As the U.S. Supreme Court wraps up oral arguments in Learning Resources, Inc. v. Trump and a companion case, the fate of President Donald Trump’s sweeping “Liberation Day” tariffs hangs in the balance. Invoking the International Emergency Economic Powers Act (IEEPA) of 1977, Trump imposed baseline duties of 10% on imports from nearly every trading partner in April, with escalations up to 50% on select nations like China, Brazil, and the European Union. These levies, tied to declared “national emergencies” over trade deficits and issues like fentanyl trafficking, have generated over $130 billion in revenue this fiscal year while fueling negotiations on everything from border security to intellectual property.
Yet, justices from across the ideological spectrum expressed some skepticism during Wednesday’s hearing about whether IEEPA — a law designed to curb presidential overreach in peacetime emergencies — grants the authority to impose revenue-raising tariffs. Chief Justice John Roberts noted the statute’s silence on tariffs, while Justice Sonia Sotomayor bluntly called them “taxes,” questioning if IEEPA turns the president into an unchecked tax collector. Justice Amy Coney Barrett probed the implications, warning that upholding the tariffs could make it nearly impossible for Congress to reclaim its constitutional power over duties without a veto-proof majority.
Lower courts, including the U.S. Court of International Trade and the Federal Circuit, already struck down the tariffs in unanimous and 7-4 decisions, respectively, ruling that IEEPA’s vague language on “regulating” imports doesn’t extend to broad taxation. Legal experts predict a similar outcome from the high court, potentially by year’s end, forcing refunds for affected businesses and states.
But here’s the deal: A loss wouldn’t gut Trump’s tariff playbook. White House officials, including Treasury Secretary Scott Bessent, have openly signaled a “Plan B” — a arsenal of alternative statutes that could replicate much of the IEEPA regime. “We’re optimistic, but we’ve always prepared for every scenario,” Bessent told Fox Business post-hearing, emphasizing the administration’s contingency planning.
As one trade attorney put it, “The U.S. government has the authority it needs to try to recreate the IEEPA tariff regime if it chooses to do so.”
The IEEPA Impasse: A Law Meant to Limit, Not Expand, Power
Enacted to rein in the expansive Trading with the Enemy Act of 1917 — which President Richard Nixon once used for a 10% universal tariff — IEEPA empowers the president to “investigate, regulate, or prohibit” imports during a declared emergency stemming from an “unusual and extraordinary threat” to national security, foreign policy, or the economy.
Trump used this to cover trade imbalances and non-trade woes, like pressuring Mexico on migration or Brazil on political prosecutions or persecutions, as the case may be.
Critics, including small businesses like Learning Resources (an Illinois toy maker hit with $20,000 in unexpected duties) and Democratic-led states, argue this bypasses Congress’s Article I authority over tariffs.
A bipartisan amicus brief from 171 House Democrats and 36 senators hammered home that IEEPA was never meant as a “tariff statute.”
Solicitor General D. John Sauer defended the move, insisting tariffs are a milder “regulation” than full embargoes — a view echoed by Justices Brett Kavanaugh and Barrett, who questioned why IEEPA would allow trade shutdowns but not duties.
The court’s conservative majority appeared irresolute, weighing textualism against deference to executive foreign policy tools.
If struck down, the ruling would settle that IEEPA can’t be a tariff backdoor, curbing future presidents’ emergency gambits but leaving Trump’s broader agenda intact via other channels.
Plan B: A Menu of Tariff Authorities, With Strings Attached
President Trump’s team isn’t starting from scratch; they’ve already deployed some alternatives and are poised to scale up. These laws, born from decades of congressional delegations, offer explicit tariff powers but demand more transparency and limits — a trade-off for legal durability.
Here’s a breakdown:
| Statute | Key Provision | Tariff Scope & Limits | Trump’s Prior/ Potential Use | Drawbacks vs. IEEPA |
|---|---|---|---|---|
| Section 232 of the Trade Expansion Act of 1962 | Allows tariffs if imports threaten national security (e.g., impairing domestic industries). Requires Commerce Dept. investigation (up to 270 days) and report to Congress. | Up to 25%+ on specific sectors/products; applies globally or targeted. No time cap. | Already imposed on steel, aluminum, copper, autos since January 2025; covers ~1/3 of imports. Could expand to tech, EVs. | Sector-specific (not country-tailored); lengthy probes slow unilateral action. Courts defer on “security” claims. |
| Section 301 of the Trade Act of 1974 | Authorizes tariffs against “unfair” foreign practices (e.g., IP theft, subsidies). USTR investigation required (6-12 months). | Broad, up to 100% on targeted goods/countries; can be phased. | Used in first term vs. China; new probe on Brazil’s ethanol/digital services in October 2025. Scalable for fentanyl or deficits. | Investigation delays; tied to trade violations, not politics (e.g., Ukraine war). Replicable for multiple nations. |
| Section 122 of the Trade Act of 1974 | Permits temporary tariffs/quotas to address “large and serious” balance-of-payments deficits (i.e., trade gaps). | Up to 15% ad valorem for 150 days (extendable to 4 months with IMF consultation). Broad application. | Untapped by Trump yet; scholars argue it’s the proper tool for deficit-focused tariffs, not IEEPA. | Short duration; caps at 15%. Quick for emergencies but requires economic justification. |
| Trading with the Enemy Act (TWEA) Precedents | Broad wartime powers, narrowed by IEEPA for peacetime. | Historical use for universal tariffs (e.g., Nixon’s 10% in 1971). | Referenced in briefs; could inform hybrid approaches but largely superseded. | Peacetime limits make it risky; not a primary fallback. |
These tools could “essentially reimpose the IEEPA tariffs going forward,” per Brookings Institution analysis, though with “procedural speedbumps” like probes that prevent on-a-whim hikes.
The administration has already launched Section 301 probes on Brazil and could parallel-process others for China or the EU, buying time while pressuring deals.
Economic Ripples
A SCOTUS ruling that IEEPA can’t be used for Trump’s tariffs would trigger immediate refunds — a windfall for importers like Walmart and Target, who’ve absorbed billions in costs — but short-lived relief. In fact, reimposition via alternatives might amplify leverage in talks, as seen with Mexico’s migration concessions in 2019.
Yet, as Politico notes, no single law matches IEEPA’s “flexibility” for tying tariffs to non-trade goals like peace deals.
For Trump, and future U.S. presidents, that’s the real stake — not the ruling itself, but recalibrating his economic nationalism without the emergency declaration.
In the end, the court may close one avenue, but Trump’s tariffs will keep on truckin’. As the justices deliberate, global markets await the next chapter in America’s effort to recalibrate trade in a more reciprocal fashion.
MacDailyNews Take: Nearly all countries in the world impose import tariffs on goods from the United States, as tariffs are a standard tool for revenue generation, industry protection, and trade regulation. Out of approximately 195 sovereign countries (based on UN recognition), over 190 maintain some form of customs duties on U.S. imports, according to global trade databases.
There’s an exceedingly simple way for countries to avoid reciprocal U.S. import tariffs. Whatever tariff level you want is the tariff level you impose. If you don’t wish to face U.S. import tariffs, don’t impose tariffs on U.S. products and services.
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