Trump's Tariffs Are Illegal. He's Got a Plan B.

What It Covers

The Supreme Court ruled 6-3 that Trump's use of the 1977 International Emergency Economic Powers Act (IEEPA) to impose broad tariffs was unconstitutional, stripping the administration of its most flexible tariff tool and forcing a pivot to alternative legal authorities including Section 122 and Section 301.

Key Questions Answered

• •IEEPA Limitations: IEEPA grants presidents broad emergency economic powers but never explicitly mentions tariffs. The Supreme Court majority held that because Congress did not clearly delegate tariff authority — a taxing power — to the executive branch, the administration cannot use this statute to impose tariffs, regardless of how broadly its other provisions are interpreted.
• •Tariff Revenue vs. Economic Impact: IEEPA tariffs generated approximately $250 billion in treasury revenue, but produced mixed economic results. U.S. manufacturing lost over 100,000 jobs in 2025, the trade deficit increased rather than shrank, and businesses largely shifted sourcing to lower-tariff countries like India and Southeast Asia rather than reshoring production domestically.
• •Section 122 as Immediate Backup: Trump's Plan B deploys Section 122 of U.S. trade law, which permits a 10–15% across-the-board tariff for up to 150 days to address persistent trade imbalances. The administration plans to use this 150-day window to build longer-term justifications under Section 301, which targets discriminatory foreign trade practices and carries stronger legal precedent.
• •Section 301 as Durable Authority: Section 301 tariffs — used against China during Trump's first term — carry minimal legal risk because they are well-established in trade law. The tradeoff is speed: unlike IEEPA proclamations issued instantly, Section 301 requires formal investigations, making rapid tariff threats as a foreign policy tool significantly harder to execute going forward.
• •Tariff Refund Windfall Risk: The Supreme Court did not address refunds for the estimated hundreds of billions already collected. Thousands of companies pre-filed federal court claims anticipating this ruling. If refunds are granted, businesses that already raised consumer prices to offset tariff costs are unlikely to pass savings back, creating a potential large windfall for corporate America.