Supreme Court Turns Down IEEPA Tariffs, What’s Next?

In a 6-3 decision, the Supreme Court of the United States upheld a lower court’s ruling and determined that the International Emergency Economic Powers Act (IEEPA) does not provide the president with the authority to initiate tariffs. This was somewhat expected given the general tenor of several justices during oral arguments months ago.  However, what comes next (which is already the subject of a large guessing game in DC) is somewhat unknown, with a few exceptions. 

We do know that the President has long said that if the Supreme Court did not align with his tariffs (which they didn’t), the Administration would find other mechanisms to initiate tariffs. In December, U.S. Trade Representative Jamison Greer signaled that tariffs are here to stay, declaring, “My message is tariffs are going to be a part of the policy landscape going forward.” 

Since then, the President has outlined what is likely to happen in the near-term, including a 10% global tariff (under the authority of Section 122 of the Trade Act, which focuses on trade deficits and unfair trade practices) and the initiation of new Section 301 investigations (the outcomes of which could justify new tariffs based on unfair trade practices).  The existing tariffs that were not impacted by the Supreme Court’s decision, including Section 232 and Section 301 tariffs, are expected to remain in place.

The President has been very transparent about the importance of tariffs to his broader economic policy, and that will not change.  It should not be surprising that the President abandoning tariffs post the Supreme Court ruling was never a realistic option. That being said, the Administration will need to move through some additional process to create a full shift in tariffs, which could take some time. 

We will learn much more in the days ahead, but it will be worth watching the broader DC policy ecosystem as this policy space shifts away from the existing IEEPA tariffs and onto new platforms.  As policymakers from both sides of the political aisle will continue to focus on affordability, for example, the emergence of new tariff announcements could bring new debate, both in the halls of Congress but also the campaign trail. 

Announcements will begin to move quickly, most of which will likely be through Executive Orders.  Congressional committees might also consider some oversight hearings, and a number of bills (none of which will advance) are likely to be introduced. And, the Administration’s efforts to secure bilateral agreements are likely to continue. The trade space has been on a bit of a pause, awaiting the outcome of the ruling, but we will now enter into a very busy trade season ahead.