Tariff Questions Remain

The US Supreme Court’s decision today in Learning Resources, Inc. v. Trump reasserts Congressional authority to impose tariffs. Looking to constitutional text and trade history, Chief Justice Roberts’ majority opinion emphasized that the power to “lay and collect taxes, duties, imposts and excises” has always been understood as a core legislative function. While Congress has delegated aspects of trade authority to the executive branch over time, the court made clear that such delegation must be explicit.

As such, the court ruled that the administration overreached when it used the 1977 International Emergency Economic Powers Act (IEEPA) as a basis for sweeping tariffs. IEEPA does not include the word “tariff”, and the court ruled that the term “regulate … imports” is not an explicit delegation.

At the same time, the decision left much unanswered. The court did not address US President Donald Trump’s expansive use of “national security” emergencies for economic (and foreign policy) leverage that could apply to other existing trade authority, nor did it address what will happen to the $129 billion in tariffs that have already been paid.

It leaves unresolved a critical practical question: What happens next?

Striking down the IEEPA tariffs raises fresh questions for companies and trading partners trying to plan supply chains in an already volatile environment. And the answers will take weeks, if not months, to materialize.

Immediately after the decision, the president announced he will use other, existing authority to achieve similar tariff aims. He will use another, untested law (Section 122) to apply a 10% tariff globally for 150 days due to “balance of payment” issues. He also referenced a raft of Section 301 investigations that the US will launch against countries for unfair trade practices, which could generate even higher tariffs for certain trading partners. However, none of these produce effects as immediate as the president’s IEEPA tariffs did. Sections 232 and 301 require the government to conduct investigations, while Sections 122 and 338 have never been used.

In theory, Congress could step in. Lawmakers could clarify the scope of emergency economic powers, codify the trade agreements and the current tariff levels, or explicitly delegate tariff authority to the president. In practice, recent congressional votes to overrule Canadian tariffs, as well as overall voter angst with regard to affordability, suggest that such action would face challenges. Congress has, to date, shown little appetite for reclaiming ownership of tariff policy even as the economic and political costs of uncertainty grow.

Of greatest concern to US companies is the fact that the court did not address refunds. With an estimated $129 billion collected through December 2025, the absence of any guidance on whether, or how, US importers might recover those funds creates significant financial and legal uncertainty that will likely take years to resolve.

In terms of transatlantic relations, the US-EU Turnberry agreement and the follow-on August 2025 trade framework, as well as the US-UK and US-Swiss agreements, are now thrown into limbo. The European Parliament has been codifying the European tariff commitments, and the United States and the EU have been negotiating on the remaining elements concerning non-tariff commitments. The Section 232 tariffs on autos, iron and steel, pharmaceuticals, and other products remain in place, cover politically sensitive industries, and can be used as levers to continue negotiations. But the balance may shift slightly, and trading partners will await further clarity before unwinding the current agreements or ongoing negotiations. 

Today’s decision restores an important constitutional boundary. The president has lost a key piece of the leverage he has used to reshape US economic and foreign policy, and will be seeking a replacement either within other executive powers or via new powers delegated by Congress. This also marks the beginning of a new phase of trade uncertainty for trading partners, companies, and the US economy. The economic impact of tariffs will likely be overtaken by the negative economic impact caused by the lack of predictability on future US policy.  As the administration contemplates what it will do regarding tariff policy, countries are thinking about the impact potential actions will have on current and ongoing trade negotiations, and US importers are awaiting word on what will happen to their tariff dollars.

While the Supreme Court has ruled, the jury is still out on what happens next.  

The views expressed herein are those solely of the author(s). GMF as an institution does not take positions.