The U.S. Supreme Court in February struck down the Trump administration’s “Liberation Day” tariffs as illegal and unconstitutional. Soon thereafter, the administration invoked a different provision of federal law to impose new tariffs. Now, the U.S. Court of International Trade, which has jurisdiction over these issues, has ruled that the administration’s second effort to impose tariffs under this different legal provision is also flawed.
But before American small businesses and consumers can breathe a sigh of relief, the administration is likely to appeal. And instead of using the Supreme Court’s decision as cover for a retreat from tariffs, the administration seems committed to pursuing unpopular policies that are bad for an economy which is also seeing consumer prices spike because of events in the Middle East.
Even if this effort to impose ill-advised tariffs on American businesses and consumers should ultimately fail once again in the courts, the administration is determined to press on.
When the Supreme Court ruled against the administration’s first effort at imposing tariffs, it found that the plain text of the Constitution vested Congress with the power to levy tariffs, and the limited authority the legislature had granted the executive under the International Emergency Economic Powers Act did not authorize the tariffs.
Despite the fact that the tariffs had taken roughly $166 billion out of the pockets of domestic business and, by extension, American consumers, the administration pressed ahead to take another swing at tariffs, this time invoking a provision passed by Congress in the early 1970s to deal with a different kind of crisis, what lawmakers back then described as a “balance-of-payments” deficit.
To understand why the administration’s efforts have failed so far the second time around, one has to understand the context in which Congress passed the provision that the administration invoked when issuing them. At the time Congress passed this authority, what is referred to as Section 122 of the Trade Act of 1974, the U.S. had just come off the gold standard and the global economy was adjusting to a new economic monetary system. Members of Congress expressed concerns that this new system might harm U.S. economic interests if money did not flow smoothly throughout the global economy, sort of like a game of economic musical chairs.
Fifty years later, the new global economy functions far better than Congress expected it would, and there are no balance-of-payments concerns that could justify the tariffs imposed under Section 122. The language in the statute, written for a different time, empowers the president to impose temporary tariffs when there is a balance-of-payments issue. Making such an argument today is sort of like claiming the decline in the use of leaded gasoline, largely taken out of the economy in the 1970s, is a basis for justifying the new tariffs. More importantly, , and as the Court of International Trade ruled, there simply isn’t a balance-of-payments issue that would justify invoking Section 122.
Admittedly, the language in Section 122 is vague. But that’s where the administration is in a legal bind, one similar to that which it found itself in when it argued in favor of the IEEPA tariffs.
Indeed, either the plain text of Section 122 cannot be invoked unless there is a clear balance-of-payments problem (which there isn’t), o the administration can say the term “balance of payments” means whatever the administration wants it to mean. Under that interpretation, the statute delegates too much authority to the executive, and is unconstitutional. In either case, the administration loses.
Still, even if this effort to impose ill-advised tariffs on American businesses and consumers should ultimately fail once again in the courts, the administration is determined to press on. It has commenced steps designed to impose tariffs under more and different provisions of federal law.
At some point, the administration will likely succeed in imposing new tariffs in a way that is consistent with the laws that might authorize them, even if such tariffs might be a mere shadow of the sweeping tariffs the administration issued in April 2025.
We saw something like this occur in the first Trump administration, when it issued a ban on travel from predominantly Muslim countries. A series of orders issued by the administration were halted in the courts at first, but the administration reissued new orders several times in an effort to pass legal and constitutional muster. In June 2018, nearly 18 months after the first such order went into effect, the Supreme Court, in a narrow, 5-4 decision, found for the administration, concluding that the revised approach was not inconsistent with federal law or the Constitution.
At some point, the administration will likely succeed in imposing new tariffs in a way that is consistent with the laws that might authorize them.
A similar pattern is likely to emerge here. Despite the evidence that the tariffs are unpopular, that the price of goods continues to soar and that the American people are unhappy with the state of the economy, the administration seems committed to imposing some kind of tariffs, perhaps for no other reason than to say that it did. Much as it was with the first Trump administration’s travel bans, when it comes to tariffs, the second Trump administration is likely to get something through that the courts will no longer block.
Of course, the administration can always simply go to Congress to seek approval for new tariffs. Such efforts are likely to fail even now, and if the Democrats should retake even one chamber in the 2026 midterms, new tariffs are most certainly doomed.
Perhaps that is why the administration keeps trying its hand at tariffs, hoping it can slip something through the courts. Whether it is through Section 122 or not, it is likely to succeed in some measure in the end.
While the current effort is stalled in the courts for now, at some point, the administration might get tariffs right, regardless of whether they are wrong for American businesses, consumers and the economy. For now, at least the Court of International Trade has given these tariffs the judicial thumbs down. But it seems unlikely the administration is going to take that as the final word on its mission to impose tariffs, regardless of how unpopular they are with the American people.
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