The Supreme Court ruling will trigger two massive waves of litigation. First, hundreds of thousands of companies will sue for refunds on billions in illegally collected tariffs. Second, new tariffs imposed under different authorities will face country-by-country legal challenges, creating a sustained boom for trade lawyers.
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.
A small, family-owned toy company led the legal charge against the tariffs while giants like Mattel and Hasbro remained on the sidelines. The podcast suggests large corporations were too intimidated by potential presidential retribution, demonstrating that smaller firms can be more courageous in challenging government overreach.
Toy manufacturing is concentrated in China due to specialized expertise in meeting high safety standards, especially for components like magnets which can be fatal if swallowed. Shifting production elsewhere introduces significant risk of safety failures from a less experienced workforce, a factor often overlooked in supply chain discussions.
Following the ruling, Trump immediately invoked Section 122 of the Trade Act to impose a 10% tariff. This authority is limited—up to 15% for only 150 days. This creates a ticking clock for his administration to build more complex legal cases under other statutes, like Section 301, to make the tariffs permanent.
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.
Countries like Japan and the EU are unlikely to abandon their trade deals with the U.S. The deals address other tariff types (like Section 232 steel tariffs) that are still in place. Furthermore, no nation wants to risk provoking an unpredictable President Trump, who could retaliate in non-tariff ways.