The Supreme Court Didn’t Fully End the Trade War, but It Reinforced Limits on the Presidency

Given President Donald Trump’s petulant response to Friday’s Supreme Court decision barring his use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs, the White House’s unilateral trade war against Americans (and the rest of the world) is not yet over. Temporary new tariffs imposed under Section 122 of the Trade Act of 1974 seem designed as much to flip the bird to the high court’s majority as to maintain the administration’s protectionist policies. But Section 122 is a more limited tool than what Trump claimed under IEEPA, and there’s little doubt the president (and his successors) have been reminded of boundaries to the power of the office.

In Friday’s ruling, Chief Justice John Roberts wrote for the 6–3 majority in the case of Learning Resources Inc. v Trump that “the Government reads IEEPA to give the President power to unilaterally impose unbounded tariffs. On this reading, moreover, the President is unconstrained by the significant procedural limitations in other tariff statutes and free to issue a dizzying array of modifications at will. All it takes to unlock that extraordinary power is a Presidential declaration of emergency, which the Government asserts is unreviewable.”

Joined in whole or in part by Associate Justices Neil Gorsuch, Amy Coney Barrett, Elena Kagan, Sonia Sotomayor, and Ketanji Brown Jackson, Roberts concluded, “IEEPA’s grant of authority to ‘regulate . . . importation’ falls short. IEEPA contains no reference to tariffs or duties. The Government points to no statute in which Congress used the word ‘regulate’ to authorize taxation….We hold that IEEPA does not authorize the President to impose tariffs.”

Gorsuch’s concurring opinion was especially on point. “The President claims that Congress delegated to him an extraordinary power in the International Emergency Economic Powers Act (IEEPA)—the power to impose tariffs on practically any products he wants, from any countries he chooses, in any amounts he selects,” he wrote. “The Constitution lodges the Nation’s lawmaking powers in Congress alone, and the major questions doctrine safeguards that assignment against executive encroachment.”

Gorsuch went on to chastise his colleagues—both the majority and the dissenters—for inconsistently enforcing the division of power between the executive and legislative branches depending on who holds the presidency. “If history is any guide, the tables will turn and the day will come when those disappointed by today’s result will appreciate the legislative process for the bulwark of liberty it is,” he concluded.

That said, Congress didn’t limit itself to IEEPA when delegating powers, a point the administration immediately seized upon.

“President Trump is invoking his authority under section 122 of the Trade Act of 1974, which empowers the President to address certain fundamental international payment problems through surcharges and other special import restrictions,” announced the White House. “The Proclamation imposes, for a period of 150 days, a 10% ad valorem import duty on articles imported into the United States.”

The president later hiked the tariff to 15 percent, seemingly just because he could. Tellingly, though, that’s the maximum allowed under that law, as is the 150-day duration of the tariffs. Section 122 doesn’t pretend to be the grant of open-ended power the administration falsely claimed from IEEPA.

Invoking Section 122 also sets up a new legal clash. That’s because the law, which authorizes temporary tariffs “to deal with large and serious United States balance-of-payments deficits,” is quite likely inapplicable in the modern world.

“Section 122 of the 1974 Trade Act, on which Trump’s 10% tariff is based, does not apply in the current macro environment,” argued Peter Berezin, chief strategist for BCA Research. “You cannot have a balance of payments if you have a flexible exchange rate, as the US currently does.”

Cato Institute economist Alan Reynolds agreed that the law is irrelevant because “the U.S. Current Account [Trade] Deficit is Fully Funded by the Capital Account Surplus [net inflow of foreign capital]. There is no ‘Balance of Payments Deficit’ justification for President Trump’s newest effort to tax American firms and families for buying imports.”

That means even the limited tariffs under Section 122 are legally dubious at best and subject to legal challenge.

In truth, the administration is probably using Section 122 as a placeholder while it prepares to invoke another law—Section 301 of the Trade Act of 1974—to achieve its protectionist goals. But that authority is intended for use to retaliate against countries that engage in “unfair trade practices.” It requires an investigation and places limits on the resulting tariff measures.

“It is not a general-purpose industrial policy statute,” point out Georgetown University’s Marc L. Busch and Jennifer Hillman. “It requires findings. It requires a process. And any remedies must be directed at eliminating the identified burden on U.S. exports.”

That means the Trump administration is running up against constraints on executive power—a welcome development under any president. It’s especially welcome given the costs the president’s tariffs have inflicted on Americans.

“Over the course of 2025, the average tariff rate on U.S. imports increased from 2.6 to 13 percent,” the Federal Reserve Bank of New York’s Mary Amiti, Chris Flanagan, and Sebastian Heise, joined by Columbia University’s David E. Weinstein, concluded last week. “We find that nearly 90 percent of the tariffs’ economic burden fell on U.S. firms and consumers.”

In dollar terms, the Tax Foundation’s Erica York and Alex Durante found “the Trump tariffs amounted to an average tax increase per US household of $1,000 in 2025.” Even after Friday’s ruling, “the President’s remaining new tariffs under Section 232 amount to average tax increase per US household of $400 in 2026.”

So, any relief, even if only partial, from the Trump administration’s trade war should be welcome news to Americans and for the prosperity around the world encouraged by relatively free trade. But the Supreme Court’s decision also reinforced overall boundaries around presidential power – power that has grown for decades beyond constitutional limits. Reminders of limits on the too-powerful presidency should be welcomed by everybody.