The ruling exposed a divide among conservative justices on the "major questions doctrine." Justices who previously used it to strike down regulations had to invent "convoluted reasons" why it shouldn't apply to Trump's tariffs, suggesting the doctrine's application can be inconsistent and politically influenced.
Despite a Supreme Court ruling against the president's broad reciprocal tariffs, the administration is expected to re-impose them using more targeted, sector-specific legal authorities. This means economic relief from lower tariffs will be short-lived, as the underlying protectionist policy stance remains.
A key legal defense for presidential tariff authority, highlighted in Supreme Court arguments, is the paradox that the president can enact a total trade embargo but is supposedly blocked from imposing a minor tariff. This reframes tariffs not as a separate power but as a lesser-included action within existing executive authority.
A Supreme Court loss on using one specific law (IEPA) for tariffs would not end the administration's ability to wage a trade war. The executive branch has other laws it can use to impose levies, such as those allowing temporary or retaliatory tariffs, limiting but not eliminating its power.
The legal theory previously used to strike down some of President Biden's policies is now being applied to Donald Trump's tariffs. The Court argues that for economically significant actions, the president needs explicit congressional authorization, which the 1977 law cited lacks.
The Supreme Court didn't eliminate all presidential tariff authority. It only ruled that the IEPA statute, used for two-thirds of his tariffs, does not grant this power. This leaves him able to use other laws, like Section 122 of the Trade Act, to reimpose tariffs, albeit with more constraints and difficulty.
Even if the Supreme Court rules against the administration, it may not change U.S. tariff levels. The executive branch has alternative legal authorities, like Section 301, that it can use to maintain the same tariffs, making a court defeat less of a market-moving event than it appears.
While the base case is that the President would replace tariffs struck down by the Supreme Court, there's a growing possibility he won't. The administration could use the ruling as a politically convenient way to reduce tariffs and address voter concerns about affordability without appearing to back down on trade policy.
Janet Napolitano argues that recent Supreme Court doctrines presume a level of legislative clarity and capability that doesn't exist in modern politics. By expecting Congress to legislate with extreme precision on all major issues, the Court ignores institutional dysfunction and creates a standard the legislative branch cannot meet.
The legal battle over President Trump's tariffs and President Biden's student loan forgiveness both hinge on the "major questions doctrine." This Supreme Court principle asserts that if the executive branch exercises a power with vast economic and political impact based on ambiguous statutory language, the Court will rule against it, demanding explicit authorization from Congress.
The market will likely ignore deteriorating fundamentals until a non-economic catalyst forces a repricing. A constitutional crisis, such as the Supreme Court striking down Trump's executive actions on tariffs, could be the event that shatters market sentiment and triggers a sharp correction.