The Supreme Court’s Tariff Decision Should Have Little Effect on Trump’s Trade Agenda
The Supreme Court has caused quite a stir. Its finding against most of Trump’s tariffs has thrilled the Democrats as well as various business interests that have suffered under the tariffs. Trump supporters, of course, see things differently. The president is angry and not a little resentful. A small group is pleased to see the Court follow its reading of the law regardless of whose ox is gored.
Limited Practical Impact Despite Headlines
Despite the strong reactions to the decision, its practical impact will likely be limited after a few initial adjustments. Much commentary has framed it as a broad ruling on tariffs or presidential authority, but the Court’s decision is actually narrow. It simply states that the International Emergency Economic Powers Act (IEEPA) does not grant the president authority to impose or modify tariffs, contrary to the White House’s claims. However, this does not prevent Trump from pursuing his trade agenda through other legal mechanisms. Tariffs were never an end in themselves, but a tool to secure more favorable trade deals for the United States, and the administration will likely turn to alternative authorities to pursue those same objectives.
Trump’s Trade Strategy: Beyond Tariffs
Trump’s approach to trade was admittedly obscure when he took his oath of office. It looked as though all he wanted to do was impose disadvantages on this country’s trading partners and collect revenues in the process. It still looked that way when on April 2, 2025—Trump’s so-called “Liberation Day”—he claimed authority under the IEEPA to impose massive tariffs on just about every other country in the world. In the weeks following the April announcement, however, the administration made clear that the trade agenda went further than tariffs. Almost immediately, the White House invited trade negotiations with any nation that objected to the levies. It was as though Trump was saying to the world, “If you don’t like these admittedly punitive tariffs, what will you give the United States to make a deal.” The tariffs, in other words, were always only a bargaining lever for these subsequent negotiations. And like any advocate in any lawsuit, the opening bid was to ask for the world in order to leave ample room for the inevitable compromises of negotiations. According to Congressional reporting, the White House has negotiated agreements or frameworks for agreements with 14 nations and the European Union (EU) since Liberation Day. In every case, the final tariffs fell significantly below those announced on Liberation Day. A complete review would take up too much space and surely try the patience of even the most earnest reader. A couple of examples should suffice to reveal the pattern built into the White House’s strategy.
Early Results: Negotiations with Japan and the EU
Negotiations with Japan started soon after the April announcements and lasted until August. On September 4, the White House announced that tariffs on Japanese goods entering the United States would stand at 15%, far lower than the 46% quoted on Liberation Day. Goods from Japan that are not produced in this country or are only produced in small amounts would enter tariff free. In return, Japan would remove long-standing barriers to imports of American rice and other agricultural products. After negotiations with the EU, the White House announced a framework of an agreement under which U.S. tariffs would fall from the 39% advanced on Liberation Day to 15%. In return, the Europeans committed to removing restrictions on American-made automobiles, agricultural products, and other goods. Under the framework, the EU also committed to buying more American energy products, most especially liquified natural gas. In response to the Supreme Court’s decision, EU lawmakers have decided to shelve the agreement, presumably on the assumption that the loss of IEEPA authorization would limit Trump’s future negotiating leverage. The EU seems to have misread the situation, for the White House, should the need arise for any future negotiation, has many alternative ways to re-establish the punitive tariffs of Liberation Day. In addition to a Congressional vote, three other tariff authorities stand out.
Alternative Legal Pathways for Tariffs
If the IEEPA no longer helps the White House in this regard, it can turn to Section 122 of the Trade Act of 1974. This piece of legislation gives the president the authority to impose tariffs of 15% and otherwise limit flows of foreign goods into the U.S. for 150 days, after which he would need Congressional authorization for an extension. If this is insufficient for White House purposes, Section 301 of the same act would give Trump extensive power over trade relations, though only after a thorough review of the matter. Similarly, Section 232 of the Trade Expansion Act of 1962 would, after a review, allow the imposition of tariffs. Since the administration would conduct these reviews, the Europeans should have little doubt that the White House would gain authority, even perhaps to re-establish the Liberation Day tariffs. Alternatively, the White House could turn to Section 338 of the Tariff Act of 1930. It authorizes tariffs of up to 50% on imports from countries that the president determines have discriminated against American businesses. The act requires no review, nor does it impose limits on how long the tariffs can remain in place. Though this act authorized the infamous Smoot Hawley tariffs that some economists contend deepened and extended the Great Depression, Treasury Secretary Scott Bessent has indicated that the administration is considering this powerful authorization. Since the Supreme Court is unlikely to block these alternative authorities—certainly not quickly—the EU and other U.S. trading partners should recognize that the White House can still apply the same negotiating pressures used on Liberation Day, which led to last August’s framework. In short, Trump can continue pursuing the strategies he’s used since taking office. While he may be frustrated by the Court’s recent ruling, it does little to alter his plans, and the Court was simply following the law, not a different trade agenda.
