US Supreme Court strikes down Liberation Day tariffs in historic ruling - here's what Trump can do now

Trump’s options after Supreme Court tariff ruling: The US Supreme Court has struck down US president Donald Trump’s sweeping “Liberation Day” tariffs, ruling that he exceeded his authority by using a 1977 emergency law to impose broad import taxes on America’s trading partners.

US Supreme Court Strikes Down Tariffs: A Major Supreme Court Ruling on Trump’s Tariffs

The justices said the International Emergency Economic Powers Act (IEEPA) cannot be used to justify across-the-board “reciprocal” tariffs, nor the separate levies targeting China, Canada and Mexico. The decision invalidates a significant portion of the tariffs Trump rolled out during his second term.

IEEPA Tariffs Rejected: What the SCOTUS Tariff Ruling Means

Economists say the impact could be immediate. EY-Parthenon chief economist Gregory Daco told AFP ahead of the ruling that striking down the tariffs would likely lower the average tariff rate from 16.8% to around 9.5%. But he cautioned that the relief could be temporary if the administration finds other ways to reimpose sweeping duties.


Also read: Dow Jones, S&P 500, Nasdaq rebound after Supreme Court strikes down Trump tariffs – why US stock market is rallying today despite weak GDP data

Tariff News: Financial Stakes After the Supreme Court Tariff Decision

The financial stakes are also high. Daco estimates the government could lose between $100 billion and $120 billion in tariff revenue. The court did not address whether importers would receive refunds. Justice Brett Kavanaugh warned that any refund process could be a “mess,” as acknowledged during oral arguments.

For critics of the tariffs, the ruling represents a significant check on presidential power. Striking down the emergency tariffs “would constrain the president’s ambitions to impose across-the-board tariffs on a whim,” said Erica York of the Tax Foundation, as quoted by AFP. Still, she noted that other statutes remain available to the president, even if they are more limited in scope or require formal investigations.

Trump Tariffs Supreme Court Battle: What Options Remain

While the Constitution gives Congress authority over taxes and duties, lawmakers have delegated certain powers to the executive branch through various trade laws. With IEEPA off the table, Trump now has at least five alternative legal pathways, though each comes with more procedural hurdles and, in some cases, caps on tariff levels or time limits.

Also read: Supreme Court tariff ruling: 6-3 decision blocks Trump tariffs under IEEPA - what does it mean for Trump administration?

Section 232 – National Security Tariffs

Section 232 of the Trade Expansion Act of 1962 allows tariffs on national security grounds, but only after a Commerce Department investigation, as per a Bloomberg report. There is no cap on the rate or duration, though the process can take up to 270 days and typically applies to specific sectors rather than entire countries. Trump previously used this authority to impose tariffs on steel and aluminum in 2018 and later extended similar measures to automobiles, auto parts, and certain copper products.

Section 201 – Industry Injury Tariffs

Section 201 of the Trade Act of 1974 permits tariffs if rising imports are found to seriously injure domestic industries. The US International Trade Commission must conduct an investigation and hold public hearings. Tariffs are capped at a 50% increase above existing duties and are limited to four years, extendable to eight, with required phase-downs after one year. Trump used this provision in 2018 for solar panels and washing machines.

Section 301 – Trade Practice Tariffs

Section 301 of the Trade Act of 1974 enables tariffs in response to discriminatory trade practices or violations of US rights under trade agreements. An investigation by the US Trade Representative is required, including consultations and public input. There is no cap on tariff rates, though the duties terminate after four years unless extended. Trump relied on Section 301 in 2018 to impose tariffs on hundreds of billions of dollars of imports from China, as per the Bloomberg report.

Section 122 – Balance of Payments Tariffs

Section 122 of the Trade Act of 1974 allows tariffs to address “fundamental international payments problems” without a prior investigation. However, duties are capped at 15% and limited to 150 days unless Congress approves an extension. This authority has never been used.

Section 338 – Smoot-Hawley Tariffs

Section 338 of the Smoot-Hawley Tariff Act of 1930 authorizes tariffs of up to 50% against countries found to discriminate against US commerce, without requiring a federal investigation. This provision has also never been used and could face legal challenges if invoked, as per the Bloomberg report.

FAQs

Could the administration bring tariffs back another way?

Yes. There are five other legal pathways, but most require investigations or have limits.

How much money could the government lose?

Estimates suggest between $100 billion and $120 billion in tariff revenue.