Breitbart Business Digest: The Supreme Court Struck Down Tariffs; Here’s What Comes Next

BBD’s Weekly Wrap: The Supreme Court Tries to Stop Trump’s Tariffs

Welcome back to Friday! This is the weekly wrap of economic and financial news from Breitbart Business Digest, where we never overreach with our emergency powers.

This week, there were huge fights over who pays for the tariffs, major signals that the U.S. manufacturing sector is strengthening, a trade report showing that the deficit has been almost cut in half since Liberation Day, and a GDP report that was disappointing, thanks in part to the government shutdown.  We’re going to put all of that aside for now (but you can read about them in the links above) to focus on tariffmegeddon: the Supreme Court’s decision striking down Trump’s assertion of broad emergency tariff power.

Photos of the U.S. Supreme Court justices are displayed on a television screen on the floor of the New York Stock Exchange after the court struck down President Trump’s tariffs on February 20, 2026. (Michael Nagle/Bloomberg via Getty Images)

SCOTUS Overturns Trump’s ‘International Economic Emergency’ Tariffs

The Supreme Court invalidated President Trump’s sweeping tariff policy on Friday, ruling 6-3 that the International Emergency Economic Powers Act (IEEPA) did not grant the president the authority to impose tariffs. This was not a surprise. Even before the case came before the courts, supporters of the tariffs understood the novel use of IEEPA to impose tariffs left it potentially vulnerable. During oral arguments before the Supreme Court, it was clear many of the justices were uncomfortable with the Trump administration’s tariff authority claim.

For non-lawyers, the Trump administration’s attempt to impose emergency tariffs on almost every other country in the world was always a bit questionable for the simple reason that it had never been tried before.

At the heart of Chief Justice Roberts’ decision is something known as the major questions doctrine, which roughly says that if Congress wants a law to grant the executive the authority to pass rules or enact policies that create really big changes in our economy or society, it needs to make it super clear that that’s what it is doing. Roberts—joined by Justices Amy Coney Barrett and Neil Gorsuch—said that Congress hadn’t satisfied the major questions burden when it comes to granting tariff authority under IEEPA.

Roberts also held that although the law allows the president to require import licenses and even outright ban imports, this does not imply a power to tax imports. “Even though a tariff is, in some sense, ‘less extreme’ than an outright compulsion or prohibition, it does not follow that tariffs lie on the spectrum between those poles. They are instead ‘very clear[ly] . . . a branch of the taxing power,’… and fall outside the spectrum entirely,” Roberts held.

The liberal Justices said they did not need the major question doctrine to decide the case. Just a plain reading of the statute makes it clear IEEPA doesn’t allow for presidentially imposed tariffs. That’s hardly surprising. The idea that Trump lacks legal authority to carry out his policies has been a consistent finding of the Supreme Court’s liberal justices and lower court progressives in so many cases that fair-minded court-watchers are forced to wonder if the new legal principle among progressives in the judiciary is simply: Trump always loses. “They’re an automatic no,” President Trump said Friday. “No matter how great a case you have, it’s a no.” It’s Trump Derangement Syndrome in legal form.

The dissent by Justice Brett Kavanaugh is pretty clearly the stronger argument. He points out that the major questions doctrine should not even arise because the power to impose tariffs to regulate trade has been a regular feature of our legal infrastructure around trade since the founding. What’s more, in similar circumstances, the courts have upheld tariff authority. Roberts tries to pick apart the precedents, but this is largely unpersuasive. Kavanaugh also points out that it is a bit ridiculous that the majority’s view of the law would allow the president to block all imports but not charge even one dollar of tariffs.

Justice Clarence Thomas’s separate dissent argues that the non-delegation doctrine—which limits Congress’s power to delegate certain powers to the executive branch—doesn’t apply here. “The power to impose duties on imports can be delegated,” Thomas writes. “At the founding, that power was regarded as one of many powers over foreign commerce that could be delegated to the President.”

Much an Import Duty About Nothing?

The Kavanaugh dissent pointed out that “the decision might not substantially constrain a President’s ability to order tariffs going forward.” Sure enough, just hours after the court handed down its decision, President Trump announced a global 10 percent tariff on all imports would be imposed under Section 122 of the Trade Act of 1974.

This provision allows the president to address “large and serious” trade imbalances by imposing up to a 15 percent tariff on imports. In addition, it grants him the authority to impose import quotas. The combination of these two powers could restore the president’s leverage in international trade talks, allowing the U.S. to threaten even higher tariffs and quotas for countries that do not agree to abide by trade deals cut under IEEPA.

The catch? The Section 122 tariffs expire after 150 days unless Congress votes to extend them. This would put the issue of tariffs front and center for lawmakers, who have until now been able to avoid dealing with the tariffs because they were imposed by presidential fiat. Of course, Congress could also simply pass an amendment to IEEPA making it clear that the president does have the power to impose tariffs, essentially overturning the Roberts decision.

There’s also Section 338 of the Trade Act of 1930, a provision of the law that brought us the much-maligned Smoot-Hawley tariffs. Yes. It’s still on the books. And it says the president can impose a tariff of up to 50 percent on any country that discriminates against U.S. commerce. This statute is very clear about presidential authority, although it doesn’t define the targeted discrimination and is vague about what procedural steps—if any—might be required. Also, it hasn’t been invoked in many decades, which means it has not been tested by the courts.

If Congress doesn’t extend the tariffs—and there are still enough anti-tariff folks in the Republican caucus to make this an open question—the administration could very likely simply re-declare a serious trade imbalance and re-impose the tariffs. That, however, would likely bring about a host of new legal challenges.

Perhaps a stronger response would be to adopt the proposal outlined in Breitbart Business Digest earlier this month: a licensing system called I-ACES (Import Authorization Certificate Exchange System). The concept is simple. IEEPA explicitly allows the President to “prohibit” imports and issue “licenses” as exceptions. Under I-ACES, Treasury would sell import authorization certificates directly to foreign governments. A country running a $50 billion trade surplus with the U.S. would pay Treasury $10 billion (at a 20 percent rate) for certificates authorizing imports for one year. The foreign government then decides how to distribute those licenses to its exporters. What makes this harder to challenge is that since the Supreme Court struck down tariffs by insisting licenses and import regulations are fundamentally different from tariffs, they can’t then turn around and claim I-ACES licenses are really tariffs.

The political advantage of I-ACES is that it kills the “Americans pay tariffs” talking point. Under this system, the German government literally writes a check to the U.S. Treasury, so there’s zero ambiguity about who pays. Foreign governments face the same choice they do with tariffs: pay for continued access, lose access to U.S. markets, or open their own markets to rebalance trade. And like tariffs, license fees can be negotiated: invest in American manufacturing and get a discount, buy Russian oil and pay more. The Supreme Court just handed Trump the legal argument he needs to implement this system, which may prove more effective than tariffs at bringing surplus countries to the negotiating table.

How Will the Rest of the World React?

The Trump administration has used the threat of IEEPA tariffs to strike trade deals with nations around the world. In exchange for lowering IEEP tariffs, governments have agreed to open their markets to U.S. products and invest hundreds of billions in U.S. production. Now that those tariffs have been struck down, it will be tempting for at least some of the countries to renege on their promises.

Some countries have already said they will not do this. And the threat of Section 122 tariffs and tariffs under other statutes may make many others think twice. But if any do decide to unwind the 2025 trade deals, this will be a major vindication of the Trump policy. It will demonstrate that the tariffs really were an important part of the president’s ability to improve the terms of trade for the U.S. and to conduct foreign policy.

If other countries do decide to close their markets to U.S. products, that may well create the impetus in Congress to grant the president the power that the Supreme Court said it did not grant already.

Happy Birthday to the Post Office

On February 20, 1792, President George Washington signed the Postal Service Act into law, establishing the foundation of the modern United States Postal Service. The law gave the federal government power to establish official mail routes to expand postal service across the growing nation, allowed newspapers to be delivered at reduced rates to spread information to the frontiers, and made it illegal for postal officials to open people’s mail.

Benjamin Franklin had been appointed the nation’s first Postmaster General by the Continental Congress in 1775, but Samuel Osgood served as the first Postmaster General under the Constitution when Washington took office in 1789. At the time Washington signed the act, the country’s four million people were served by just 75 post offices and 2,400 miles of post roads.

For the next 180 years, Congress jealously guarded its power to set postal rates, writing them directly into statutes. Then in 1970, just seven years before enacting IEEPA, Congress passed the Postal Reorganization Act of 1970, which took rate-setting responsibility away from Congress and delegated it to the Board of Governors of the new U.S. Postal Service.