Supreme Court Strikes Down Trump’s ‘Emergency’ Tariffs, Not His Ability to Reorient Global Trade

The Supreme Court just issued a significant blow to the Trump administration’s trade policy. On February 20, the high court ruled that Donald Trump’s application of tariffs under the International Emergency Economic Powers Act (IEEPA) violates a legal principle known as the “major questions” doctrine. This means the president requires expressed authorization from Congress before imposing such tariffs, which are central to his trade strategy. The ruling also opens the door to billions of dollars in potential refund claims from importers who paid IEEPA-based tariffs.

Still, Trump maintains other tariff authorities under Section 232 of the Trade Expansion Act of 1962, Sections 122, 201, and 301 of the Trade Act of 1974, and Section 338 of the Tariff Act of 1930 — each with different constraints on rates, duration, investigative prerequisites, and scope. The administration will likely move quickly to demonstrate that its remaining tariff authorities provide sufficient leverage to ensure trading partners continue delivering on their commitments. Already, Trump has announced he will implement a flat 10 percent tariff on all foreign goods entering the United States pursuant to Section 122 of the Trade Act of 1974, which empowers the president to address “large and serious” balance-of-payments deficits. These will expire 150 days after taking effect.

Trump’s Tariffs Cut Chinese Imports, While Imports From Europe Grew

The Supreme Court ruling comes as recently released Commerce Department data show record imports entering the United States, indicating that Trump’s tariffs had little effect on America’s global trade deficit. Yet U.S. imports from China shrunk by nearly a third in 2025 while imports from Europe grew steadily.  

This means that the tariffs, in conjunction with U.S. trade deals, increased the flow of goods from so-called middle power countries to the United States, helping to show them that trading with the United States can help them escape China’s economic grip.

It’s Time to Build a Near-Global Economy

The Supreme Court ruling limits the president’s options, but he still has statutory powers that could produce new China-specific tariffs that rest on firmer legal ground. In October 2025, the U.S. Trade Representative initiated an investigation into China’s failure to comply with the Phase One trade agreement of January 2020 — a probe that, once concluded, could authorize tariffs of unlimited rate and duration specifically targeting unfair Chinese trade practices.

This is exactly the kind of targeted, legally durable action the administration should be accelerating in furtherance of building a “Near-Global Economy” — a trading system open to countries that play by market rules and closed to those that distort fair competition by stealing, cheating, bribing, and bullying their way to unfair advantages.

Next Steps: From North America to a Near-Global Economy

Congress has a role to play in supporting a U.S.-led economic coalition — one where respect for America’s economic and trade guardrails is rewarded with preferential access to our trade, capital, and technology. It should begin by working with the administration to reconsider current tariff rates on U.S. partners in North America, support renewal of the U.S.-Mexico-Canada free trade agreement, and, more broadly, constrain China’s access to North American markets.

But tariffs alone are not a strategy. The United States possesses an entire toolkit — export controls, investment screening, sanctions, anti-dumping enforcement, and allied coordination — that it should deploy in concert. Congress and the administration should build a durable plan of action that further improves the balance of trade, reins in China’s overproduction, and reasserts U.S. leadership in building a near-global economy. The Supreme Court’s ruling narrows just one of the president’s authorities. It does nothing to diminish America’s overwhelming economic leverage.

Elaine K. Dezenski is senior director and head of the Center on Economic and Financial Power (CEFP) at the Foundation for Defense of Democracies (FDD), where Max Meizlish is a research fellow. For more analysis from Elaine, Max, and FDD, please subscribe HERE. Follow Elaine and Max on X @ElaineDezenski and @maxmeizlish. Follow FDD on Twitter @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focused on national security and foreign policy.