Trump Pivots to 1962 Trade Act After Supreme Court Strikes Down Global Tariffs

The U.S. Supreme Court’s 6-3 decision to strike down the administration’s global tariffs marks a pivotal moment in the ongoing struggle over the separation of powers and the executive branch's authority to dictate trade policy. By ruling that the International Emergency Economic Powers Act (IEEPA) does not grant the President the unilateral power to impose import taxes—a power the Constitution explicitly reserves for Congress—the Court has established a significant legal boundary. The majority opinion, notably composed of a coalition of three liberal and three conservative justices, emphasized that while the IEEPA provides broad emergency powers, it does not mention tariffs, and such revenue-generating measures require clear legislative authorization during peacetime.

President Trump’s immediate and aggressive response to the ruling signals a period of heightened regulatory volatility for global markets and legal departments. By labeling the Court a “disgrace” and accusing justices of being “swayed by foreign interests,” the President has set the stage for a direct confrontation between the executive and judicial branches. More importantly for RegTech and trade law professionals, the administration’s pivot to the Trade Expansion Act of 1962 as an alternative legal basis suggests a sophisticated, if controversial, workaround. This 1962 statute, specifically Section 232, allows the President to adjust imports if they are found to threaten national security, a justification that has historically been difficult for courts to overturn due to the deference typically shown to the executive on security matters.

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The proposed implementation of a 10% global tariff for a 150-day window creates an immediate compliance challenge for multinational corporations.

The proposed implementation of a 10% global tariff for a 150-day window creates an immediate compliance challenge for multinational corporations. This temporary measure appears designed to act as a bridge while the administration conducts new investigations into “unfair trade practices.” These investigations will likely serve as the administrative record necessary to justify more permanent tariffs under the 1962 Act or Section 301 of the Trade Act of 1974. For the legal industry, this means a surge in litigation as companies challenge the “national security” or “unfair trade” designations that the administration will use to bypass the Supreme Court’s recent restriction on IEEPA.

From a market perspective, the uncertainty generated by this “law-switching” strategy is profound. Supply chain managers and trade compliance officers must now navigate a landscape where the legal basis for duties can shift within a single news cycle. The 150-day timeline mentioned by the President suggests that the administration is racing against a clock to formalize its new trade regime before the temporary tariffs expire or face new legal challenges. Analysts suggest that the administration’s willingness to bypass a direct Supreme Court ruling by utilizing alternative statutes will likely lead to a new wave of constitutional challenges regarding the delegation of powers.

Looking forward, the focus for RegTech firms will be on real-time monitoring of these new trade investigations. The outcome of these probes will determine the long-term tariff rates for specific sectors and countries. Furthermore, the bipartisan nature of the Supreme Court’s majority suggests that the judiciary may be increasingly skeptical of broad interpretations of executive power, regardless of the political leanings of the justices. This ruling may embolden Congress to take a more active role in trade oversight, potentially leading to new legislation that clarifies or restricts the President’s ability to use the 1962 Act in the future. For now, the trade landscape remains in a state of flux, with the 10% global tariff serving as the first volley in a renewed legal and economic battle.