After the President’s defeat in the Supreme Court, more tariffs, with different legal foundations, are underway.

The U.S. can imposed tariffs for a number of legal reasons that are being explored and cited by the administration of Donald Trump. With help from a top international trade lawyer, here is a brief primer on how each of these approaches works, and what challenges they present.

IEEPA. The Supreme Court reviewed tariffs enacted under the International Emergency Economic Powers Act of 1977, or IEEPA, which the Trump administration used to justify the sweeping tariff agenda. The act had never before been used by a president to impose tariffs.

In a 6-3 decision, the Supreme Court ruled that IEEPA “does not authorize the President to impose tariffs.” There is no path to appeal the ruling.

Section 122. Under Section 122 of the Trade Act of 1974, tariffs can be levied for up to 150 days (after that, Congress has to vote to extend them) in response to “situations of fundamental international payments problems.” The statute defines such circumstances as “large and serious United States balance-of-payments deficits and/or circumstances” in which the dollar faces “imminent and significant depreciation.”

The statute has never been invoked before February 20, 2026.

The administration now claims that invoking Section 122 is necessary to address the United States’ large trade deficit, and began charging a 10% across-the-board tariff on all imports not covered by special agreements, starting February 24 (Trump has announced an increase to 15% that has not yet been imposed). 

But, says the libertarian think tank, the Cato Institute, the trade deficit is not the balance of payments, and conflating the two represents a serious distortion of the statute’s plain terms. “Like their predecessors, these new tariffs almost certainly violate the law,” said Clark Packard and Alfredo Carrillo Obregon, in a February 24 podcast.

A provision that goods subject to existing or future Section 232 tariffs are excluded from the Section 122 tariffs, provides certain tariff relief for now (although future Section 232 tariffs may be much higher). The Supreme Court’s ruling does not cover tariffs enacted under Section 232, and those on steel, aluminum, auto parts, furniture and copper, among others, remain in force for the meantime (see below).

Section 232. Section 232 tariffs are trade restrictions authorized by Section 232 of the Trade Expansion Act of 1962, allowing the U.S. president to impose tariffs or quotas on imports of specified goods (imported from anywhere) deemed to threaten national security. Based on Department of Commerce investigations, these have been used to protect domestic industries — notably steel, aluminum, automobiles, and semiconductors — by increasing costs for foreign goods.

Section 232 tariffs were rare before Trump’s first term, 2017-2021, explains international trade lawyer, Mark Herlach. “Before the first Trump administration, 232 hadn’t been used in roughly 20 years, when it had been invoked unsuccessfully in response to oil imports.” Perhaps the last successful use of 232 tariffs was under President Ronald Reagan, who used them to push back against cheap machine tools from Japan. 

In March 2018, Trump imposed Section 232 tariffs of 25% on steel and 10% on aluminum; duties that were largely continued by President Joe Biden, while shifting to tariff-rate quotas for allies, and expanded in the case of Russia, in 2023, to a 200% on aluminum. Trump immediately reinstated across-the-board steel and aluminum tariffs in his second term, adding a 25% charge on imported automobiles and parts (except where exempt under existing trade agreements such as the U.S.-Mexico-Canada, or USMCA, one), adding other items such as furniture and copper, with more likely to come.

“The first Trump administration was looking for ways to impose tariffs with a minimum of judicial oversight, and 232 was attractive because it allows investigation to begin at behest of the Department of Commerce or a private party,” says Herlach, who is global co-chair of competition, trade and foreign investment at Eversheds Sutherland. 

Now, says Herlach, Trump has called for 232 investigations into a broad range of goods, “many of which you wouldn’t think were threats to national security,” including timber, lumber, pharmaceutical and trucks. “They’ve taken advantage of the fact that the president has a great deal of discretion when it comes to deciding whether imports threaten national security,” says Herlach.

An investigation into a candidate for a 232 tariff can go for 270 days, but it does not have to last that long, and then the president has three months to decide what to do. Herlach says the second Trump administration has shortened the typical investigation process. The strategy now is to issue an official notification through the Federal Register, inviting comments, “then issue a determination without very much input from industry or anyone else. That’s a real sea-change from what happened previously,” says Herlach. “Now, it’s frankly a black box, and has taken much less time than 270 days.” 

Section 301.  This is a similar process to Section 232, but applies to countries rather than specific goods. U.S. trade penalties authorized under Section 301 of the Trade Act of 1974 allow the U.S. Trade Representative (USTR) to impose duties against foreign countries for unfair trade practices, such as intellectual property theft or forced technology transfers. After an investigation by USTR, the president has discretion to impose tariffs. 

Herlach says that section 301 has been used historically to justify tariffs for some time. “Some say it conflicts with obligations under U.S. membership of the WTO (World Trade Organization), but it’s used a lot,” says Herlach. “After the SCOTUS decision, it’s expected that this will be the primary instrument of imposing tariffs going forward, along with 122.”

Get Ready for a Flurry of Lawsuits

One way or another, there is likely to be a slew of lawsuits against any and all of the new tariffs. 

For example, the distinction made in Section 122 between the balance of payments and the trade deficit is likely to be challenged in court. Already, the Attorneys General of two dozen states have filed a lawsuit in the Court of International Trade in Manhattan, claiming the Section 122 10% tax on imports is “fatally flawed” and must be overturned.

There are also likely to be challenges to however the Trump administration handles the expiry of the Section 122 150-day limit. Will they simply impose fresh tariffs and restart the clock? “As a lawyer, I would question whether the law authorizes the approach where, after 150 days, you wait a day and start it all again,” says Herlach. “I think that would increase the chance of a legal challenge. But they might use it just to buy time to get the 301 and 232 investigations and findings.”

There’s no doubt that all this makes trade more complex. Herlach points to wording in the February 20 announcement of Section 122 tariffs that exempts items subject to Section 232 tariffs. 

“That’s a great example of how discretionary this is,” he says. “If you’re an importer, you’re in a tough spot, because you’re trying to figure out: Do I fall under this exemption or not? Do these duties stack up on top of each other, and what about refund from IEEPA? These are not questions importers have typically had to deal with in the post-War era. It’s not an easy time to be an importer!”

“It raises questions about conducting global trade,” says Herlach. “You need more people to advise companies, and in government to deal with the complexity efficiently.”

And Trump’s tariff policies herald a new era in global trade relations. “Ever since GATT (the 1947 General Agreement on Tariffs and Trade), the focus has been on reducing tariffs and facilitating trade. Now that’s all changed; that’s going to have an impact, no question. There are inefficiencies in all this,” says Herlach. “You can argue that the tariff policy will help bring industries back to the U.S. and boost domestic production. It will be interesting to see if that actually happens. Those are types of activities that don’t take place overnight.”