[Global Focus] The Shaky "Trump Round": Will Reciprocal Tariffs Survive the Supreme Court?

Trump's Reciprocal Tariffs on Trial
"Even If IEEPA Is Blocked, Section 232 and Section 301 Remain"
Will the Supreme Court Ruling Mark a New Watershed for the Global Trade Order?

The "new trade order" promoted by the Donald Trump administration, which has emphasized reciprocal tariffs, is now being tested in court. As the U.S. Supreme Court has decided to rule on the legitimacy of tariffs imposed under the International Emergency Economic Powers Act (IEEPA), the so-called "Trump Round" trade strategy is facing a critical turning point. Observers predict that the Supreme Court's decision will have a significant impact on both the Trump administration's push for the "Turnberry System" and the future direction of the global trade order.

Reciprocal Tariffs on Trial at the Supreme Court...Lower Courts Found "Abuse of Power"

Jameson Greer, the United States Trade Representative (USTR), wrote in an op-ed for the New York Times on August 7 (local time) that "we are now witnessing the 'Trump Round,'" arguing that the existing international trade order has ended and the "Turnberry System" has begun.

At the core of the "Trump Round," as named by Greer, are reciprocal tariffs. After President Trump announced reciprocal tariffs on countries around the world in April of this year, he proceeded with bilateral trade negotiations. Greer described these negotiations as a "round," evaluating that "the United States has laid the foundation for a new order."

President Trump has consistently cited the IEEPA as the legal basis for imposing reciprocal tariffs. Enacted in 1977, the IEEPA has mainly been used for sanctions or asset freezes against hostile nations. Trump was the first president to use this law to impose tariffs. He has consistently argued that America's trade deficit constitutes an "emergency," as it affects the overall economy, including manufacturing decline, job losses, and national security.

However, twelve state governments, including Oregon, filed lawsuits challenging the Trump administration's claims and seeking to invalidate the reciprocal tariffs, and the courts sided with them. Previously, both the U.S. Court of International Trade (USCIT) and the U.S. Court of Appeals for the District of Columbia Circuit ruled that while the IEEPA grants the president authority to regulate imports, it does not extend to a "broad authority to impose tariffs" through executive orders.

In response, the Trump administration filed a petition with the Supreme Court on the 3rd of last month, seeking to overturn the lower court rulings. D. John Sauer, Deputy Attorney General at the Department of Justice, argued in the petition that "if the lower court decisions stand, America's defensive tools will be unilaterally dismantled, allowing other countries to hold the U.S. economy hostage with retaliatory trade policies." He added, "If we have tariffs, we are a rich country. If we do not, we are a poor country." The Supreme Court has decided to expedite the case and scheduled the first hearing for the 5th of next month to determine the legality of reciprocal tariffs under the IEEPA.

If the Supreme Court rules that reciprocal tariffs are illegal, it is expected that President Trump's aggressive tariff strategy will be partially rolled back. Attention is particularly focused on the impact this will have on countries that have reached trade agreements with the U.S. to reduce reciprocal tariffs. Bloomberg News reported that if the Supreme Court invalidates reciprocal tariffs, the average effective U.S. tariff rate will drop significantly, resulting in refunds amounting to billions of dollars. The report also pointed out that some trade agreements with other countries could be reversed.

U.S. Government: "Tariffs Are National Security...We Won't Stop Even If We Lose"

Jameson Greer, United States Trade Representative (USTR). Photo by AP News Agency

The Trump administration has stated that it will continue to impose tariffs on trading partners even if the Supreme Court rules reciprocal tariffs illegal. On the 30th of last month, Greer, the USTR, said, "We are confident that President Trump's trade policy will prevail in court," and mentioned that even if reciprocal tariffs are found to be illegal, there are alternative means to impose tariffs. Greer emphasized that tariffs would "remain part of the policy," stating, "Whether we win or lose at the Supreme Court, we must approach trade in this way going forward."

While Greer did not specify what alternatives would be used if reciprocal tariffs under the IEEPA are invalidated, the most likely legal basis is Section 232 of the Trade Expansion Act. The U.S. Department of Commerce has previously stated that it will "continue work necessary to address the impact of imports on national security."

Section 232 of the Trade Expansion Act allows the administration to impose tariffs on goods that have a significant impact on national security. President Trump has used this provision to impose tariffs on steel, aluminum, copper, automobiles, and auto parts. In addition, the Department of Commerce is reportedly reviewing the impact of imports of critical minerals, aircraft, jet engines, polysilicon, and wind turbines on national security. Even if reciprocal tariffs under the IEEPA are struck down by the Supreme Court, it is possible that the list of items subject to tariff investigations could be greatly expanded. Experts generally agree that, since the Department of Commerce is not an independent agency but a government department, it is highly likely that the investigation results will align with President Trump's preferences.

Along with Section 232, Section 301 of the Trade Act is also being considered as a tool for imposing tariffs. Jesse Kreier, a law professor at Georgetown University and former interim director at the World Trade Organization (WTO), explained that "President Trump, who is determined to change America's trade relations with the world, has a wide range of tools at his disposal." He noted that Section 301 allows the U.S. to define actions that burden the American economy as "unfair trade" and impose tariffs accordingly. In fact, after launching a Section 301 investigation into China's maritime, logistics, and shipbuilding industries, the Trump administration concluded that these sectors were harming the U.S.

Kreier said that even if the Supreme Court restricts President Trump's authority to impose tariffs, "it is unrealistic to expect the U.S. to return to a kind of 'open economy' as it was 20 years ago," and predicted that President Trump would "quickly find alternatives to the IEEPA."

"A Major Case for America"...The Fate of Trump-Style Trade Order

Reuters Yonhap News

Analysts say the Supreme Court's ruling on reciprocal tariffs will have long-term implications for America's economic strategy. William Galston, senior fellow at the Brookings Institution, said, "President Trump called the legal dispute sparked by his tariffs 'America's big case,' and that's no exaggeration. At stake are the core of the Trump administration's economic agenda and the scope of its authority." He added, "Conservative justices must balance their support for a strong executive branch with how to calibrate the scope of authority President Trump claims. While this case centers on legal interpretation, its outcome will affect all three branches of government: legislative, judicial, and executive. Whatever the Supreme Court decides, the repercussions will last for decades."

Stephanie Connor, partner at global law firm Holland & Knight, also said, "The Supreme Court's ruling will have a ripple effect on future U.S. economic policy," explaining that "the IEEPA is the legal foundation for most foreign sanctions, as well as recently introduced regulations on foreign investment, data security restrictions, and information and communications technology controls." She continued, "If the Supreme Court invalidates President Trump's tariffs, it will be seen as an unusual and risky check on the administration. Conversely, if the tariffs are upheld, it could set a precedent for future presidents to expand their authority in unprecedented ways by invoking national emergencies to bypass Congress." She added, "The Supreme Court's ruling will go beyond tariff policy and could determine America's influence in an increasingly competitive global economy."