Supreme Court decision throws reciprocal tariff policy for another loop

The U.S. Supreme Court on Feb. 20 dealt a serious setback to President Donald Trump's attempt to set tariffs affecting most countries.

In a landmark 6-3 decision, the justices ruled that Trump cannot use the International Emergency Economic Powers Act to levy tariffs. 

Trump has cited IEEPA — a 1977 law that allows tariffs on all imports during an "unusual and extraordinary threat ... to the national security, foreign policy or economy of the United States" — to justify his most far-reaching assertions of tariff power, including the reciprocal tariffs.

But the court ruled that "when Congress grants the power to impose tariffs, it does so clearly and with careful constraints. It did neither in IEEPA."

Meredith Kolsky Lewis, a University at Buffalo law professor, told PolitiFact the court's ruling would "make it difficult" to resurrect reciprocal tariffs without explicit legislative approval from Congress.

In remarks after the decision, Trump promised to forge ahead with alternate strategies for imposing tariffs, using other laws that are more likely to withstand judicial scrutiny.

Trump wrote on Truth Social he would soon sign an executive order for a 10% "global tariff" using Section 122 of the 1974 Trade Act, which allows the president to address "large and serious" balance-of-payments deficits through import surcharges, quotas or a combination of the two.

The libertarian Cato Institute, which generally opposes tariffs, wrote after the court's decision that the administration "could replicate most of the IEEPA tariff structure through Section 122 in short order" without lengthy investigations that other trade statutes require.

The downside of Section 122 tariffs for Trump is that they expire after 150 days unless Congress extends them, which could prove complicated in an election year. The provision also hasn't been used this way before, so it is subject to legal challenge. 

Cato research fellow Clark Packard wrote that if Congress declined to act, Trump might let the tariffs lapse and then declare a new emergency, starting the 150-day clock again.

"The maneuver would raise serious separation-of-powers concerns, but nothing in the statute clearly forbids it," Packard wrote.

In his Truth Social post, Trump said he would use another law not affected by the Supreme Court decision: Section 301 of the 1974 Trade Act, which allows tariffs when the president determines that a foreign country "is unjustifiable and burdens or restricts United States commerce" through trade agreement violations. This requires executive branch officials to investigate first.

Investigations under these provisions, which usually target specific classes of products, "typically take three months or more, but they probably could be completed in much less time and still be judgment-proof" in the courts, said David A. Gantz, a University of Arizona emeritus law professor. These could be used to impose many tariffs against China as well as those on "steel, aluminum, copper, autos and auto parts, kitchen cabinets, furniture and pharmaceuticals," he said.

It remains to be seen whether the tariffs Trump imposes during the rest of his term qualify as "reciprocal." The ones the justices struck down were not structured to match foreign tariffs on the U.S. but were based instead on trade deficits with each country.

The Supreme Court decision is a significant setback for reciprocal tariffs, but we'll be watching to see if Trump can impose them using other legal tools. For now, we rate this promise Stalled.