Tariffs: March 2026 Update
They keep going and going and going
After months of waiting, the Supreme Court decision was what most expected: the President of the United States cannot unilaterally impose tariffs under the International Emergency Economic Powers Act (IEEPA). This invalidated hundreds of tariffs that President Trump had initiated during his second term, as well as hundreds of billions of dollars worth of revenue that now likely needs to be returned.
Thank God.
Tariffs are bad. Period. They punish Americans and prevent the US economy from leveraging comparative advantage around the globe. One study found that, contrary to Trump’s assertions that foreigners pay for the tariffs, roughly 90 percent of the burden was borne by American companies and consumers. As predicted, the Trump tariffs have been hurting the US economy.
The legal reasoning, which was decided in a 6-3 vote, was straightforward. IEEPA never mentions tariffs. Tariffs are a tax, and taxes are under the purview of Congress. Unless the legislature specifically delegates taxation authority to the executive branch, it remains with the legislature. IEEPA does give the president the authority to regulate trade with a foreign country, but not impose tariffs. The court did not address the blatant falsehood that there was any kind of emergency to begin with that would warrant IEEPA’s usage.
The three liberal judges, Sotomayor, Kagan, and Jackson, joined Roberts, Gorsuch, and Barrett in the majority. Conservative judges Thomas, Kavanaugh, and Alito were in the dissent. In his dissent, Kavanaugh claimed:
Interpreting IEEPA to exclude tariffs creates nonsensical textual and practical anomalies. The plaintiffs and the Court do not dispute that the President can act in declared emergencies under IEEPA to impose quotas or even total embargoes on all imports from a given country. But the President supposedly cannot take the far more modest step of conditioning those imports on payment of a tariff or duty.
I am not a lawyer, but this type of reasoning never made any sense to me. It may seem odd that IEEPA allows the president to embargo a country entirely, but cannot place even a one percent tariff on a nation. But these inconsistencies are everywhere. The Federal Government can literally execute people, and it does, but is not allowed to parade a convicted felon through the streets while the populace throws old vegetables at him, as was done in the days of old. Granting authority for one course of action does not implicitly grant authority over every lesser course.
The spiciest part of the decision came from Justice Gorsuch, who called out almost every fellow justice for being a hypocrite in his concurrence. Over the last few decades, justices have increasingly relied on the “major questions doctrine”. Not present in any textual document, the major questions doctrine says that any action taken by the executive branch that has major political or economic implications must have explicit authorization from Congress. During the Biden administration, Republican-appointed justices often relied on the major questions doctrine to rein in Biden policies. For example, the Supreme Court struck down Biden’s student debt relief plan, in part, because the Department of Education was not given explicit authority to forgive student debt by Congress. During the Biden administration, however, the three Democrat-appointed justices disagreed with the major questions doctrine rationale.
Today the shoe is on the other foot. The liberal justices, Kagan, Sotomayor, and Jackson, suddenly decided the major questions doctrine now applied. Meanwhile, former staunch defenders of the major questions doctrine Kavanaugh, Alito, and Thomas, conveniently found it didn’t apply in this case. As Gorsuch states, “It is an interesting turn of events. Each camp warrants a visit.”
In a more sane world, this would be the end of the Trump tariffs. They were always a bad idea. The Supreme Court effectively handed Trump a get out of jail free card. He could say, “I wanted the tariffs, but the Supreme Court won’t let me do them.” This is effectively what Biden did with the student debt issue. Letting the Supreme Court allow you to save face is a blessing for presidents who need to backtrack from bad policies but don’t want to be seen as weak.
Trump, of course, has no such trepidations. He truly believes that tariffs are good no matter what, and that any country with a trade surplus with the United States must be “ripping off” the American people. No amount of common sense or simple reasoning will convince him otherwise. It’s an insane shibboleth on par with another Trump totem, “low interest rates good,” or one commonly heard from the left, “billionaires bad”.
Thus, Trump immediately said he would use a different law, Section 122 of the Trade Act of 1974, and apply a blanket 10 percent tariff on every country. Then he said the tariff would actually be 15 percent. Then the tariff actually instituted was 10 percent. Wide carveouts have been instituted, but the typical product now has a 10 percent tariff on it, regardless if it’s coming from Canada or China.
These are not serious people.
Section 122 does allow the president to impose such tariffs, but only for 150 days. Things will likely come to a head then, when Trump will undoubtedly try to just restart the clock. It will be up to the courts to determine whether that is allowed. Similar to the endless, and not allowed, extensions of a TikTok ban, Trump will likely just keep restarting the 10 percent tariffs under Section 122 and claim the clock resets until the end of his second term in January of 2029. Companies will undoubtedly sue, and it will be up to the courts to decide how often the clock is allowed to reset.
In the interim, Trump has threatened to actually-for-realsies-this-time institute a 15 percent global tariff, the maximum allowed under Section 122. If this comes to pass, it would reach a new level of stupidity, as it would violate the deals that his own administration negotiated. Countries like Colombia and the United Kingdom already had 10 percent tariff rates under the IEEPA tariffs. If they are increased to 15 percent over Section 122, the deals they made with the Trump administration less than a year ago would be invalidated. Regardless of your feelings on tariffs, this is not the way to conduct trade policy.