IEEPA Tariffs are Dead. Long Live...All the Other Tariffs?
Hi friends,
This month’s edition of Foundations was originally going to be the second part in our series on the law of war. That explainer will still go out next month, but I’ve gently bumped it in favor of getting out this update on what’s happening with tariffs after the Supreme Court’s recent decision in Learning Resources, Inc. v. Trump.
If you’re one of the readers who has joined us since October, you may want to start with our backgrounder, Understanding Tariffs With a Little Help from Kpop Demon Hunters. There, we cover the basics of what tariffs are, how costs can be passed on, and how tariffs are used as foreign policy tools. But if you’re already all caught up, let’s dive into what’s changed.
Which tariffs did the Supreme Court strike down?
The Supreme Court struck down tariffs that President Trump imposed under the International Emergency Economic Powers Act (IEEPA). These include tariffs purportedly issued to spur China, Mexico, and Canada to do more to address the influx of illegal drugs into the United States, as well as tariffs on countries with which the president claimed the U.S. had a “trade deficit.” (This latter category, which the president also called “reciprocal tariffs,” applied to almost all countries.)
In its opinion, the Court held that the statutory language of IEEPA does not actually authorize the president to impose tariffs. The Court stated, “Based on two words separated by 16 others in Section 1702(a)(1)(B) of IEEPA—‘regulate’ and ‘importation’—the President asserts the independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time. Those words cannot bear such weight.”
But wait…didn’t the president immediately issue new tariffs?
Yes, yes he did!
You may have seen or read about the news conference where President Trump called Supreme Court Justices “fools and lap dogs” and immediately said that he would impose an across-the-board tariff of 10% beginning the following Tuesday. That’s because the executive branch has a number of other authorities to issue tariffs, including Section 122 of the Trade Act of 1974, which is the law President Trump relied on for the tariffs mentioned in his press conference. (The president subsequently said that this rate would be raised to 15%, though as of this writing, that does not appear to have happened.)
The Council on Foreign Relations has put together a comprehensive explainer on the additional authorities the executive branch may make use of to continue imposing tariffs, including under the Trade Act of 1974, the Trade Expansion Act of 1962, and the Tariff Act of 1930. Their explainer is worth checking out in its entirety if you’d like a deeper dive. For our purposes, suffice it to say that each of these authorities has their own parameters and limitations that the president would have to consider in imposing tariffs under them. For example, Section 122 of the Trade Act of 1974, which is the authority for Tuesday’s tariffs, is limited to tariffs of up to 15%, which expire after 150 days unless Congress extends them.
What happens next?
As you can imagine, there’s a lot going on. In accordance with the Court ruling, U.S. Customs and Border Protection has announced that it will stop collecting IEEPA tariffs. The executive branch can continue to collect existing tariffs issued under authorities other than IEEPA, such as those issued pursuant to Section 232 of the Trade Expansion Act of 1962. Many importers who paid tariffs under IEEPA have already filed cases seeking refunds before the Court of International Trade, which, despite its name, is actually a U.S. court with jurisdiction over cases arising from the customs and international trade laws of the United States. And the U.S. will have to figure out what to do about the trade agreements it has entered into with other countries, in no small part as an effort by partner countries to bring down the administration’s tariffs.
On the latter issue, the Office of the U.S. Trade Representative has already posted on X that U.S. trade deals “covering half of the world’s population remain in full effect.” However, as Just Security points out in its comprehensive article on the tariffs decision, there are a lot of unknowns related to these agreements, including whether tariff rates negotiated by countries under pressure from IEEPA tariff rates will remain in effect, or whether the rates imposed on Tuesday under Section 122 would now apply. Foreign partners may not want those agreements to remain in place if they would receive a lower rate under Section 122. But they also may not have many options, particularly if the administration tries to reconstitute the IEEPA tariffs piecemeal using other authorities, and they’ll also have to balance any actions against broader geopolitical concerns and their own foreign policy interests. In other words, you’ll want to watch this space.
ICYMI
These last several weeks have been busy!
- We had a guest post from Darjan Vujica on the national security implications of prediction markets;
- We sent out a Special Edition of The Brief covering ICE’s human rights abuses in Minnesota;
- And paid supporters received an explainer on U.S. threats against Greenland; updates on the Board of Peace, Venezuela, and Iran; a breakdown of international protests and changes in U.S. soft power; a piece on foreign policy and the Winter Olympics; and a discussion of the statement from U.N. Special Rapporteurs raising concerns about extrajudicial killings in Minnesota;
- Finally, we put out a new Foreign Policy Reads video on The CIA Book Club by Charlie English, which was a fascinating and hope-inspiring read. If you’ve watched our review and want to check it out for yourself, you should be able to find the book at your local library, or you can support The Connection by picking up a copy from our Bookshop affiliate page.
Thanks so much for joining us this month! If you have ideas for other topics you’d like to see covered in Foundations, please drop a comment or send me an email with any suggestions. I’ll see you back here soon.
Alexis
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