Trump's Tariffs Are Illegal. He's Got a Plan B. - The Journal Recap
Podcast: The Journal
Published: 2026-02-20
Duration: 20 minutes
Guests: Gavin Bade
Summary
The Supreme Court has ruled that Trump's tariffs are illegal, leading to a significant setback for his economic agenda. Trump plans to implement new tariffs under different legal justifications.
What Happened
The Supreme Court ruled in a 6-3 decision that most of President Trump's tariffs, enacted under the International Emergency Economic Powers Act (IEPA), are illegal. This decision represents a major blow to Trump's economic policies, which heavily relied on tariffs as a tool for foreign policy and revenue generation.
Trump's tariffs had previously brought in approximately $250 billion in revenue but also increased costs for American businesses and consumers. The trade deficit, which Trump aimed to reduce, actually increased in 2025 due to various factors, including companies stockpiling imports before tariffs were enforced.
Despite the Supreme Court's ruling, tariffs on specific industries like steel, aluminum, and cars, enacted under Section 232, remain in place. These tariffs are governed by a more durable statute not affected by the court's decision. Trump criticized the ruling and announced a plan to impose a new 10% tariff under Section 122, which allows for short-term tariffs to address trade imbalances.
Section 122 permits tariffs up to 15% for 150 days, giving Trump a temporary measure while seeking longer-term solutions under Section 301. This section allows tariffs to counteract unfair trade practices but requires more time to implement.
The Supreme Court's ruling has led to uncertainty regarding refunds for the tariffs already collected. Companies affected by these tariffs have filed claims preemptively, seeking refunds due to material harm caused by the tariffs.
Trump's use of IEPA provided him with broad powers to rapidly impose tariffs, which has been curtailed by the court. The administration's challenge now lies in maintaining its tariff regime while navigating around the legal constraints imposed by the ruling.
Key Insights
- The Supreme Court's 6-3 decision declared most of Trump's tariffs under the International Emergency Economic Powers Act illegal, challenging a significant part of his economic strategy. This ruling raises questions about the future of tariff-based revenue strategies that once generated $250 billion.
- Despite the court's ruling, tariffs on steel, aluminum, and cars remain intact under Section 232, which is immune to this decision. Trump's reliance on this more durable statute underscores the complexity and layered nature of U.S. trade laws.
- Trump plans to counteract the Supreme Court's decision by leveraging Section 122, which allows for temporary tariffs up to 15% for 150 days. This move illustrates the president's determination to maintain control over trade policy despite legal setbacks.
- The ruling has spurred uncertainty regarding refunds for previously collected tariffs, leading affected companies to file preemptive claims. This situation highlights the potential financial and operational repercussions for businesses already impacted by these tariffs.
Key Questions Answered
What did the Supreme Court say about Trump's tariffs on The Journal podcast?
The Supreme Court ruled that Trump's tariffs enacted under the International Emergency Economic Powers Act are illegal, highlighting that the power to impose tariffs rests with Congress unless explicitly stated otherwise.
How does Trump plan to maintain tariffs after the Supreme Court ruling?
Trump plans to implement a new 10% tariff under Section 122, which allows for short-term tariffs to address trade imbalances, while pursuing longer-term measures under Section 301 for unfair trade practices.
What impact have Trump's tariffs had on the US economy according to The Journal?
Trump's tariffs have generated $250 billion in revenue but raised costs for businesses and consumers. They have not significantly incentivized manufacturing back to the US and have led to an increased trade deficit.