Roger Bernard, US Senior Policy Analyst,
HIGHLIGHTS
- US trade policy could shift, potentially dramatically, depending on US Supreme Court ruling
- Tariffs still a part of Trump administration focus, but tools could change
- New routes for tariffs are accompanied by more uncertainty
2026 is poised to unfold with a potentially even greater degree of uncertainty due to US policies on trade and other areas that have emerged during 2025 and created significant market and economic uncertainty. Uncertainty equals volatility, and this constant is expected to remain.
IEEPA tariffs implemented
The International Emergency Economic Powers Act (IEEPA) of 1977 was the main policy tool used by the Trump administration to levy tariffs on imported goods in 2025. Those tariffs have brought in record amounts to the US Treasury — nearly $200 billion USD during Fiscal Year (FY) 2025, up 150% from FY 2024. For perspective, January 2025 tariff collections were just $7 billion USD, surging to $30 billion USD in September 2025. The US effective tariff rate was 18.6% as of August, the highest since 1933.
But the very authority used by the administration is at issue, with the matter in the hands of the US Supreme Court. The nation’s top court heard arguments in the case on Nov. 5, and it was clear justices had some skepticism about whether the administration overstepped its authority by using the IEEPA. A decision is pending and could come from now until June — the Supreme Court does not telegraph how long it will take to issue a ruling.
Potential rulings by the Supreme Court:
- A full affirmation of the administration’s authority to use IEEPA to levy tariffs.
- Significant limitations on the IEEPA use.
- A potentially mixed ruling that would force a recalibration of tariff policies.
However, even if the Supreme Court invalidates use of IEEPA, that does not end the administration’s ability to impose tariffs. Officials are signaling they will pursue other routes to put duties on US imports. Those other options involve more time and investigation before the levies are put in place, slowing but not eliminating tariff use.
Tools available if IEEPA use invalidated
Section 301 of the Trade Act of 1974 was used by the administration to impose tariffs on China during the first Trump administration, and many of those levies remain in place today. But the Section 301 process involves initiating a formal investigation, providing notice via the Federal Register, holding hearings and taking in public comment, and determining if there are “unreasonable or discriminatory” actions by a foreign government. The process is typically more legally durable but takes 6 to 12 months to unfold.
Section 232 is another route for tariffs on the grounds of national security such as the levies on steel and aluminum. To use this route, the Department of Commerce (DOC) would conduct a national security investigation, undertake a mandatory 270-day review period, with actions based on those findings. Section 232 is more rigid procedurally and can be challenged if stretched “too far.” There must be a national security issue, not just a desire for reciprocal tariffs or generating tariff revenue.
Section 201 Safeguards would route the process through the US International Trade Commission (USITC). There would need to be a finding of serious injury to a US industry, which can be a lofty legal threshold and one that could hold political sensitivities. Other options are focused on injury findings after a petition and investigation process.
Rarely used Section 338 of the Tariff Act of 1930 allows for retaliation in the event of discriminatory treatment, but it has a narrow scope. Plus, some observers believe modern courts could limit it relative to newer trade laws.
The administration has made clear they will keep using tariffs, but the pursuit of the other options would be time-consuming, involve well-established procedural steps, injury findings, hearings and have a much narrower legal justification.
As for tariff revenues already collected, history indicates that when courts have invalidated actions where duties have been assessed and paid, the government normally does not issue refunds unless mandated by Congress or importers file suit within a statutory refund window. The administration could argue the Supreme Court ruling applies only from the date of the decision and could issue a statement declaring the funds were “lawfully collected at the time” via provisions in the Administrative Procedure Act (APA).
Already, some companies have filed suit via the US Court of International Trade as a “hedge” to put them in line for potential refunds should the Supreme Court invalidate the use of the IEEPA. But as noted, that is not a guarantee that those revenues will be returned.
Even if IEEPA authority is not invalidated, President Donald Trump has shown he will act with little notice on the tariff front.
The bottom line remains that uncertainties created by the Trump administration’s tariff policies will continue — they may just take place via longer, more involved actions that will keep volatility alive well into 2026 as the process plays out.
Risks: Should the administration lose its ability to use IEEPA to levy tariffs, the resulting actions will create even more uncertainty as the administration shifts to use other policy tools and depending on the exact details of the ruling. Another risk is that removal of the IEEPA authority could call into question some of the trade deals that have been negotiated as IEEPA-linked tariffs were a tool to extract trade concessions as countries sought less onerous tariff levels. From a longer-term perspective, given that the IEEPA tariffs were enacted via executive orders, they could just as easily be removed by a future administration.