In a press conference after the ruling on Friday, Mr. Trump acknowledged that his team had been studying these and other laws as fall-back options, and he announced a slate of new actions to replace his IEEPA tariffs. This includes the current 232 actions, initiating new investigations under Section 301, and imposing a global 10% tariff under Section 122 of the Trade Act of 1974, which empowers the president to address “large and serious” balance-of-payments deficits via global tariffs of up to 15% for no more than 150 days (after which Congress must act to continue the tariffs). The administration might later consider Section 338 of the Tariff Act of 1930—a short and ambiguous law that authorizes the president to impose tariffs of up to 50% on imports from countries that have “discriminated” against U.S. commerce—but this is legally riskier.
These measures will create global tariff regime similar to what Trump imposed under IEEPA. The main difference—and the main benefit for America’s economy and trading partners—would rest in how the president does so. IEEPA was essentially an Oval Office “tariff switch” that Mr. Trump could flip on and off at any time, for any reason and in any amount. This created massive uncertainty and crippling complexity for businesses, foreign governments and the U.S. economy. The alternative authorities, by contrast, have substantive and procedural guardrails that limit their size and scope or, at the very least, give companies time to prepare for tariffs (or lobby against them).
To be sure, “guardrails” is a relative term for a president who has already stretched Section 232’s “national security” rationale to cover whipped-cream cans and bathroom vanities. And the courts have largely rubber-stamped the administration’s previous moves under Sections 232 and 301—a big reason why the tariff Plan B will feature them. Abuse is likely, as is more litigation. And unlike with IEEPA, we shouldn’t expect the courts to save us.
The justices’ ruling is an important victory for constitutional governance and will eliminate the most destabilizing element of Mr. Trump’s tariff regime. But until Congress reclaims some of its constitutional authority over U.S. trade policy and limits the president’s legal tariff powers, costly and erratic tariffs will remain the norm in the U.S., to our economy’s great detriment.
Here’s Dartmouth’s great trade economist, Doug Irwin, writing in The Economist. A slice:
The historic ruling is critically important beyond its implications for current trade policy. Had the court not limited Mr Trump’s actions, presidential power on import tariffs would have been completely unchecked by any congressional legislation and untethered to any congressional opinion. If the government had won, this administration and future administrations could have declared an emergency, however frivolous, and imposed steep taxes. As the brief for VOS and several other companies put it, the president could “impose tariffs on the American people whenever he wants, at whatever level he wants, against whatever countries and products he wants, and for as long as he wants”, simply by declaring an emergency that is “unreviewable”.
In oral argument, a hypothetical case was raised of a Democratic administration declaring a climate emergency and imposing high tariffs on imported electric vehicles or diesel trucks as they saw fit. One person could dictate policy without approval from Congress, the representatives of the people. This would have been a radical rewrite of the constitution.
Jane Shaw Stroup reminds us of what is threatened by protective tariffs. Here’s her conclusion:
That’s why today’s Supreme Court ruling was important. It’s a reminder that prosperity is not guaranteed. The world’s economic ascent has been built on openness—on the ability of goods, people, and ideas to move cheaply and freely. Re‑erecting barriers through tariffs risks undoing gains that lifted billions out of poverty and reshaped the human condition.
[DBx: Long experience at debating trade policy prompts me to add this further point, one that I know Jane agrees with: Free trade’s lifting of billions of people around the world out of poverty did not come at the expense of Americans; this free trade also made us Americans richer.]
The Administration’s strongest argument is that it deserves deference on questions that implicate foreign affairs. The dissent agrees. But as Justice Gorsuch notes in a brilliant concurrence, this logic would have required the Court to uphold the Obama Clean Power plan in West Virginia v. EPA (2022) since climate change is an international issue.
Justice Gorsuch acknowledges that “the major questions doctrine may speak with less force where the President and Congress enjoy “overlap[ping] . . . authority” under the Constitution. But the Constitution expressly vests the power over taxation and foreign commerce with Congress, not the President.
Justice Gorsuch also amusingly hoists the liberal Justices on their prior dissents that criticized the use of the major-questions doctrine in cases involving overreaches by Democratic Presidents. “Their approach today is difficult to square with how they have interpreted other statutes,” he writes. Yes, it is.
This is ugly even by Mr. Trump’s standards. He’s accusing them of betraying the U.S. at the behest of nefarious interests he didn’t identify, no doubt because they don’t exist. Asked about Justices Gorsuch and Barrett, whom he appointed, Mr. Trump called them “an embarrassment to their families.”
This is rhetoric that could cause some deranged Trump acolyte to turn to violence against a Justice. It’s as bad as Sen. Chuck Schumer’s threat in 2020 that Justices Gorsuch and Brett Kavanaugh had “released the whirlwind and you will pay the price!” Recall the nut who stalked Justice Kavanaugh’s home in 2022, after the leak of the Court’s draft opinion overturning Roe v. Wade. We hope all nine Justices appear next week at the State of the Union address as a show of self-protective solidarity.
Congress never approved the worldwide tariffs at issue in the case. Trump told the court they were authorized by a 1977 law, the International Emergency Economic Powers Act. No president has used IEEPA to impose tariffs, but it contains the phrase “regulate … importation.” Trump said that was sufficient authorization for him to throw out the rest of the tariff schedules and set import taxes however he pleased.
Roberts saw the flimsiness of that reasoning. “Based on two words separated by 16 others,” he wrote, “the President asserts the independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time. Those words cannot bear such weight.” Indeed. The executive branch can’t be allowed to grab hundreds of billions of dollars from the American people on such a thin legal basis.
Reading between the lines, there’s a sense that Trump’s frenetic alteration of tariff rates weighed on the court. The opinion notes that under Trump’s reading of the law, he is “free to issue a dizzying array of modifications at will” — and indeed he has. Tariffs have become a lobbying bonanza as companies campaign for exemptions and carveouts.
Also applauding the SCOTUS ruling against Trump’s IEEPA tariffs are the Editors of National Review. A slice:
While the Court’s conservatives were equally divided in this case, we believe that the majority (which included two of Trump’s three appointees to the Court, Justices Neil Gorsuch and Amy Coney Barrett) had much the better of the argument that the extraordinary, limitless delegation of the most central power possessed by Congress needs to hang on language more specific than what IEEPA says. In so holding, the Court was faithful to the same principles it repeatedly cited to constrain Biden on student loans, the eviction moratorium, the workplace vaccine mandate, and carbon emission rules. That means the Court is doing its job — which is why progressives hate it. The right should not sing from that hymnal.
The president’s furious and intemperate response — effectively accusing the justices in the majority of being bought off by foreign powers and suggesting that Democrats might have a point in calls for Court-packing — was not only irresponsible, but also completely politically unhelpful to his own cause. It’s also not apt to win him more friends on a bench that still has many other cases on its docket regarding his powers and his initiatives.
Those tariff costs offset a majority of the average $3,736 tax cut Americans are projected to receive in 2026 from the OBBBA. Considering both policies together, Figure 4 shows that the bottom two income groups face a net tax increase, decreasing their after-tax income by between 1.2 percent and 0.3 percent. Middle- and higher-income Americans see small net tax cuts of between 0.3 and 0.6 percent of after-tax income. Overturning the IEEPA tariffs will allow more Americans to fully benefit from the 2025 tax cuts.
What about the $18 trillion in investment pledges that the tariffs were used to extract from foreign governments and companies? If the gun is taken away, do the promises made at gunpoint disappear with it?
Well, the thing is, most of those promises were never really what they seemed in the first place, as Scott Lincicome’s detailed analysis at The Dispatch shows. So before you panic about the $18 trillion in investment that Trump claimed his tariffs had secured, it’s worth understanding what that number actually was. It was, in short, mostly fiction.
Congress wants the President to move fast in a real emergency, but it doesn’t want to hand over routine control of trade policy. The right delegation design is therefore a screening device: give the President authority he will exercise only when the situation is truly an emergency.
An import ban works as a screening device precisely because it is very disruptive. A ban creates immediate and substantial harm. It is a “costly signal.” A President who invokes it is credibly saying: this is serious enough that I am willing to absorb a large cost. Tariffs, in contrast, are cheaper–especially to the President. Tariffs raise revenue, which offsets political pain. Tariff incidence is diffuse and easy to misattribute—prices creep, intermediaries take blame, consumers don’t observe the policy lever directly. Most importantly tariffs are adjustable, which makes them a weapon useful for bargaining, exemptions, and targeted favors. Tariffs under executive authority implicitly carry the message–I am the king; give me a gold bar and I will reduce your tariffs. Tariff flexibility is more politically appealing than a ban and thus a less credible signal of an emergency. The “lesser-included” argument gets the logic backwards. The asymmetry is the point.
Not surprisingly, the same structure appears in real emergency services. A fire chief may have the authority to close roads during an emergency but that doesn’t imply that the fire chief has the authority to impose road tolls. Road closure is costly and self-limiting — it disrupts traffic, generates immediate complaints, and the chief has every incentive to lift it as soon as possible. Tolls are cheap, adjustable, and once in place tend to persist; they generate revenue that can fund the agency and create constituencies for their continuation. Nobody thinks granting a fire chief emergency closure authority implicitly grants them taxing authority, even if the latter is a lesser authority. The closure and toll instruments have completely different political economy properties despite operating on the same roads.
The majority reaches the right conclusion by noting that tariffs are a tax over which Congress, not the President, has authority. That is constitutionally correct but the deeper question is why the Framers lodged the taxing power in Congress — and the answer is political economy. Revenue instruments are especially easy for an executive to exploit because they can be targeted. The constitutional rule exists to solve that incentive problem.
Once you see that, the dissent’s “greater includes the lesser” inference collapses on its own terms. A principal can rationally authorize am agent to take a dramatic emergency action while withholding the cheaper, revenue-lever not despite the fact that it seems milder, but because of it. The blunt instrument is self-limiting. The revenue instrument is not. That asymmetry is what the Constitution’s categorical division of powers preserves — and what an open-ended emergency delegation would destroy.
Even today the overwhelming majority of people, including, I am afraid, a good many supposed economists, do not yet understand that this extensive social division of labour, based on widely dispersed information, has been made possible entirely by the use of those impersonal signals which emerge from the market process and tell people what to do in order to adapt their activities to events of which they have no direct knowledge. That in an economic order involving a far-ranging division of labour it can no longer be the pursuit of perceived common ends but only abstract rules of conduct … is an insight which most people still refuse to accept.
What mankind needs today is liberation from the rule of nonsensical slogans and a return to sound reasoning.
You can prove geometry to every man, not history. You can only prove history to men of good will.
