A recent Supreme Court decision has brought into question President Donald Trump’s reliance on the 1977 International Emergency Economic Powers Act (IEEPA) to enforce widespread global tariffs. This ruling could potentially strip Trump of a key tool he has used to penalize countries that have provoked his ire on matters unrelated to trade.
Following a challenge initiated by small business entities and various states, the Supreme Court, featuring a 6-3 conservative majority, including three of Trump’s appointees, is deliberating on the issue. The timeline for the court’s decision remains uncertain.
Trump’s utilization of the IEEPA to levy tariffs marks the first instance of a president invoking this statute, traditionally employed for imposing economic sanctions on adversaries. The law grants the president authority to address “an unusual and extraordinary threat” to U.S. national security, foreign policy, or economy, often resulting in sanctions or asset freezes.
In this particular case, Trump declared the $1.2 trillion U.S. goods trade deficit in 2024 as a national emergency, despite the country consistently running trade deficits since 1975.
While U.S. Treasury Secretary Scott Bessent anticipates the Supreme Court upholding the IEEPA-based tariffs, he mentioned alternative tariff authorities that could be pursued if the current tariffs are struck down. These include Section 122 of the Trade Act of 1974, enabling the imposition of broad 15% tariffs for 150 days to address trade imbalances.
Additionally, Bessent highlighted Section 338 of the Tariff Act of 1930, permitting tariffs of up to 50% on nations discriminating against U.S. commerce. Trump has also deployed other tariff provisions, such as Section 232 of the Trade Expansion Act of 1962, focusing on national security concerns in strategic sectors like autos, copper, and pharmaceuticals.
Critics of Trump’s tariffs argue that the U.S. Constitution assigns the authority to levy taxes and tariffs to Congress, not the president. They contend that any delegation of such authority should be explicit and limited, drawing on the major questions doctrine. This principle mandates that executive actions of significant economic and political consequence must be clearly authorized by Congress.
Trump’s reliance on tariffs has led to concerns about the potential financial impact, particularly in the Treasury debt market, with fears of refunding over $100 billion in IEEPA tariff collections and forfeiting substantial annual revenue. This revenue has played a crucial role in offsetting various expenditures, contributing to a slight reduction in the U.S. deficit for the fiscal year ending September 30, 2025.
Experts caution against becoming overly reliant on tariff revenues, as it could pose challenges for future administrations seeking to lower tariffs.
