After the US Supreme Court on Friday ruled that US President Donald Trump’s tariffs imposed on international trading partners under the 1977 International Emergency Economic Powers Act (IEEPA) were illegal, he within hours signed a proclamation imposing a flat 10 percent tariff on all imports under Section 122 of the Trade Act of 1974, even though that authority only lasts 150 days. One day later, Trump announced he would raise his global tariffs to 15 percent. Meanwhile, the US administration also pledged to explore other ways to achieve Trump’s goals, such as using Section 301 of the Trade Act to impose additional tariffs on countries that it believes have engaged in unfair trade practices.
For anyone hoping that the US Supreme Court’s decision would mark the end of Trump’s tariff policies, it did not. While the ruling is a setback for the White House, Trump’s trade war will not go away; it could just get more complicated and last longer than expected, as his administration turns to other tools. The Trump administration’s other policy options include invoking national security concerns under Section 232 of the Trade Expansion Act of 1962; trade imbalances and unfair trade practices under Sections 122, 201 and 301 of the Trade Act; and discrimination against US exports under Section 338 of the Tariff Act of 1930. Such institutionalized tariffs would be more sustainable than Trump’s emotionally driven levies waged under the guise of the IEEPA.
Section 122 tariffs could be seen as a transitional tool, as they expire after 150 days, while Section 301 investigations would become the administration’s primary instrument and something permanent, even though that process takes six months to one year, or longer. Section 232 enables reviews of specific industries, such as automobiles, steel, aluminum, copper and semiconductors, with similarly lengthy timelines.
While tariffs imposed under Sections 301 and 232 would be slower to take effect, as the process is more complicated, once implemented, they would become more institutionalized, longer-lasting and harder to reverse. Yet, Section 338, dating back to the Great Depression, authorizes the US president to impose tariffs of up to 50 percent on grounds of discrimination against US goods, without the need for a formal investigation first. So, despite the US Supreme Court disrupting Trump’s trade agenda, the White House could still rebuild a new framework through other, more durable means. The new US tariffs might end up settling close to current levels, given Trump’s unyielding position.
With the IEEPA levies — a foundation of bilateral trade negotiations between the US and its trading partners over the past few months — deemed unlawful by the court, some US trading partners would seek to renegotiate their deals or rethink their investment commitments in the US.
However, the Taiwan-US Agreement on Reciprocal Trade signed with Washington earlier this month has little to do with the IEEPA tariffs, because the deal mainly concerns Section 232 and covers tariffs applicable to Taiwan’s key industries, such as semiconductors and electronics. In addition, Taiwan was the first country to reach an agreement with the US under Section 232, with tariffs on Taiwanese goods down to 15 percent, which is what the market is most concerned about.
Therefore, the government must not misjudge the situation. The US Supreme Court’s decision would not bring relief. Instead, the US is seeking to institutionalize economic security into its trade policy, as Section 301 and 232 investigations could target specific sectors more precisely and yield longer effects than IEEPA’s broad-brush approach. Once institutionalized, it would be a permanent, structural change, and not a matter of any particular US president’s personal whims, with scrutiny and restrictions on labor conditions, pricing fairness and other elements all likely to increase in the medium to long term.
Clearly, the US Supreme Court’s decision shifts the balance of power back to the US Congress from the White House, but it does not change Washington’s trade agenda. Rather, it seems to broaden its policy toolkit. For Taiwan, the court’s ruling has somewhat increased trade uncertainty, but the conditions for exports to the US secured through the Taiwan-US Agreement on Reciprocal Trade remain largely intact. Still, Taipei must enhance its exchanges with Washington and further diversify its global markets to limit the impact of potential long-term risks from US tariff policy.
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