Trump lost on tariffs, but the world should not celebrate yet

The Supreme Court ruling of February 20 that sweeping global tariffs imposed by US President Trump were illegal has rightly been read as a rebuke of executive overreach. But it does not mark a return to the old order. The trade policy of the United States has shifted in a more durable protectionist direction, and the world has noticed.

The legal point is straightforward. The Constitution of the United States assigns tariff authority to Congress. Article I, Section 8 empowers it to levy taxes, duties, imposts, and excises. Tariffs are taxes. Over the past ninety years, however, Congress has delegated parts of that power to the White House for speed and flexibility. The result is a presidential arsenal of trade statutes, each with its own triggers, procedures and limits.

The second-term strategy of the administration was to reach for the biggest weapon in that arsenal and use it without restraint. It chose IEEPA, a 1977 emergency law built for sanctions and asset freezes, and stretched it to justify tariffs on virtually every country, at virtually any rate, for virtually any reason. Canada and Mexico were targeted over fentanyl. China faced tariffs of up to 145 percent for trade deficits. There were threats against Colombia over migration, Brazil over the prosecution of a political ally, and the BRICS countries for allegedly plotting to dethrone the dollar. In practice, IEEPA became a general-purpose tool of presidential coercion aimed not only at trade rivals but at anyone who crossed the president politically.

That marked a sharp break from the first term. Then, President Trump largely relied on existing trade tools in their traditional lanes. Section 232 was used for national security cases such as steel and aluminium, and Section 301 against China for unfair trade practices. Those measures survived legal challenges. The first term trade team reportedly avoided IEEPA precisely because it was legally and politically high-risk. The second term took that gamble anyway.

The gamble failed. Chief Justice John G Roberts wrote that the administration was using two words, regulate and importation, to carry authority to impose tariffs from any country, of any product, at any rate, for any amount of time. Those words, he concluded, cannot bear such weight. The Court also relied on the major questions doctrine, meaning that when the policy stakes are this large, the president needs clear congressional authorisation. The ruling was 6 to 3, with two Trump appointees joining the majority.

The practical fallout is substantial. About $170 billion in IEEPA tariffs was collected before the decision, and much of it is now potentially subject to refund claims. Beyond the money, the ruling limits tariffs as a general-purpose cudgel used as leverage or punishment outside the trade domain. The era of tariffs by threat against allies, adversaries and political irritants is now far harder to sustain legally.

Yet the presidency still retains real tariff firepower. Within hours of the ruling, the administration invoked Section 122 of the Trade Act of 1974 to impose a 15 percent global tariff, the first use of that provision in roughly fifty years. The move was tactically nimble, but Section 122 was written for balance of payments crises. Here, the legal footing is shaky. A trade deficit is not the same thing, legally or economically, and that distinction may invite fresh court challenges. Section 122 also comes with limits. It expires after 150 days and is capped at 15 percent.

Meanwhile, the administration is building a pipeline of Section 301 investigations to generate unfair trade findings that can support more durable tariffs. Section 232 national security tariffs already in place for steel and aluminium remain untouched. The Court did not end tariff politics. It pushed tariff policy back into statutes with clearer text and tighter procedural guardrails. Section 301 requires investigations, a record and defensible findings. It moves on administrative time, not presidential impulse. The era of tariffs by tweet is constrained, even if not fully over.

Most importantly, the decision should not be mistaken for a restoration of the pre-Trump trade consensus.

First, tariffs now generate hundreds of billions of dollars in annual revenue, money few administrations will surrender lightly. In key sectors such as steel, autos and semiconductors, tariffs have supported factories and jobs, creating political constituencies in swing states.

Second, both parties have moved away from free trade orthodoxy. The Biden administration kept all the China tariffs of President Trump. Within the Democratic Party, free trade neoliberals are in retreat. The Republican shift is equally striking.

As recently as 2018, most Republican senators were willing to vote to curb President Trump’s tariffs when push came to shove. By October 2025, the majority had shrunk to a handful, and most Republicans who once rejected the administration’s impulsiveness now accept that future policy should incorporate reciprocity and strategic industrial intervention.

Third, the world is adapting. At the 2026 Munich Security Conference, German Chancellor Friedrich Merz noted that dependence on a single powerful partner carries real risk when that partner policy can shift suddenly and without warning. Europe is now working to reduce those dependencies and build greater resilience.

The Supreme Court has drawn a clear constitutional line. Presidents cannot conjure tariff powers out of emergency language. That is a win for separation of powers. But the trade war continues, now fought with slower tools and more procedure, alongside a renewed question for Congress. Will it reclaim the authority the Constitution gave it, or will it write new statutes that delegate tariff power explicitly? What is no longer available is strategic ambiguity. The Supreme Court has closed that door.

[MG Quibria is a trade and development economist who has worked at the Asian Development Bank and Morgan State University. He can be reached at mgquibria.morgan@gmail.com]