It’s the End of the Beginning of the Tariff War

Talk about doubling down!

It’s the End of the Beginning of the Tariff War

The Supreme Court rules against Trump, but his administration has been working on Plan B.

By Scott Lincicome, WSJ

Updated Feb. 20, 2026 2:59 pm ET

The Supreme Court’s ruling in Learning Resources v. Trump is welcome news for American importers, the U.S. economy and the rule of law. But the tariff fights have only begun.

Invalidating the tariffs President Trump imposed under the International Emergency Economic Powers Act will eliminate the most potent and unchecked instrument in his tariff tool kit, boosting certainty and predictability in the U.S. market. It will also immediately set off a battle over the tens of billions of dollars that the federal government has unlawfully collected from American importers since the spring.

These refunds could be remarkably easy: With almost all duty payments now made electronically, and with every IEEPA-related import assigned a specific tariff code, U.S. Customs and Border Protection could return most of the money owed to importers, with interest, at the push of a button. In several past cases, CBP has issued automatic blanket refunds covering many years and billions of dollars, and duty refunds in general are a daily occurrence.

Yet unless Congress mandates the easy approach, the Trump administration will probably make the refund process as burdensome as possible, requiring every importer to file mounds of paperwork, if not a lawsuit, to get its money back. That process would demand significant time and money that American businesses won’t be able to devote to their core operations—and that smaller importers might be unable or unwilling to commit. Government resistance would therefore be a costly travesty as a matter of both economics and fairness. Unfortunately, it’s also widely expected.

The longer-term fight will be over the tariffs the administration will impose to replace the now-defunct IEEPA levies. The Constitution grants Congress the power to impose tariffs, but U.S. trade law is littered with provisions delegating the president broad powers to impose tariffs for various reasons.

Mr. Trump has already invoked some of these laws. We have Section 301 tariffs of up to 25% on around half of all Chinese imports, due to alleged unfair trade practices by Beijing. We also have global Section 232 tariffs of up to 50% on imports of steel and aluminum, automotive goods, heavy-duty trucks, copper, and wood products—each imposed on grounds that these goods threaten U.S. national security.

The Trump administration has also created a process whereby “derivative” products made from goods subject to Section 232 tariffs will be covered by those same tariffs. This “inclusion” system is mind-bendingly complicated and has already doubled the coverage of Mr. Trump’s steel tariffs. Several other Section 232 investigations—on semiconductors, pharmaceuticals, critical minerals, commercial aircraft and more—were initiated in 2025, setting the stage for more tariffs in the weeks ahead.

In a press conference after the ruling on Friday, Mr. Trump acknowledged that his team had been studying these and other laws as fall-back options, and he announced a slate of new actions to replace his IEEPA tariffs. This includes the current 232 actions, initiating new investigations under Section 301, and imposing a global 10% tariff under Section 122 of the Trade Act of 1974, which empowers the president to address “large and serious” balance-of-payments deficits via global tariffs of up to 15% for no more than 150 days (after which Congress must act to continue the tariffs). The administration might later consider Section 338 of the Tariff Act of 1930—a short and ambiguous law that authorizes the president to impose tariffs of up to 50% on imports from countries that have “discriminated” against U.S. commerce—but this is legally riskier.

These measures will create global tariff regime similar to what Trump imposed under IEEPA. The main difference—and the main benefit for America’s economy and trading partners—would rest in how the president does so. IEEPA was essentially an Oval Office “tariff switch” that Mr. Trump could flip on and off at any time, for any reason and in any amount. This created massive uncertainty and crippling complexity for businesses, foreign governments and the U.S. economy. The alternative authorities, by contrast, have substantive and procedural guardrails that limit their size and scope or, at the very least, give companies time to prepare for tariffs (or lobby against them).

To be sure, “guardrails” is a relative term for a president who has already stretched Section 232’s “national security” rationale to cover whipped-cream cans and bathroom vanities. And the courts have largely rubber-stamped the administration’s previous moves under Sections 232 and 301—a big reason why the tariff Plan B will feature them. Abuse is likely, as is more litigation. And unlike with IEEPA, we shouldn’t expect the courts to save us.

The justices’ ruling is an important victory for constitutional governance and will eliminate the most destabilizing element of Mr. Trump’s tariff regime. But until Congress reclaims some of its constitutional authority over U.S. trade policy and limits the president’s legal tariff powers, costly and erratic tariffs will remain the norm in the U.S., to our economy’s great detriment.

Mr. Lincicome is vice president of general economics and trade at the Cato Institute.

This article has been updated to account for Mr. Trump’s comments after the ruling Friday.

Trump’s New Trade Agenda Is on a Collision Course With Midterms

A plan—in response to the Supreme Court ruling that some global tariffs were illegal—could take months to implement

By Gavin Bade, WSJ

Updated Feb. 20, 2026 9:12 pm ET

President Trump announced new tariffs under Section 122 of the Trade Act of 1974 and Section 301 of the Trade Act.

President Trump’s new plan for tariffs puts his trade agenda on a collision course with the midterm campaign season.

Just hours after his main tariff rationale was invalidated by the Supreme Court on Friday, Trump announced he would implement new levies under two separate legal authorities—one short term, another longer lasting.

Some of the new tariffs Trump wants to impose require congressional approval to extend beyond five months. Others require months of investigations before they can be put into place. In both cases, that pushes key tariff decisions into the summer, just months before November’s midterms when many Republicans are likely to be especially sensitive to complaints about inflation and affordability.

In a sign of growing anxiety toward his tariffs, six GOP lawmakers voted with Democrats last week in an attempt to rein in Trump’s tariff powers in the House of Representatives. The Senate passed three similar resolutions last year on narrow bipartisan votes. Now, Republicans running for re-election will have to grapple with tariff drama along with other attacks from Democrats on the economy.

“The potential that they could be asked by the White House to vote to levy higher tariffs on their constituents is not something Congress would look forward to,” said former Rep. Kevin Brady, a Republican from Texas, who led the Ways and Means Committee during Trump’s first term. “The conventional wisdom is that there isn’t support for that.”

Representative Kevin Brady, a Republican from Texas and ranking member of the House Ways and Means Committee, arrives at a business meeting.

Kevin Brady in 2022. Al Drago/Bloomberg News

On Friday, House Speaker Mike Johnson (R., La.), who has defended the president’s tariffs, said Congress and the administration “will determine the best path forward in the coming weeks.”

The Supreme Court ruling also left many questions about Trump’s past and future trade policies unanswered. There could be years of litigation to determine what happens to more than $130 billion in tariffs collected under the now-invalid policy. And the White House on Friday didn’t give clear specifics about how the new tariffs would work or whether key products might be exempted. This could set off a fierce lobbying process in Washington and around the world.

The Supreme Court’s decision on Friday caps a year of legal wrangling over Trump’s unprecedented use of tariffs. Since last April, Trump has used emergency national-security powers to levy most of his tariffs—deploying the International Emergency Economic Powers Act, a 1977 law that had never before been used for tariffs. Trump and his team chose that law, in part, because it let him impose tariffs nearly instantaneously, allowing him to threaten other countries with higher levies over trade and nontrade issues alike.

But on Friday, the Supreme Court ruled that Trump’s use of Ieepa for tariffs is illegal, undermining his chosen tool of economic leverage.

The impact of the decision will be “weakening the president’s negotiating power,” said Wilbur Ross, who was secretary of Commerce during Trump’s first term. The other legal options for tariffs, he added, are either time-limited or require extensive investigations before they can be put into place.

Trump on Friday sought to quickly rebuild the tariff regime, posting online that he had signed an order to impose a 10% global tariff under Section 122 of the Trade Act of 1974, which allows the president to impose tariffs up to 15% for 150 days on nations that have persistent trade imbalances with the U.S. After that time, the tariffs would require a vote of Congress to be extended, something Trump didn’t commit to pursuing during an earlier press conference he held following the Supreme Court ruling. According to the order, products from Canada and Mexico that comply with the U.S.-Mexico-Canada Agreement will be exempt from the tariffs.

The Section 122 tariff authority could act as a stopgap while the administration readies more permanent tariffs under Section 301 of the Trade Act, which Trump used in his first term for tariffs on China. That authority is more legally durable than Trump’s Ieepa action and is broadly expected to be upheld in court, depending on the details of the investigations set to be released in the coming weeks.

Trump said that using a combination of those two tariff authorities will allow him to impose even higher tariffs than he did under Ieepa. But trade veterans say that strategy would still be more administratively difficult than his application of the emergency law, which allowed him to alter tariff levels with simple proclamations.

The Supreme Court decision “takes away a pretty significant tool the president has been using,” said Everett Eissenstat, deputy director of the National Economic Council in Trump’s first term. “The other statutory authorities are not as flexible as Ieepa.”

Additionally, Trump could expand other tariffs that he has already imposed in his second term, like the sector-specific tariffs on steel, aluminum, cars, trucks, lumber and other industries that are outside the scope of the Supreme Court case. Those levies, imposed under Section 232 of the Trade Expansion Act of 1962, are already being applied more broadly than in previous terms and could be expanded further. Supporters of the administration’s trade agenda say his team has already been leaning more on the Section 232 tariffs in recent months, decreasing the relative importance of the Ieepa duties.

A red semi-truck carrying new Toyota Tacoma vehicles at the Otay Mesa port of entry.

Some auto tariffs won’t be affected by the Supreme Court decision. Ariana Drehsler/Bloomberg News

“While this impacts an important pillar of the administration’s priorities, Ieepa was not the only pillar and, frankly, the administration has moved past Ieepa now,” said Nazak Nikakhtar, a former Commerce Department official in Trump’s first term now at Wiley Rein.

The durability of Trump’s Section 232 tariffs will also help preserve many of the trade agreements that Trump has signed with major economies in the past year. Many of the U.S.’s largest trading partners—including the European Union, Japan and South Korea—secured lower Section 232 tariffs on automobiles as part of those agreements. Since those auto tariffs are not affected by the decision, other governments are likely to persist in the agreements even without the Ieepa levies in place.

There is much less certainty for U.S. businesses that have paid about $130 billion in Ieepa tariffs. More than 1,000 companies have petitioned for refunds in the event the tariffs are struck down, but the Supreme Court didn’t lay out a process for those refunds to be processed, leaving the issue up to lower courts.

Business leaders on Friday called on the administration to quickly set up a process to process refunds, but Trump indicated that there may be more litigation before any money is paid out. “We’ll end up being in court for the next five years,” Trump said during his press conference.