Supreme Court Kills Trump Tariffs, But Trump Has a Plan

At 1:49 p.m. today, Donald Trump posted on Truth Social: "The Supreme Court did not overrule TARIFFS, they merely overruled a particular use of IEEPA TARIFFS." Hours after the Supreme Court had struck down his global tariff regime in a 6-3 decision, the president seemed remarkably unfazed.

He had good reason to be. Trump had been preparing for this moment for months.

The Fall and Rise of Trump's Tariff Empire

This morning's Supreme Court ruling gutted the legal foundation of Trump's trade war. The justices ruled that the International Emergency Economic Powers Act (IEEPA), a 1977 law that Trump had stretched to justify most of his tariffs, doesn't actually give presidents the power to impose tariffs at all. "We hold that IEEPA does not authorize the president to impose tariffs," Chief Justice John Roberts declared.

The decision invalidated Trump's tariffs on Mexico, Canada, and China from last February, the "reciprocal" tariffs he slapped on almost every country on Liberation Day, and most of the one-off tariffs he's threatened against Brazil, India, Europe, and others. These weren't minor trade adjustments—they represented the backbone of Trump's economic nationalism.

But even as the Court was deliberating, Trump's team was building what they call their "backup plan." According to National Economic Council Director Kevin Hassett and Treasury Secretary Scott Bessent, the administration has spent the past year crafting a two-phase strategy to rebuild the tariff wall using different legal authorities.

The 150-Day Window: Phase One

The first tool is Section 122 of the Trade Act of 1974. This provision allows presidents to levy tariffs up to 15 percent for up to 150 days to address "large and serious balance-of-payment deficits." Trade experts Clark Packard and Stan Vueger estimate this authority alone could restore 70 percent of the tariff revenue the Supreme Court just eliminated.

The 150-day limit isn't a bug—it's a feature. That window gives the administration time to activate phase two: Section 301 investigations. Section 301 allows essentially permanent tariffs in response to "unfair" trade practices, but requires a lengthy bureaucratic process including official investigations, detailed reports, and public comment periods.

"Nearly 90 percent of U.S. trade comes from our 20 largest trading partners," Peter Harrell, who served as a top trade adviser in the Biden administration, told reporters. "I don't think it would be too difficult to reconstitute tariffs on most of them in 150 days."

Trump wasted no time. Hours after the ruling, he announced plans to "impose a 10% GLOBAL TARIFF, under Section 122" while simultaneously "initiating several Section 301 and other Investigations."

The New Constraints: Less Flexibility, More Process

But this legal workaround comes with significant limitations that could reshape how Trump wields tariff threats. The president has built his reputation on sudden, unpredictable trade moves—threatening 25 percent tariffs on Europe over Greenland or 100 percent tariffs on Canada for making deals with China.

Under the new system, such threats carry less punch. Section 122 caps tariffs at 15 percent, while Section 301 requires drawn-out bureaucratic processes. "They will lose quite a bit of flexibility," Vueger explained. "Trump loves to threaten higher and higher tariffs on whatever country for whatever reason—and these tools just weren't designed to do that."

The administration acknowledges this reality. Commerce Secretary Howard Lutnick has previously testified that alternative authorities are "procedurally time-consuming and do not allow for immediate action."

Legal Brinkmanship and Business Chaos

Trump might simply ignore the procedural requirements, rushing through sham investigations and rubber-stamp reports. He could also dust off even older authorities like Section 338 of the Smoot-Hawley Tariff Act of 1930, which allows tariffs up to 50 percent against countries with "discriminatory" trade practices.

Both approaches would face court challenges, but litigation takes time. The IEEPA case took a full year to resolve. If Trump issues country-by-country tariffs under different authorities, each would likely require separate litigation.

"It would be total, complete chaos," Harrell warned. Businesses would face constantly changing tariff landscapes, with duties imposed, overturned, refunded, and reimposed. Companies would raise prices preemptively, unable to make long-term investment decisions with any confidence.

The Congressional Wild Card

One institution could end this legal shell game immediately: Congress. The Constitution gives the legislative branch power over international trade; Trump can only impose tariffs because previous Congresses delegated that authority to presidents. A simple majority could revoke those powers.

So far, while some Republicans have complained about tariffs, almost none have acted to constrain them. The political calculus may be changing, however, as tariffs contribute to inflation and higher living costs—issues that dominated voter concerns in recent elections.