The Supreme Court Has Overturned Trump's Tariffs: What He Can Do Now
It's a limited ruling that covers a lot less than the pundits are claiming. And among the things the Court pointedly did not say is that a tariff is a tax, which may only be levied by Congress.
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by Rod D. Martin
February 20, 2026
The Supreme Court erred this morning in its decision against Trump’s tariffs. Its three best justices — Clarence Thomas, Samuel Alito, and Brett Kavanaugh — agree with me. The three Democrat justices make up half of the majority.
Even so, Chief Justice John Roberts — who famously strained to uphold Obamacare as an exercise of the taxing power, and inexcusably ignored the act’s lack of a severability clause — has produced a flawed but quite limited ruling that may not constrain President Trump nearly so much as MSNBC thinks.
At its core is the holding that the International Emergency Economic Powers Act (IEEPA) does not authorize presidential imposition of tariffs. Well, fair enough as to form: the act does not actually use the word “tariffs”. But it does use words like “fees”, a point which came up in oral arguments when the plaintiffs’ attorney was asked if it was his contention that the President had power to impose a complete prohibition on trade from a particular country, or a trillion-dollar fee for them to trade here. He admitted that the answer was clearly yes, but that despite that, he contended that the president does not have the power to impose even a $1 tariff.
That’s absurd. Silly even. It’s a distinction without a difference. And this is the real problem with the majority’s opinion: it strains to uphold form, while completely ignoring substance.
So I have deliberately titled this analysis in part “what Trump can do now”. In point of fact, he can do quite a lot. But to get there, let’s first examine why.
Since the passage of the Reciprocal Trade Agreements Act of 1934, every U.S. President has unilaterally imposed tariffs, or maintained those established by their predecessors. This matters.
The principal argument of Trump’s political opponents is the libertarian dogma that the words “tariff” and “tax” are synonyms. This follows in part from their function — to raise the price of imported goods, and to do so in a manner that funds the Treasury — and in part from the ideological view that anything the government charges anyone is necessarily a tax.
But while that makes sense from a certain point of view, it’s not the law. Nor did it become the law in today’s ruling. Legally, lots of government fees are not taxes. Grazing rights are not taxes. Driver’s license fees are not taxes. National park entry fees are not taxes. Tuition at a state university is not a tax. Again, libertarians would argue to the contrary. The Chief Justice did not.
Now, all the examples I just gave you are fees of some sort, and they are paid in exchange for some service. IEEPA allows the president to impose fees for the privilege of trading in the United States (or to block companies or whole countries from trading here at all). So why should Trump’s use of the word '“tariff” matter? He may be notoriously imprecise (potentially an argument in his favor here), but he has plainly said — to anyone who will listen — that his purpose in imposing these IEEPA tariffs is not to impose a tax, but rather to force foreign companies to pay for the privilege of doing business in the largest, most lucrative consumer market on the planet, and thus be incentivized to deal more fairly with U.S. exporters. Remember: “reciprocal”.
I have to pay for the privilege of doing business in Florida, and I actually live here. That payment is a fee, not a tax (though of course there are also taxes). So why shouldn’t Toyota have to pay a fee to do business here (and ironically, so long as it pays it to the State of Florida rather than the U.S. Treasury, it already does)? And why can’t that fee be charged as a percentage of the value of the business it does? Both the trade and the payment are voluntary, just like choosing to drive on the state’s roads. It’s a privilege, not a right, so it’s not a tax.
The Supreme Court didn’t disagree with any of that, much less overturn it. Which is remarkable, in at least two respects.
First, it means that the Court did not overturn either IEEPA — which allows the president to levy those fees — or any of the trade acts passed since 1930. Several of those laws explicitly state that the president has power to levy tariffs. Yes, the rules he must abide by in each of those acts are more restrictive of his authority than IEEPA’s, but the principle remains that Congress has said the President has such power, and the Court did not today — or any other day in American history — deny it. Nor did it so much as suggest that tariffs are taxes and thus may only be levied by Congress.
Second, to quote Justice Kavanaugh, “although I firmly disagree with the Court’s holding today, the decision might not substantially constrain a President’s ability to order tariffs going forward … because numerous other federal statutes authorize the President to impose tariffs and might justify most (if not all) of the tariffs at issue in this case.”
Goldman Sachs said much the same thing shortly after the Trade Court ruling that started all this: “This ruling represents a setback for the administration’s tariff plans and increases uncertainty, but might not change the final outcome for most major U.S. trading partners. For now, we expect the Trump administration will find other ways to impose tariffs.”
For starters, tariffs specific to particular industries — such as those on steel, aluminum, and automobiles — are entirely unaffected by today’s ruling, giving the President plenty of room to maneuver. And Trump has multiple additional legal tools available. Among these are Sections 122 and 301 of the Trade Act of 1974, and Section 338 of the Tariff Act of 1930. The fact that the Supreme Court did not overturn these provisions is telling as to their position on nondelegation doctrine, at least as it applies to trade and foreign policy, but also as to what they view as his remaining range of options.
Section 122 stands out because it doesn’t require a formal investigation in the manner of Section 301, allowing for faster implementation. Under this provision, the administration could quickly introduce a tariff of up to 15% as a substitute for the blocked 10% measure. However, such a tariff would be temporary — lasting no more than 150 days unless Congress intervenes.
In the alternative, the Administration could initiate Section 301 probes into the trade practices of major U.S. partners (and you may rest assured that the groundwork has already been quietly laid for this over the last year). This would set the legal groundwork for future tariffs, although this route could take several weeks at a minimum to complete. One option would be to conduct this investigation during the 150 day limit of the Section 122 tariffs, then replacing them with new equivalent tariffs under Section 301.
Additionally, tariffs already in place under Section 232, which targets imports that may pose national security risks, could be extended to cover more industries. This section has already been used for metals and automobiles.
Perhaps the President’s most potent tool is Section 338, which authorizes the president to levy duties up to 50% on goods from nations that engage in discriminatory trade practices against the United States. This measure has never before been used. But it’s the law, the Supreme Court did nothing to undermine it, and it fits literally everything the President wants to do.
I would go one further. There is plenty of room in IEEPA for the President to simply reclassify his existing tariffs as fees, which at the very least might get him out of refunding already-collected tariffs (once again, the Supreme Court did not address whether refunds would be required). And if he chose not to do so retroactively, what is to stop him from doing so prospectively? The Court clearly did not restrict this: it’s semantic, but it might hold up, or at least hold up long enough to finish Trump’s remaining trade negotiations.
Would the Supreme Court permit this? The better question is: does it matter? The Trump Administration now has trade deals with most of our major trading partners. A deal’s a deal, regardless of wranglings over the technicalities of IEEPA: once the parties agree on the terms, this case no longer applies.
And as to everyone else, is any nation on Earth so foolish at this point to think that Donald Trump is going to give up, or just ignore the countless powers at his disposal — both trade-related and otherwise — to drive his re-ordering of global trade relations forward? The Court has left him all the tools he needs to do so, requiring just a tad more creativity.
That is indeed the correct course. The administration argues correctly (in its appellate brief) that “the political branches, not courts, make foreign policy and chart economic policy.” America cannot function if President Trump, or any other president, has his sensitive diplomatic or trade negotiations railroaded by activist judges.
Trade policy is foreign policy. The Congress absolutely has a say. What it must not have is an absolute say: that becomes government by committee, an order that utterly failed in our own history under the Articles of Confederation. We don’t want a king, but we also don’t want an impotent executive, especially in a crisis.
This tension has existed from the founding of the Republic. The Supreme Court did nothing to alter the balance today.
IE Not The end Of The World.
Thanks so much for that very timely analysis...sincerely appreciate it.