What’s next? After Supreme Court blow, Trump likely to backfill tariffs with section authorities

The Supreme Court’s decision to strike down a major plank of President Trump’s tariff framework raises key questions for foreign trading partners and the U.S. budget.

Trump officials haven’t outlined a Plan B that backfills import levies after the justices, in a 6-3 ruling Friday, said Mr. Trump overstepped by using the International Emergency Economic Powers Act to impose nation-by-nation tariffs.

But they’ve dropped some hints, and the likeliest fallback option involves tariffs imposed under provisions known as Sections 301, 232 and 122. 

Mr. Trump used those provisions, which were insulated from the Supreme Court decision, to impose tariffs on sector-specific items such as steel and furniture. 

The president sees those provisions as cumbersome because they require lengthy investigations into national security concerns or unfair trade practices. However, he’ll have to rely on those conditions after the justices said he cannot invoke IEEPA.

Wendy Cutler, senior vice president at the Asia Society Policy Institute, said foreign trading partners who struck trade deals with Mr. Trump probably expected Mr. Trump to rely on other statutes if the court ruled against him.

“Walking away from the deals announced in recent months does not seem to be in the cards for our partners,” she said. “They know all too well that such a step could end up leaving them in a worse position with the White House.”

The ruling raises another issue: How, or if, the U.S. can backfill the revenue it can no longer collect through IEEPA tariffs.

For months, Mr. Trump hailed his tariffs as a major boon for the Treasury.

Now, the Committee for a Responsible Federal Budget projects the ruling will increase deficits by $2 trillion over the next decade. 

“Whatever one feels about the tariffs themselves, the country needs that $2 trillion in fiscal improvements, all of which should be dedicated to deficit reduction,” CRFB President Maya MacGuineas said. “Congress should work to quickly replace at least that amount — whether through a border-adjusted cash flow tax, cuts to tax breaks, or spending reductions. There is no shortage of options.”