By: Ariana Rokneddini

The President of the United States has long-since been delegated by Congress broad powers to impose tariffs and trade sanctions per Section 232 of the Trade Expansion Act (1962) and Section 301 of the Trade Act (1974).[1] Section 232 allows the President to set restrictions on the imports of goods if U.S. national security is being threatened, while Section 301 allows the United States Trade Representative, with the President’s authority, to investigate and levy tariffs to ensure U.S. rights regarding foreign trade practices.[2] While the Constitution gives Congress the explicit authority to impose tariffs and regulate foreign commerce, Courts reviewing presidential action under Section 232 and Section 301 have generally accorded substantial deference.[3] They have interpreted the statutory language broadly while sustaining expansive executive authority.[4] These were the legislative authorities that President Trump implemented during his first term when he imposed a series of tariffs on imports from China in 2018.[5] Those tariffs affected more than $380 billion worth of trade – effectively marking the beginning of Trump’s trade war.[6] Fast-forwarding to Trump’s second term, a tariff rate of 18.6% – the highest since 1933 – is likely to be faced by consumers due to Trump’s enactment of another national security-based law– the International Emergency Economic Powers Act (IEEPA).[7]

IEEPA, enacted by Congress in 1977, grants the President the broad authority to regulate economic transactions in the event of a national emergency.[8] However, President Trump’s invocation of IEEPA in the past year to impose tariffs is unprecedented.[9] In the last two months, a steep 50% tariff rate was imposed on India, a 35% tariff rate was imposed on Canada, a 40% tariff rate was imposed on Laos, and a minimum of a 10% tariff rate was imposed on all other countries.[10] Predictably, these countries imposed retaliations on U.S. exports, further fueling the existing trade wars between the U.S. and the world, and subsequently, intensifying the uncertainty around the U.S.’s international relations.[11]

Courts have previously reviewed whether separation of powers has been violated because of Congress delegating too much power regarding the President’s use of IEEPA in navigating foreign trade affairs.[12] Congress has provided that the President’s authority under IEEPA is limited by requiring that emergency powers may only be exercised in response to an “unusual and extraordinary threat” tied to a declared national emergency, and by narrowly defining the scope of delegated powers.[13] However, Courts like the Second Circuit have historically concluded that the realm of foreign affairs is one in which the President has greater discretion.[14] The novel issue, however, is that Courts have not yet addressed a President’s use of IEEPA to impose a sweeping domino effect of tariffs until recently.[15]

On August 29, 2025, the U.S. Court of Appeals for the Federal Circuit, in a 7–4 ruling, struck down many of the global tariffs President Trump had placed under IEEPA, which imposed levies of 10% to 50% on goods from U.S. trading partners.[16] Following this decision, the Trump administration asked the U.S. Supreme Court to review the ruling and address the scope of the President’s authority to impose tariffs under IEEPA.[17] A more pressing issue, however, is that as trade tensions between the U.S. and other countries rise, negative reactions towards the U.S. have grown, further straining international relations with the rest of the world.[18]

In an era of increasing globalization, these modern tariffs are threatening an international chain reaction that history has seen before. In 1930, the U.S. enacted the Smoot-Hawley Tariff Act, which imposed tariff rates of up to 45% on various countries.[19] This act incited global retaliation, resulting in a 60% drop in world trade and a trade war by 1933.[20] A return to these retaliatory measures has already begun with the similar broad U.S. tariffs that are being imposed.[21] The danger is a feedback loop: each retaliatory measure makes future cooperation harder, pushing nations toward protectionism. If this trend continues, the long-term cost won’t just be higher prices at home, but a weakened role for the U.S. in setting the rules of global trade – a modern echo of the Smoot-Hawley era

Ultimately, this controversy is likely to generate heightened uncertainty in U.S. foreign trade relations. The unprecedented use of IEEPA to impose sweeping tariffs, followed by their partial invalidation by the courts, leaves trading partners unsure of whether U.S. commitments can be relied upon or whether future administrations will wield emergency powers unpredictably. The broader implication is that foreign governments may increasingly perceive U.S. trade policy as volatile, making cooperative economic negotiations more difficult and prolonging the ripple effects of these disputes on global commerce.

Looking ahead, it is unclear how the Supreme Court will rule in addressing the executive’s discretion in imposing tariffs using IEEPA. There is a looming question of scope in this case, and while the Court has shown great deference to the executive in navigating foreign affairs, it could decide that some of the tariffs imposed extend beyond the authority of IEEPA. One thing is certain, however – the revolving cycle of Trump’s continuous tariffs is raising challenges against U.S. trade policies as the enactment of IEEPA was not intended to give the President unlimited authority to impose tariffs.[22]

 

[1] Charlotte McLaughry, Trade Wars: How Tariffs Became the Trump Card, Fordham Int’l L. J. (Feb. 28, 2025), https://www.fordhamilj.org/iljonline/k73pddfmra65ecd-fxc5k-bdazp-npp5j-l8be9-kbndm-tlwlf-2pnhz-hpjc3-2bxkm-9egc4-4acpz-ez2w6-yakx3-nxyka-wrd4f [https://perma.cc/W3S7-67BD].

[2] Trade Expansion Act of 1962, Pub. L. No. 87-794, § 232, 76 Stat. 872, 877 (1962) (codified as amended at 19 U.S.C. § 1862); Trade Act of 1974, Pub. L. No. 93-618, § 301, 88 Stat. 1978, 2041-2043 (1974) (codified as amended at 19 U.S.C. §§ 2411–2420).

[3] See Christopher T. Zirpoli, Cong. Rsch. Serv., R48435, Congressional and Presidential Authority to Impose Import Tariffs (2025).

[4] Id.

[5] Erica York & Alex Durante, Trump Tariffs: Tracking the Economic Impact of the Trump Trade War, Tax Found. (Sept. 12, 2025), https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/#main [https://perma.cc/Y8PU-5CC7].

[6] Id.

[7] The Budget Lab at Yale, State of U.S. Tariffs: August 7, 2025, Yale Univ. (Aug. 7, 2025), https://budgetlab.yale.edu/research/state-us-tariffs-august-7-2025 [https://perma.cc/93XE-5DPJ].

[8] Madeleine Ngo, What to Know About the Emergency Law Trump Used to Impose Tariffs, N.Y. Times (Aug. 29, 2025), https://www.nytimes.com/2025/02/02/us/politics/trump-tariffs-ieepa.html [on file with the American University Business Law Review].

[9] Gail Cole, The Difference Between IEEPA Tariffs, Section 232 Tariffs, and Section 301 Tariffs, Avalara (Sept. 10, 2025, 12:30 PM), https://www.avalara.com/blog/en/north-america/2025/08/the-difference-between-ieepa-tariffs-section-232-tariffs-and-section-301-tariffs.html [https://perma.cc/WG2X-4KYK].

[10] Mike Wendling, Shock and Relief – Businesses Worldwide React to New Trump Tariffs, BBC (Aug. 1, 2025), https://www.bbc.com/news/articles/cly7244rx3ko [https://perma.cc/2MN9-7BQ5]; The Budget Lab at Yale, supra note 7.

[11] York & Durante, supra note 5.

[12] Christopher A. Casey & Jennifer K. Elsea, Cong. Rsch. Serv., R45618, The International Emergency Economic Powers Act: Origins, Evolution, and Use (2024).

[13] Id.

[14] Id.

[15] Christopher T. Zirpoli, Cong. Rsch. Serv., LSB11281, Legal Authority for the President to Impose Tariffs Under the International Emergency Economic Powers Act (IEEPA) (2025) (explaining that the government has not applied the use of IEEPA as a tariff authority since the law’s enactment in 1977, until 2025).

[16] Amy Howe, Trump Administration Brings Tariffs Case to Supreme Court, SCOTUSblog (Sept. 4, 2025), https://www.scotusblog.com/2025/09/trump-administration-urges-supreme-court-to-take-up-tariffs-case/ [https://perma.cc/3ZFP-S66U].

[17] Id.

[18] See Rafael Nam, As Trump’s Tariffs Take Shape, is America Really Winning?, NPR (Aug. 4, 2025, 6:35 PM), https://www.npr.org/2025/08/04/nx-s1-5487592/global-economy-tariffs-inflation-prices [https://perma.cc/EN9B-S7ZQ].

[19] Guido Baltussen et al., Tariffs and Returns: Lessons from 150 Years of Market History, CFA Inst. (May 21, 2025), https://blogs.cfainstitute.org/investor/2025/05/21/tariffs-and-returns-lessons-from-150-years-of-market-history/ [https://perma.cc/6BBG-876W].

[20] Id.

[21] Natalie Baker & Ryan Mulholland, How Retaliation Against the Trump Administration’s Trade War Makes Each State Vulnerable, Ctr. for Am. Progress (Apr. 23, 2025), https://www.americanprogress.org/article/how-retaliation-against-the-trump-administrations-trade-war-makes-each-state-vulnerable/ [on file with the American University Business Law Review] (discussing how the U.S.’s top trading partners, such as China, Canada and the European Union, have announced retaliatory measures against Trump’s tariffs which can lead to negative impacts on the global economy).

[22] See Brad W. Setser, How Court Rulings Could Affect Trump’s Aggressive Trade Policies, Council on Foreign Rels. (Aug. 31, 2025, 12:33 PM), https://www.cfr.org/expert-brief/how-court-rulings-could-affect-trumps-aggressive-trade-policies [https://perma.cc/8TQM-9L2J].