Supreme Court ruled IEEPA does not authorize tariffs

The court said tariffs are "very clearly a branch of the taxing power" and that Article I of the Constitution gives that power to Congress alone, according to the Council on Foreign Relations. Tariffs under Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974 remain in place. Customs and Border Protection said in a 22 February bulletin that it would end collection of all IEEPA tariffs "on or after 12:00 a.m. eastern time on February 24, 2026." The bulletin retracted duties issued under seven executive orders, including those covering Canada, Mexico, China, Venezuelan oil, the reciprocal tariff, Brazil and India.

The replacement surcharge

The IEEPA tariffs had been the basis for trade negotiations since Liberation Day and for the rates countries agreed to in framework and reciprocal deals. With those tariffs gone, the administration must look to other statutes to rebuild its tariff regime and give trading partners clarity about their commitments. On 20 February, Trump announced a 10% global tariff under Section 122 of the Trade Act of 1974, over and above normal tariffs. The Diplomat reported that Section 122 allows a surcharge of up to 15% for 150 days to address an international payments crisis. Trump quickly said he was raising the surcharge to 15%, but only the 10% rate has been implemented.

What it means for Japan and other partners

For Japan, South Korea and Taiwan, the new global surcharge only slightly adjusts their current circumstances, The Diplomat reported. Each had negotiated deals focused on investment to bring their Liberation Day tariffs down to 15%, and those deals also reduced some Section 232 national security tariffs. If the 15% surcharge becomes official, it would largely restore the tariff level in place for the three before the Supreme Court decision. The shift still creates differences: exports not subject to Section 232 or other tariffs returned to their most favored nation rate, or in South Korea's case its KORUS FTA rate. The Section 122 surcharge exempts goods already subject to Section 232 tariffs and certain critical minerals, but unlike the IEEPA tariffs it is added on top of each country's existing MFN rate rather than establishing a new uniform tariff.

The Council on Foreign Relations said a trade agreement no longer guarantees predictability in trade relations with the United States. Liberation Day lifted the average effective US tariff rate to 22.5%, a level not seen since 1909, the council said. Its tracker counts 17 deals concluded one year after Liberation Day, all before the Supreme Court ruled. Some countries got cold feet about finalizing a deal after the ruling: India canceled a planned trip to Washington, and implementation of the European Union's deal was fraught and delayed. The tracker says all the deals include language allowing constant modification and quick termination, and give Congress no role.

What happens next

The Section 122 surcharge can last only 150 days unless Congress reauthorizes it, making it a temporary measure. The administration also announced expedited Section 301 investigations into unfair trading practices, which it intends as a more permanent replacement for the IEEPA tariffs. Those cases are likely to draw heavily on the 2025 National Trade Estimate, which for Japan highlighted tariffs on chemicals, seafood and footwear, as well as non-tariff barriers affecting US wheat, pork, rice and ethanol. Section 301 is a more constrained tool: it requires the United States to identify specific unfair practices, demonstrate harm to US commerce, negotiate with the partner country and keep any tariffs proportional to the estimated burden on US exporters.