Just days after the U.S. Supreme Court struck down President Donald Trump’s sweeping use of emergency powers to impose global tariffs, a fresh legal and political storm is brewing over his rapid move to implement new tariffs under a different statute. The controversy centers on Trump’s invocation of Section 122 of the Trade Act of 1974 to levy a 15% tariff on all imports, a maneuver that many legal experts and economists say could end up back in court—and possibly meet the same fate as his previous tariff plan.
The Supreme Court’s landmark decision on February 20, 2026, was unambiguous. In a 6-3 ruling, the justices invalidated Trump’s reciprocal tariffs, which had been imposed under the International Emergency Economic Powers Act (IEEPA) of 1977. Chief Justice John Roberts, writing for the majority, stressed that “Congress alone holds the authority to impose taxes and tariffs.” The ruling underscored a core constitutional principle: tariffs are, in effect, taxes, and only Congress can levy them. This decision was hailed by critics as a necessary check on executive overreach, but it also left Trump scrambling for a new legal foundation to continue his aggressive trade policy.
Undeterred, Trump wasted no time. On the very day of the Supreme Court decision, he announced a new 10% tariff on global imports under Section 122 of the Trade Act of 1974. The following day, he raised the rate to the maximum allowed by the statute—15%—and declared the measure effective immediately. In a Truth Social post, Trump blasted the Supreme Court’s ruling as a “ridiculous, poorly written, and extraordinarily anti-American decision,” vowing to find new, legally permissible ways to pursue his trade agenda and keep “Making America Great Again.”
Section 122 of the Trade Act is a rarely used provision dating back to the 1970s, originally designed to address emergency balance-of-payments problems. It allows the president to impose tariffs of up to 15% for a period of 150 days if there is a “fundamental balance-of-payments issue.” Trump is the first president to use Section 122 for such sweeping tariffs, and his administration claims that the U.S.’s large and persistent trade deficit, along with risks of dollar depreciation, constitute just such an emergency.
But legal experts are far from convinced. Neal Katyal, the former Acting U.S. Solicitor General and lead counsel in the Supreme Court challenge against Trump’s earlier tariffs, has been especially outspoken. On February 22, Katyal stated, “If he (Trump) wants sweeping tariffs, he should do the American thing and go to Congress. If his tariffs are such a good idea, he should have no problem persuading Congress. That’s what our Constitution requires.” According to Katyal, the administration’s reliance on Section 122 is legally shaky at best. He noted that in a previous court case, the Justice Department itself argued that Section 122 does not apply to trade deficit concerns, which are “conceptually distinct from balance-of-payments deficits.” Katyal quoted the DOJ’s earlier submission: “Nor does [Section 122] have any obvious application here, where the concerns the President identified in declaring an emergency arise from trade deficits, which are conceptually distinct from balance-of-payments deficits.”
This distinction isn’t just legal nitpicking. As Katyal and others have pointed out, the statute was never intended to be a tool for broad global trade pressure or negotiation leverage. It was crafted during the dollar-exchange crisis of the 1970s for true emergencies involving the nation’s balance of payments. Using it now, critics argue, is a clear attempt to sidestep the Supreme Court’s ruling and may not stand up to judicial scrutiny.
Economist Gita Gopinath, former First Deputy Managing Director of the International Monetary Fund, lent her support to Katyal’s analysis. Sharing his critique on social media, she remarked that Katyal was “speaking International Economics 101,” highlighting the basic economic distinction between trade deficits and balance-of-payments deficits—a distinction that the administration’s legal arguments appear to ignore.
The Wall Street Journal reported that Trump’s team is framing the tariffs as a temporary import surcharge, allowed for up to 150 days, while the administration determines new, legally permissible tariffs in the coming months. A White House official confirmed that countries like India would be subject to the new tariffs until another legal authority is invoked, and urged trade partners to abide by existing deals. This comes amid ongoing U.S.-India trade developments: on February 7, the two countries announced a framework for an Interim Agreement on reciprocal and mutually beneficial trade. Under the agreement, India will eliminate or reduce tariffs on various U.S. industrial goods, food, and agricultural products, while the U.S. applies an 18% tariff on certain Indian-origin goods under an existing executive order. Both sides have provisions for removing tariffs upon successful conclusion of negotiations.
India’s Commerce and Industry Ministry has responded cautiously to the Supreme Court judgment and Trump’s subsequent tariff announcements, stating that it is studying the implications for their potential impact. With the new U.S. tariffs in place, Indian exporters and American importers alike are bracing for further uncertainty in the bilateral trade relationship.
Legal experts anticipate that lawsuits challenging the Section 122 tariffs are only a matter of time. Many of the same plaintiffs who successfully challenged the IEEPA tariffs are expected to pursue legal action again. As Reuters pointed out, while Section 122 does permit tariffs up to 15%, “it too could face legal scrutiny.” The core constitutional question—whether the president can unilaterally impose tariffs that function as taxes without congressional approval—remains unresolved. The Supreme Court’s recent decision has already set a precedent for curbing presidential tariff powers, and Section 122 could become the next judicial battleground.
For now, businesses and importers are left navigating a shifting legal landscape. The new 15% tariffs are applied uniformly to all imports, without industry- or country-specific reviews, unlike other trade measures such as Section 232 (national security) or Section 301 (unfair trade practices). This blanket approach has reignited debates about the appropriate balance of power between the executive and legislative branches, as well as the economic wisdom of unilateral tariffs in a globalized world.
As the dust settles from the Supreme Court’s ruling, the fate of Trump’s latest tariffs will likely hinge on how the courts interpret the intent and limits of Section 122. In the meantime, the episode serves as a vivid reminder of the complex interplay between law, economics, and politics at the heart of American trade policy.