Tariffs remain, but the battlefield has changed

When the US Supreme Court ruled on Feb 20 that the International Emergency Economic Powers Act does not authorize a president to impose sweeping tariffs, many observers read it as a "stop" sign for a trade war. However, the judgment does not put an end to tariff politics; it just shifts the battlefield from emergency decrees to statutes, courts and complex procedure.

The court ruling was straightforward: IEEPA contains no clear authorization for "tariffs or duties", and a president cannot build an open-ended tariff regime from general words such as "regulate" and "importation". The 6-3 ruling was cross-ideological (the majority included three liberals and three conservatives), showing that limits on executive tariff power can command support beyond predictable alignments.

The decision's most consequential global effect is procedural. It moves the struggle from "fast executive shock" to "statutory trench warfare": a patchwork of narrower legal tools, slower processes, and litigation that becomes part of trade policy for years to come.

IEEPA offered what tariff strategists value most: speed, breadth and discretion. It allowed the White House to declare an "emergency" and then raise, lower or reshape tariffs quickly. The court has now removed that shortcut by insisting that tariff authority must be clearly delegated by Congress.

The US administration's immediate pivot shows the new terrain. It invoked Section 122 of the Trade Act of 1974 to impose a temporary import surcharge; announced at 10 percent and then quickly raised to the statute's 15 percent ceiling. Section 122 is still unilateral, but it is not IEEPA: it is capped and time limited (no more than 150 days unless Congress extends it).

Those limits change the diplomacy. A capped, temporary surcharge is a blunter instrument than bespoke "reciprocal" tariffs: broad pressure, less tailoring. And because it expires without congressional action, it pushes the tariff agenda back into domestic politics — lawmakers become the hinge between a temporary maneuver and a durable regime.

The US Supreme Court did not resolve the practical question of refunds; what should happen to tariff revenue already collected under an invalid legal basis. That means downstream remedies and sequencing will be fought out in specialized trade litigation.

Even the court's procedural disposition points in that direction. It vacated one case for lack of jurisdiction while affirming another arising from the Court of International Trade, underscoring that CIT is the natural forum for many tariff disputes. Challenges will not be exceptional; they will be structural.

For global exporters, legal volatility itself becomes a trade barrier. If tariffs can be imposed quickly, struck down, and reimposed under different triggers and limits, companies face higher costs in contracting, pricing and compliance. The "tariff risk" matters as much as the rate: its survival, duration, and speed of change.

For China, the ruling narrows one pathway (IEEPA) but leaves others intact; and may encourage their use. The Office of the US Trade Representative stresses that the US Supreme Court addressed only the "Reciprocal and Fentanyl Tariffs", while "extensive tariffs" under other authorities will remain in place.

That statement maps the next legal battlegrounds. Washington says it will impose the Section 122 surcharge, launch new investigations under Section 301, continue ongoing Section 301 investigations "including those involving Brazil and China", and maintain existing Section 232 tariffs. The Office of the US Trade Representative notes that existing Section 301 tariffs on China range from 7.5 percent to 100 percent depending on the product.

In other words, the US Supreme Court ruling does not eliminate tariff pressure; it reallocates it across statutes that are more procedural, more litigable, and more sector specific.

This reallocation also changes bargaining dynamics. IEEPA enabled rapid, country specific pressure. A capped Section 122 surcharge and investigation-based Section 301 actions are slower and easier to contest, which can encourage trading partners to "wait out" temporary measures while still preparing for targeted sectoral actions that may last longer.

For Asian economies embedded in US-linked supply chains, the practical response is to treat US tariff policy as "lawfare" as much as statecraft: managing exemptions, monitoring investigations, tracking litigation, and writing contracts that allocate tariff risk.

Section 122 also has a strong international law resonance. Because it is justified in balance-of-payments terms, it echoes WTO rules that treat such import restrictions as temporary relief, subject to transparency, progressive relaxation, and consultations in the WTO's balance of payments committee with IMF participation. The revival of balance of payments language makes those disciplines newly relevant.

The bottom line is important. The Supreme Court did not end tariff conflict. It made tariff policy more legalistic and more exposed to court calendars. For China and other trading partners, the smart response starts with a basic question: what law does Washington cite, what limits come with it, and how easy is it to contest in court?

The author is a professor of law & RGC senior research fellow at City University of Hong Kong and president of the Asia-Pacific FDI Network.

The views don't necessarily reflect those of China Daily.

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