With US President Donald Trump ever more eager to push the limits of the powers of his office, the Supreme Court’s 6-3 decision to rule illegal the bulk of his totemic tariff agenda is a reassuring demonstration of enduring checks and balances in American democracy. Trump’s decision to invoke the 1977 International Emergency Economic Powers Act last year, citing a “large and persistent” trade deficit and a supposed fentanyl “crisis”, to justify sweeping import duties was dubious from the start. Besides, as the justices noted, although IEEPA enables the executive to “regulate” imports, this does not extend to tariffs.
The ruling brings temporary relief to US businesses and trading partners. It reduces the US average effective tariff rate by 7.8 percentage points, according to Yale’s Budget Lab. The S&P 500 rose following the Court’s announcement, as did European auto and luxury shares. But the decision will now give way to another period of global economic uncertainty.
The White House has been planning for this eventuality and has many other legal routes to rebuild the tariff wall. On Friday, at a hastily arranged press conference following the decision, an angry Trump said he would invoke Section 122 of the US Trade Act to impose global tariffs of 10 per cent on top of those already in place. The provision allows the president to implement import duties of up to 15 per cent, without congressional approval, for up to 150 days. The president also said his administration would initiate actions under Section 301, which allows him to impose unlimited tariff rates in response to discrimination against US businesses, pending an investigation. There are other legal levers he could pull beyond these options too.