if related to the management of foreign affairs.³² However much some justices may want to tighten up on the nondelegation doctrine, the tariff cases provide an unlikely vehicle for them to do so.

There are, however, three other ways in which the Court could decide that the Trump administration’s “ask” in these cases is too broad. One of them is an offshoot of the nondelegation concept. The Court might conclude that the IEEPA is susceptible to two plausible interpretations regarding tariff authority—one permitting it, but one not. Without actually holding that Trump’s interpretation would render the IEEPA unconstitutional, the Court might at least determine that Trump’s interpretation raises a significant constitutional issue because of the nondelegation doctrine. Under the so-called “constitutional avoidance canon,” “When ‘a serious doubt’ is raised about the constitutionality of an Act of Congress, ‘it is a cardinal principle that this Court will first ascertain whether a construction of the statute is fairly possible by which the question may be avoided.’”³³ Taking this approach, the Court would not have to conclude definitively that the Trump reading of the IEEPA is unconstitutional. The Court could affirm the Federal Circuit’s decision on the ground that the constitutional question is at least serious and that the Federal Circuit’s more limited interpretation is plausible.

Second, the Court might be guided by the so-called major questions doctrine (MQD) in construing IEEPA’s reach. As crystallized by the Roberts Court in a 2022 decision, West Virginia v. EPA, the MQD holds that when an administrator—here, the president—has proposed to use a particular statutory authority in an “unheralded” and “transformative” way to support an administrative initiative of “vast economic and political significance,”³⁴ “the government must point to ‘clear congressional authorization’ for that asserted power.”³⁵ Otherwise, the administrator’s action is unlawful.

President Trump’s tariff executive orders seem to be a classic MQD overreach. At best, the scope of tariff authority granted to the president by the IEEPA is murky. It certainly is not “clear,” as the MQD doctrine requires. This was the view of the Federal Circuit majority. Moreover, no other president has purported to rely on IEEPA for levying tariffs. Even the Nixon proclamation upheld in Yoshida II did not initially rely on the TWEA’s authority to “regulate” imports. Nonetheless, the Taranto dissent argues that because the delegation in question is to the president, not some mere agency administrator, and is in a foreign policy context, the MQD is inapposite. Taranto points to a recent concurring opinion by Justice Kavanaugh, albeit in a different setting, arguing that even if the MQD may be relevant to delegations to the president, the “canon has not been applied by this Court in the national security or foreign policy contexts, because the canon does not reflect ordinary congressional intent in those areas.”³⁶

But even without formal invocation of the MQD, it is plausible that Trump’s interpretation of the IEEPA is just too much for the Court to swallow. The technical applicability of the MQD is currently uncertain because it was articulated in 2022 as an exception to what was then the usual regime of deference to agency interpretations of their own legal authority—so-called Chevron deference. The Court, however, has overturned Chevron deference, asserting that every statute has a “best” interpretation and if an interpretation “is not the best, it is not permissible.”³⁷ In a post-Chevron world, the Court might well decide that the “best” reading of the IEEPA, which never mentions tariffs, does not hand the president the kind of extraordinary authority that Trump claims.

Contemporary imponderables (including the economy)

Beyond the strictly legal arguments, these cases may also be affected by contextual factors that Justice Robert Jackson, in another context, called “contemporary imponderables”³⁸—political, economic, or institutional factors that may make a possible ruling in a case either more or less attractive. Unfortunately, there is no way of quantifying the impact of such factors on Supreme Court decisionmaking. Justices like to write their opinions as if formal principles of law dictate the results they reach; only rarely do they highlight that policy considerations motivate their conclusions. Yet no serious observer of the Supreme Court during the Roberts era or any other doubts that “extralegal” factors play a role in what the Court decides. In this case, there may be at least four such sets of factors kicking in, some favoring the president, others not.

An executive-indulgent Court?

First, the Roberts Court, overall, is notably indulgent of executive authority. The tariff cases—unlike Trump’s challenges to independent agencies—do not go to the heart of the “unitary executive theory” that the Court has seemingly endorsed so broadly. But challenges to executive authority arriving at the Court may meet at least a starting presumption among the majority that “elections matter,” and presidents are entitled to pursue their core agenda boldly.

Conflict avoidance

Reinforcing the first consideration is the appearance that the Roberts Court has created of wanting to avoid or at least maximally postpone any occasions that might prompt outright defiance from the Trump administration. The administration has been aggressively hostile to lower court rulings in hot button cases that purport to bar specific practices or command certain remedies. A ruling favoring the president on the tariff matter would avoid a conflict with him.

This consideration may now be especially relevant if the Court perceives that other major disappointments for the administration will be inevitable this term. It is all but certain that the administration’s position on birthright citizenship will be rejected. The Court may also impose procedural constraints on the administration’s deportation policies that Trump will not welcome. Both those contexts implicate individual liberties in ways that the tariff cases do not. If the Court thinks it wise to “keep its powder dry,” giving Trump his way on tariffs would be a way for the Court not to be on the near-term receiving end of Trump’s ire, or at least to cushion his ire when other cases before the Court don’t go his way.

The appearance of partisanship

On the other hand, the Court may be concerned—despite denials—that deferring to Trump’s use of emergency power while having second-guessed President Biden’s will further fuel a common perception that the Court is too politically biased. In Biden v. Nebraska, the Court invoked the MQD to invalidate the Biden administration’s initiative in designing a higher education loan forgiveness program.³⁹ The HEROES Act, on which the Biden administration’s case relied, was, like IEEPA, an emergency statute.⁴⁰ The government’s defense of the Biden program arguably tracked the language of the HEROES Act more closely than Trump’s tariff proclamations follow IEEPA.

If Chief Justice Roberts were to write or join an opinion favoring Trump’s tariffs, a partial response to criticism directed specifically at him might be that, during the Obama administration, he went to surprising lengths to uphold Congress’s power to enact the Affordable Care Act (ACA), thus preserving a cornerstone commitment of the then-incumbent president.⁴¹ In light of the Court’s conspicuous indulgence of the Trump administration thus far, however, Roberts’s protectiveness towards the ACA over a decade ago would be unlikely to dampen criticism of the Court today as a whole.

Economic impact

Finally, even if Trump can find other statutory bases for implementing his tariff regime in the future—as we explore below— the extraordinary economic significance of the tariffs may give the Court pause about validating them now. Despite the Court’s obvious antagonism towards the idea of independent agencies, for example, the Court has already signaled anxiety about giving the president authority to fire members of the Board of Governors of the Federal Reserve System.⁴² The Court’s tentatively offered legal explanation for distinguishing the Fed from other independent agencies is flimsy. The majority of the Court’s real reason for its Fed “carve out” is not to add to economic anxiety. A similar motive could persuade a majority not to run other economic risks by enabling the president to have his way on the tariff matter.

Economic effects

In a report from September,  the Budget Lab at Yale (YBL), a broadly cited source for its economic analysis, if the Supreme Court were to strike down the IEEPA tariffs that President Trump has imposed to date, or the same result were brought about upon a remand to the lower court, that would remove an estimated 71% share of the revenue collected on the tariffs he has imposed since assuming office on January 20.⁴³ The number is not 100% because, both before and after the country-specific “Liberation Day” order, the president has invoked “national security” under Section 232 of the Trade Expansion Act of 1962 to place additional tariffs on imported aluminum, steel, and other products. Those tariffs would remain regardless since they are not part of the IEEPA lawsuit.

A Trump loss at the Supreme Court would mean refunds to the importers who initially paid the tariffs, even if they had passed on some or all of that amount to other parties, including consumers. Through the end of August, that amount totaled $72 billion.⁴⁴ On the assumption that that amount covers a full five months or tariff revenue collection from “Liberation Day” in early April through August, four more months of duties would push the total to roughly $130 billion by the end of the year.⁴⁵ The refund would be higher if the Court issues its ruling thereafter.  

But going forward, it would be a mistake to assume that the tariffs implemented under the authority of the IEEPA would not soon reappear. To the contrary, the president likely has authority under three other provisions of U.S. trade law to eventually reinstate the IEEPA tariffs in full, albeit with some time lag due to the procedural requirements of these alternatives. It would be surprising if administration officials have not already prepared the paperwork to invoke one or more of these provisions right away after any Supreme Court loss.

Most immediately, the president could invoke Section 122 of Trade Act of 1974⁴⁶ as a basis for immediately reinstating some or all of the IEEPA tariffs, but only up to 15% for up to 150 days unless extended by Congress. Section 122 allows the president to target countries with large balance-of-payments surpluses with the U.S. (most of our trading partners) or that have imposed unjustifiable trade restrictions against U.S. goods and services (a low bar to clear).

At the same time, under the authority of Section 232 of the Trade Expansion Act of 1962,⁴⁷ the secretary of commerce could open investigations of imports of specific products or from specific countries not already subject to tariffs under that Section to determine whether they threaten national security—presumably the secretary would find that most or all of the imports covered by the IEEPA tariffs do. Although the president has 270 days to determine whether he agrees with any affirmative finding and another 90 days after that to decide what remedy to invoke, it is safe to presume that both the Department of Commerce and presidential decisions resulting in tariffs would come relatively quickly. Because the term “national security” is not defined in the statute, the president has wide latitude to define it himself. Given that Courts are also likely to give any president wide berth to define national security, it is entirely possible that the Supreme Court would uphold some or all of the IEEPA-based tariffs if re-imposed under Section 232.

Third, the president could also invoke Section 301 of the Trade Act for 1974 as an alternative or supplement to invoking Section 232. Section 301, which has been used by multiple presidents, allows the U.S. trade representative the power to investigate and remedy unfair or discriminatory trade practices by foreign countries, including by implementing tariffs. Though the law has procedural requirements including consultations with foreign countries and asking for public comments, which normally takes about a year, a president intent on acting fast, as this president has done, could do so more quickly. President Trump invoked Section 301 authority to impose tariffs on China on the EU in his first administration. He could use this authority more expansively if he were to lose the IEEPA case at the Supreme Court.⁴⁸

In short, the tariffs at issue before the Court might well be reinstated under different trade provisions, although the administration would have to consider whether those other authorities would give Trump the flexibility he has exploited under IEEPA, allowing for tariffs to be adapted in the course of negotiations. If all the tariffs were reimposed, the question would be raised of what their impact would be, combined with the other tariffs Trump has put in place since assuming office.

The most comprehensive recent estimates have been provided by the YBL in October 2025.⁴⁹

First, the YBL estimates that the overall average effective tariff rate will be 18%, or a slightly lower 17% once shifts in consumption patterns of imports due to the tariffs are factored in—the highest levels since 1935.

Second, the YBL estimates that tariffs eventually would raise the overall price level, which is not the same as inflation (which measures the change in the price level over a given period of time) by 1.3%, assuming the Fed does not offset those higher prices with a more restrictive monetary policy. If, however, the Fed were to become restrictive in an effort to counter that rise in prices, then they estimate average incomes could fall by at least $1,600.

Third, the YBL projects the tariffs will reduce U.S. real GDP growth by 0.5% in both 2025 and 2026. Over the long run, however, YBL projects permanently lower GDP growth of 0.35%, which doesn’t sound like a lot, but given projected long run annual GDP growth in the neighborhood of 2% annually, a 0.35% reduction amounts to a cut in long run growth by almost 20%. If anything, this may be an underestimate to the extent that the rest of the world reacts to America’s turn inward by forming supply chains and free trade blocs that exclude the U.S. This would hamper U.S. exports and divert some investors to put their capital abroad, adding to the tariffs’ long run economic damage to the U.S.⁵⁰

Fourth, the YBL projects the unemployment rate would be 0.3 percentage points higher by the end of 2025 and 0.7 percentage points higher by the end of 2026 than it would be in the absence of the IEEPA tariffs.

Why hasn’t the immediate impacts of the Trump tariffs been even greater? It’s a question frequently asked among journalists and on the blogosphere.

We’ll suggest three reasons. First, unlike the Depression-era Smoot-Hawley tariffs, the Trump tariffs have not triggered a cycle of retaliatory tariffs, which would have depressed economic output here and abroad to a much greater extent. China’s plan to restrict exports of its rare earth minerals to the U.S. was briefly one exception. Although President’s Trump and Xi have temporarily averted a showdown on that issue, China could implement that plan down the road or threaten to do so. If China curtails those exports substantially, the economic and national security impacts to the U.S. could be significant, with one analyst calling them “massively disruptive” should the restrictions be put in place.⁵¹

Second, the depressing effect of the tariffs on U.S. aggregate demand have been concealed so far by the boom in AI-related investment, especially for data centers, adding to U.S. GDP growth by at least a full percentage point.⁵² If AI investment slows down, so would the overall economy, and the public may begin to notice the demand dampening impacts of the tariffs to a greater extent.

Though they may not notice, for a third reason: Consumers and investors can see only actual economic numbers as they are published (which are now late because of the government shutdown), not the counterfactual better inflation, GDP, and unemployment performance numbers that would exist if the tariffs had not been introduced. Moreover, the full effects of the tariffs have not yet shown up because the fluctuations in tariffs levels have complicated firms’ pricing and investment decisions, while adding a risk premium to U.S. assets.⁵³ In our view, these effects may get worse once investors realize that the tariffs are here to stay.

Conclusion

In sum, the economic effects of the Supreme Court’s decision about the reach of the IEEPA may prove marginal at most, depending on how far the administration goes in imposing tariffs pursuant to other statutory authorities. It will be the legal precedent and the Court’s rationale that will matter most to the overall trajectory of presidential power. The scope of authority the Court reads into the IEEPA, the degree of deference the Court does or does not give to presidential fact-finding, and anything the Court might say about the future of the nondelegation doctrine will all be of keen interest.