Economists Warn: No Price Relief After Supreme Court Curbs Trump Tariffs

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Court Strikes Down Emergency Tariff Powers (Image Credits: Unsplash)

The Supreme Court last week invalidated broad tariffs imposed by President Trump, yet experts predict sustained high prices for American consumers in the months ahead.

Court Strikes Down Emergency Tariff Powers

In a 6-3 decision on February 20, the justices ruled that the International Emergency Economic Powers Act of 1977 did not authorize the president to levy tariffs.[1][2] The case, Learning Resources, Inc. v. Trump, targeted sweeping levies including “trafficking tariffs” on goods from China, Canada, and Mexico over fentanyl concerns, as well as 10% “reciprocal” duties on imports from nearly all trading partners.[1]

The majority applied the major questions doctrine, emphasizing Congress’s exclusive constitutional authority over tariffs as a taxing power. IEEPA permitted regulation of imports during national emergencies but omitted any reference to duties or taxes, a deliberate exclusion given explicit language in other trade laws. Dissenters, led by Justice Kavanaugh, argued that “regulate importation” historically encompassed tariffs, but the court prioritized clear statutory text.[2]

Trump Pivots to New Tariff Tools

Hours after the ruling, President Trump announced 10% across-the-board tariffs, which he raised to 15% the following day using Section 122 of the Trade Act of 1974.[3] This provision allows temporary balance-of-payments measures for up to 150 days without congressional approval. Trump described the move as “fully allowed, and legally tested” on social media.

U.S. Trade Representative Jamieson Greer affirmed the policy’s continuity, stating the legal mechanism might shift but the approach remained unchanged. Economists note this keeps the effective tariff rate roughly stable, around 10% before the decision and now similar post-adjustment.[4]

Why Prices Stay Elevated

Several factors prevent immediate price drops. First, the invalidated IEEPA tariffs accounted for about half of recent import duties, but surviving measures and new ones maintain overall pressure.[3] Citigroup economists project minimal change in inflation forecasts, with the 15% Section 122 levy offsetting reductions elsewhere.

Price stickiness compounds the issue. Retailers and suppliers adjust upward quickly during cost hikes but hesitate to reverse, especially after testing consumer tolerance. Mary Lovely, a senior fellow at the Peterson Institute for International Economics, observed, “We’re not going to see tariff relief in the longer run, and businesses know that.”[3]

Carola Binder, an economics professor at the University of Texas at Austin, added that for consumers, the authorizing statute matters less than the persistent high tariff levels on goods. Goldman Sachs analysts estimated the bulk of prior costs already passed through, limiting further consumer impacts.

More Presidential Options Linger

Beyond Section 122, Trump retains other levers. Section 301 targets unfair trade practices, as in past China duties; Section 232 invokes national security; and Section 338 allows retaliation against discriminatory foreign tariffs, though rarely used.[3]

• Section 301: Probes unfair practices, enables targeted duties.
• Section 232: National security basis, applied to steel and aluminum previously.
• Section 338: Counters foreign discrimination, untested in modern era.
• Section 122: Short-term global tariffs, renewable potentially via new declarations.

Each faces legal hurdles and time limits, inviting challenges, but they ensure tariffs endure. Moody’s chief economist Mark Zandi warned of broader deglobalization risks, with businesses curtailing investment amid uncertainty.[4]

The tariff saga underscores enduring trade tensions. While the court reined in one executive tool, alternatives sustain elevated costs, delaying relief for households. What impact have recent tariffs had on your budget? Share in the comments.