After the Supreme Court Ruling: What’s Next for President Trump’s Tariffs
- Feb 25
- 4 min read
The Supreme Court recently overturned a major tranche of President Trump’s tariffs, so what's next?
The bottom line up top
The Supreme Court ruling will create near-term uncertainty, while the broad direction of the Administration – using tariffs as a tool to spur U.S. investment – is likely to remain the same. Longer-term, both U.S. political parties appear committed to tariffs as a tool to address unfair trade practices and U.S. supply chain vulnerabilities.
Companies can respond to recent changes by:
Closely following guidance from Customs and Border Protection about implementation of tariff changes.
Sharing supply chain concerns with the Office of the U.S. Trade Representative and the Department of Commerce.
Participating in any requests for comment/information put out by the U.S. government.
Companies should be aware the Administration may also rely more heavily on negotiations in other trade agreements to secure its objectives. For instance, U.S. trade negotiators may now feel more pressure to update USMCA in a more favorable way for the U.S.
The Supreme Court decision
Friday, February 20, the Supreme Court struck down the President’s ability to use the International Emergency Economic Powers Act (IEEPA) to impose tariffs on other countries. IEEPA dates to 1977 and allows the President to impose certain extraordinary economic measures during a national emergency. The Court’s decision said the President must be able to show approval from Congress to use IEEPA to levy sweeping global tariffs, which the President does not have.
About the IEEPA tariffs
Since their imposition in February 2025 (Canada, Mexico, and China) and April 2025 (so-called “reciprocal tariffs”), the Administration has collected over $130 billion in tariffs. Under the “reciprocal tariffs,” (named because they were designed to retaliate against other countries’ tariffs on U.S. goods) dozens of countries across the world faced country-specific tariffs ranging from 11-49% on exports to the U.S. The IEEPA tariffs of 20-35% on goods from China, Canada, and Mexico were imposed in response to the U.S. fentanyl crisis.
Goods affected by certain existing tariffs (e.g., aluminum and steel, lumber Section 232 tariffs) were exempt from the IEEPA tariffs, as were goods governed under the USMCA trade agreement. A variety of critical inputs for various sectors of the economy were also exempt. However, some IEEPA tariffs did “stack” with other tariffs, like the Section 301 tariffs imposed on China.
IEEPA Tariff Refunds
Since the Supreme Court overturned the IEEPA tariffs, the tariffs should in theory be refunded to whoever paid them. However, the Supreme Court’s ruling did not provide guidance on how refunds should work. Secretary Treasury Scott Bessent said February 22 on CNN that the Administration would follow lower courts’ future rulings in determining a procedure for refunds. However, waiting for the court process to play out could take weeks or months.
President Trump’s tariffs: Section 122 “surcharges”
The White House was preparing for the potential of this ruling and President Trump acted quickly to impose an alternative to the IEEPA tariffs. In a February 20 press conference, Trump expressed disappointment in the Supreme Court decision and announced he would be imposing Section 122 surcharges on most imports into the U.S.
Section 122 of the Trade Act of 1974 allows for temporary surcharges of up to 15% on imported goods for a period of 150 days. After 150 days, any continuation must be approved by Congress. The announced surcharges go into effect at 12:01am on February 24, 2026. As with the IEEPA tariffs, USMCA-compliant goods and goods subject to Section 232 tariffs are exempt, as are goods hard to produce in the U.S.
President Trump has threatened to raise the rate to the 15% maximum, but as of February 23, has not yet done so.
Open questions
The Administration has been negotiating bilateral trade agreements with a variety of countries. Some of these included a decrease in the IEEPA tariffs, such as the 15% tariffs agreed to with the European Union. As of February 23, it is too early to say how the overturn of the IEEPA tariffs and imposition of the Section 122 surcharges would be applied in order to meet the terms of these preexisting bilateral agreements.
After Section 122: Will Section 301 create a durable tariff regime?
The 150-day limit on Section 122 surcharges ends in late July. This means that either Congress would need to vote to approve the surcharges – tough given slim Republican majorities in both chambers – or they would be allowed to expire and the Administration would replace them with another tariff instrument. The Administration has indicated it has multiple Section 301 investigations underway, indicating that those may be the long-term durable solution.
Section 301 of the Trade Act of 1974 allows the President to impose tariffs against countries using unfair trade practices, after an investigation determines these trade practices are unfair. Using Section 301, Trump imposed tariffs on hundreds of billions of dollars of imports from China in his first term. The World Trade Organization ruled in 2020 that Trump’s use of Section 301 in this way violates global trade rules, but the tariffs have survived multiple court challenges and multiple presidential administrations in the U.S.
Moving forward
The next several months will bring a period of longer-term uncertainty since it is unclear what tariffs will look like after July. However, one thing is for sure, regardless of the tools the administration chooses: tariffs are here to stay. President Trump personally feels strongly that tariffs are a critical tool for the U.S. economy and a bargaining chip with other countries. Both parties see the hollowing out of American manufacturing as a strategic threat that must be addressed.
With the tariffs as a primary tool, the current administration is taking a country-by-country and company-by-company approach to tariff negotiations and U.S. investment commitments. This means that for the next few years, we are likely to see more country- and company- specific deals. They will almost certainly be tied to specific U.S. investment commitments.
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