Trump Lost His Favorite Weapon. What Comes Next?

What happens when you take away a president's favorite toy? On Friday, the Supreme Court found out, ruling 6-3 that most of Donald Trump's tariff policies are illegal—effectively disarming his go-to diplomatic weapon.

For Trump, tariffs weren't just trade policy. They were foreign policy Swiss Army knives. Countries got hit with duties for failing to stop fentanyl flows, refusing deportation cooperation, buying Russian oil, or simply annoying him personally. When Brazil prosecuted his ally Jair Bolsonaro, Trump slapped 50% tariffs on the country. When Emmanuel Macron declined to join his "Board of Peace," Trump threatened 200% tariffs on French wine and champagne.

"You can theoretically still use them as leverage in trade negotiations, but it just takes a lot longer," said Edward Fishman, former State Department official now at the Council on Foreign Relations. "It's not like a crisis can break out somewhere in the world, and Trump can threaten 30% tariffs to try to fix it."

The Legal Straightjacket

Nearly all of Trump's tariff threats relied on the International Emergency Economic Powers Act (IEEPA)—the same law the Supreme Court just gutted. Trump quickly pivoted Friday, announcing a 10% "global tax" under Section 122 of the 1974 Trade Act and launching new negotiations under Section 301.

But these alternatives come with serious constraints. Section 122 caps tariffs at 15% and expires after 150 days without Congressional approval. Section 301 requires lengthy reviews and is designed for "unfair trade practices"—not exactly applicable when countries refuse to hand over Greenland.

"It effectively neutralizes tariffs as a geoeconomic weapon," Fishman noted. The days of waking up to international crises sparked by overnight presidential tweets threatening ruinous tariffs may be behind us.

Sponsored

Advertise with Us

[email protected]

Sponsored

From Tariffs to Sanctions: A Dangerous Shift?

Trump's remaining option is economic sanctions—which the Supreme Court notably left untouched. But there's a problem: Trump hates sanctions. He believes they undermine global confidence in the dollar and prefers tariffs because he thinks they benefit the economy while achieving foreign policy goals.

As Trump ruefully noted Friday, his IEEPA authorities let him "destroy the country" through blanket trade embargos but not "charge a dollar." This philosophical difference matters more than it might seem.

Sanctions are blunt instruments that cut off economic relationships entirely. Tariffs, in Trump's view, can pressure countries while still generating revenue. With his preferred tool constrained, will Trump embrace the "sanctions-happy" approach of previous administrations—or look for more dramatic alternatives?

Winners and Losers in the New Reality

Trump's tariff diplomacy had mixed results. Mexico halted oil shipments to Cuba, contributing to the island's economic collapse. Thailand and Cambodia came to the negotiating table during a border conflict partly due to tariff relief promises. But countries with retaliatory capacity, like China, pushed back with their own economic coercion.

Now some nations may feel emboldened. India probably won't ramp up Russian oil purchases overnight, but the psychological effect of Trump's diminished economic leverage could shift diplomatic calculations worldwide.

For American businesses and trading partners, the ruling brings welcome predictability. No more waking up to surprise tariff announcements that could reshape entire supply chains overnight. But it also removes a tool that, however erratically used, sometimes achieved results through sheer unpredictability.