Rogé Karma writes:

The Trump tariffs are dead. Long live the Trump tariffs?

This morning, in a 6–3 opinion, the Supreme Court struck down the bulk of the president’s sweeping global tariffs. The majority ruled that the law Donald Trump had used to carry out most of his trade policies does not, in fact, allow the president to impose tariffs at all. This is a major setback for Trump’s trade agenda, but it is far from a fatal one. The president has several alternatives that he can use to reconstruct his tariff regime, and his administration has spent months putting a plan in place to do so. Those efforts, too, may eventually be challenged in court, but fully litigating them would take years. Unless the president suddenly has a change of heart, Trump’s tariff adventure is far from over.

The case before the court centered on a 1977 law called the International Emergency Economic Powers Act, or IEEPA, which authorizes the president to “regulate” the importation of goods in a national emergency that arises from an “unusual and extraordinary threat.” The Trump administration had interpreted this vague statute, which had never been used to justify tariffs, to mean that the president can issue tariffs of whatever kind he wants, whenever he wants, on any country he wants, so long as he says an emergency exists, all without getting congressional approval. IEEPA was the basis of Trump’s tariffs on Mexico, Canada, and China last February, the “reciprocal” tariffs he levied on almost every country in the world on Liberation Day, and most of the one-off tariffs he has issued or threatened to impose on trade partners such as Brazil, India, and, more recently, Europe and Canada. (Industry-specific tariffs on goods such as steel and aluminum have been imposed under separate, more legally sound authorities, and are not affected by the ruling.)

Last year, the lower courts ruled that although IEEPA might allow some tariffs, it certainly didn’t allow these tariffs—many of which were set at arbitrary levels, on an arbitrary set of countries, using justifications that could hardly be thought of as a true national emergency (such as the existence of a trade deficit or an imaginary surge of fentanyl shipments from Canada). The Supreme Court went even further. “We hold that IEEPA does not authorize the president to impose tariffs,” Chief Justice John Roberts declared.

But even as it insisted that the law was on its side, the administration spent much of the past year preparing a backup plan to rebuild Trump’s tariff wall in case the courts ruled against them. Because, as the president observed on Truth Social a few hours after the ruling, “the Supreme Court did not overrule TARIFFS, they merely overruled a particular use of IEEPA TARIFFS.”

According to top Trump-administration officials such as National Economic Council Director Kevin Hassett and Treasury Secretary Scott Bessent, the administration’s plan draws on two main authorities. The first is Section 122 of the Trade Act of 1974. That law allows the president to levy tariffs of up to 15 percent on any country for up to 150 days to address “large and serious balance-of-payment deficits,” a term that refers to more money leaving the country than coming into it. After the initial window, the tariff must be reauthorized by Congress. According to estimates by Clark Packard and Stan Vueger, trade experts at the Cato Institute and the American Enterprise Institute, respectively, this technique alone would allow Trump to reinstate 70 percent of the tariff revenue struck down by the Supreme Court. This would be a temporary solution, and overbroad use of Section 122 could also be invalidated by the courts. It would most likely be intended only as a stopgap measure to buy time while the administration begins work on the second part of its plan.

Phase two would draw on Section 301 of the same law. Section 301 allows a presidential administration to levy essentially permanent tariffs of any kind on any country in response to “unfair” trade practices. The catch is that the tariffs can come into effect only after the federal government has navigated several layers of bureaucratic process, including launching an official investigation into the unfair practices of the country in question, compiling a report detailing those practices, and offering a public notice-and-comment period. That’s where the 150 days come in. The administration could use that time to launch investigations into the U.S.’s major trading partners so that once the five months are expired, the paperwork is already in place to switch to indefinite tariffs under Section 301. This authority rests on stronger constitutional grounds. The first Trump administration and the Biden administration both used section 301 to impose or raise tariffs on Chinese goods. Courts have generally been deferential to how presidents use the authority as long as the proper process has been followed.

Trump has already signaled that he plans to use all the legal authorities at his disposal. “Therefore, effective immediately, all National Security TARIFFS, Section 232 and existing Section 301 TARIFFS, remain in place, and in full force and effect,” he wrote in his Truth Social post. “Today I will sign an Order to impose a 10% GLOBAL TARIFF, under Section 122, over and above our normal TARIFFS already being charged, and we are also initiating several Section 301 and other Investigations to protect our Country from unfair Trading practices.”

Most experts I spoke with think that this one-two combination will allow Trump to functionally rebuild most of the current tariff regime in a way that could survive in court. [Continue reading…]