During oral arguments on Wednesday, the Supreme Court justices expressed skepticism regarding former President Donald Trump's extensive claims of authority to impose tariffs as he deems appropriate. However, even if the court rules against him, Trump will still retain numerous options to aggressively tax imports. He can utilize tariff powers that he employed during his first term and may even resort to historical measures dating back to the Great Depression.
According to Kathleen Claussen, a trade law professor at Georgetown University, “It’s hard to see any pathway here where tariffs end. I am pretty convinced he could rebuild the tariff landscape he has now using other authorities.” This indicates that despite legal challenges, Trump could continue to implement tariffs effectively.
At the Wednesday hearing, attorney Neal Katyal, representing small businesses challenging the tariffs, argued that Trump does not need the expansive powers under the 1977 International Emergency Economic Powers Act (IEEPA) to impose tariffs. He pointed out that Congress has delegated tariff authority to the White House through several statutes, albeit with specific limitations on how that authority can be exercised. “Congress knows exactly how to delegate its tariff powers,” Katyal asserted.
Tariffs have become a critical component of Trump’s foreign policy in his second term, with double-digit “reciprocal” tariffs levied on numerous countries. He justifies these tariffs by citing America’s persistent trade deficits as a national emergency. According to calculations by Yale University’s Budget Lab, the average U.S. tariff increased from 2.5% when Trump returned to office in January to 17.9%, the highest level recorded since 1934.
Despite the legal uncertainties surrounding his authority, Trump has several other tools at his disposal to impose tariffs and counter unfair trade practices. One such tool is Section 301 of the Trade Act of 1974, which allows the U.S. to take action against countries accused of “unjustifiable,” “unreasonable,” or “discriminatory” trade practices. Trump has previously employed Section 301 to impose significant tariffs on Chinese imports, particularly in response to China's aggressive tactics aimed at undermining U.S. technological leadership.
Ryan Majerus, a trade official with experience in both Trump’s and Biden’s administrations, noted, “You’ve had Section 301 tariffs in place against China for years.” While there are no limits on the size of Section 301 tariffs, they do require a thorough investigation and public hearing before being applied.
In May, the U.S. Court of International Trade ruled against Trump’s reciprocal tariffs, stating that the president could not use emergency powers to tackle trade deficits. This limitation is partly due to Section 122 of the Trade Act of 1974, which allows the president to impose tariffs of up to 15% for a maximum of 150 days to address an unbalanced trade situation without the need for a prior investigation. However, Section 122 authority has never been utilized, leading to uncertainty about its application.
Throughout his presidency, Trump has also invoked Section 232 of the Trade Expansion Act of 1962 to impose tariffs on imports he perceives as threats to national security. In 2018, he implemented tariffs on foreign steel and aluminum, which have since been expanded to include autos, auto parts, and even household items like kitchen cabinets and upholstered furniture. “Even though people might roll their eyes at the notion that imported furniture poses a threat to national security,” said John Veroneau, a former general counsel for the U.S. Trade Representative, “it’s difficult to get courts to second-guess a determination by a president on a national security matter.”
Looking back to history, Trump may consider reviving tariffs enacted during the Great Depression. The Tariff Act of 1930, also known as the Smoot-Hawley Tariffs, allowed the president to impose tariffs of up to 50% on imports from countries discriminating against U.S. businesses. While these tariffs have never been imposed due to their negative reputation, they remain an option. Treasury Secretary Scott Bessent indicated that the administration might explore Section 338 as a contingency plan if the Supreme Court rules against Trump’s use of emergency powers.
In conclusion, while the Supreme Court's skepticism towards Trump's tariff authority poses challenges, he has a multitude of options available that could allow him to continue imposing tariffs. Whether through existing legal frameworks or historical precedents, the landscape of tariffs in the United States remains complex and dynamic.