Introduction

        One of the defining aspects of Donald Trump’s 2024 campaign was his economic proposal to implement tariffs aiming to create new jobs, protect American businesses, and lower the substantial deficit the country faces. Now over a year into his presidency, these tariffs have been enacted quite tumultuously and have faced extensive legal challenges, many of which have been overturned. Following a significant reprimand by the Supreme Court, President Trump has rephrased new tariffs that fall under different acts, raising questions about the constitutionality of President Trump's tariffs and how they will affect everyday Americans. Furthermore, the climate of American economic policies abroad remains uncertain. This article will establish what a tariff is, its historical significance, and how the administration is using them today. Additionally, it will provide an analysis of the Supreme Court’s February ruling and the president’s retaliatory tariffs’ impact on the United States economy.

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What is a Tariff?

        The World Trade Organization (WTO) classifies a tariff as “Customs duties on merchandise imports that give a price advantage to locally-produced goods over similar goods which are imported, and they raise revenues for governments [1].” This can be simplified as an extra tax placed on imported goods that gets added onto the bill by the government, during customs and authority checks. Tariffs are paid by consumers in the form of higher prices and not by foreign exporters [2]. This practice forces exporting countries to increase their prices while domestically made goods remain at lower prices, which in turn, increases demand for local businesses [3]. However, if these domestic companies need materials from foreign sources, they have to pay that tax and then place the difference onto consumers. Tariffs are most commonly enacted to help raise government revenue, protect domestic industries, correct trade imbalances, and serve as a political tool for negotiations [4]. In terms of President Trump’s tariffs, the main goal reflects these priorities, including creating well-paying jobs and combating inflation [5]. Tariffs must maintain this fragile balance to help grow domestic companies but not significantly impact consumer practices. This is easier said than done, with much of American tariff history being a cycle of high and low rates.

 

[1] World Trade Organization, Tariffs, World Trade Organization (2019), https://www.wto.org/english/tratop_e/tariffs_e/tariffs_e.htm 

[2] Michael Townsend, What is a Tariff and How Does it Work? Charles Schwab (2025), https://www.schwab.com/learn/story/what-is-tariff

[3] Brent Radcliffe, The Basics of Tariffs and Trade Barriers, Investopedia (2025), https://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp

[4] Clarissa Hahn, Tariffs 101: What are They and How Do They Work? Oxford Economics (2025), https://www.oxfordeconomics.com/resource/tariffs-101-what-are-they-and-how-do-they-work/

[5] The White House, Fact Sheet: President Donald J. Trump Imposes a Temporary Import Duty to Address Fundamental International Payment Problems, The White House (2026), https://www.whitehouse.gov/fact-sheets/2026/02/fact-sheet-president-donald-j-trump-imposes-a-temporar y-import-duty-to-address-fundamental-international-payment-problems/ 

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Historical Context

        For much of American history, and before the federal income tax existed, tariffs have been a major source of government revenue [6]. However, those tariffs under the early constitutional system differed dramatically from their modern day counterparts. One of the first tariffs was the Tariff Act of 1789, which imposed a flat 5% rate on all imported goods and services with the profit contributing to 90% of the United States GDP at the time [7]. This notion remained commonplace up until the McKinley Tariff act of 1890, which increased the percentage rate to 50% on all products and was highly unpopular in public opinion. It was not until the passage of the 16th amendment, which gave Congress the authority to implement a federal income tax without going through state leadership [8]. The amendment completely decoupled tariffs from their function as a revenue source and fundamentally altered the political economy of trade policy to become a mechanism to protect American goods [9]. This implied that tariff rates remained high until the Smoot-Hawley Tariff Act, which is credited as one of the precursors to the Great Depression. The act placed high rates on all exporters, which resulted in a trade war with retaliatory tariffs against the United States, ultimately disrupting global trade and crippling the economy. It wasn’t until the end of World War II that the average U.S. tariff rate on dutiable goods dropped from almost 60 percent under Smoot–Hawley to less than 30 percent [10]. This legislation held relatively stable until the Trade Act of 1974. The purpose of the Act was to promote the development of an open, non-discriminatory, and fair world economic system, and to create a global system that stimulates fair and free competition between the United States and foreign nations. To do so, the ability to control trade with other nations must be delegated by Congress to the president [11]. This clause, coupled with other smaller acts, authorized the executive branch to impose tariffs under certain circumstances, which is something President Trump and past presidents have utilized.

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[6] Michael Townsend, What is a Tariff and How Does it Work? Charles Schwab (2025), https://www.schwab.com/learn/story/what-is-tariff

[7] Philip W. Magness, The Problem of the Tariff in American Economic History, 1787-1934, Cato Institute (2023), https://www.cato.org/publications/problem-tariff-american-economic-history-1787-1934?gad_source=1&g ad_campaignid=22458109145&gbraid=0AAAAADusmueUdvVwJwVhgaoaGIPyBGsi6&gclid=CjwKCAjw1 N7NBhAoEiwAcPchp4TWZXp4TcRggtD7tYiNmrQMSjj94KhnniUzoohO0Lb2ENPTUQdtMhoCzEo 

[8] Philip W. Magness, The Problem of the Tariff in American Economic History, 1787-1934, Cato Institute (2023), https://www.cato.org/publications/problem-tariff-american-economic-history-1787-1934?gad_source=1&g ad_campaignid=22458109145&gbraid=0AAAAADusmueUdvVwJwVhgaoaGIPyBGsi6&gclid=CjwKCAjw1 N7NBhAoEiwAcPchp4TWZXp4TcRggtD7tYiNmrQMSjj94KhnniUzoohO0Lb2ENPTUQdtMhoCzEo 

[9] Michael Townsend, What is a Tariff and How Does it Work? Charles Schwab (2025), https://www.schwab.com/learn/story/what-is-tariff 

[10] Philip W. Magness, The Problem of the Tariff in American Economic History, 1787-1934, Cato Institute (2023), https://www.cato.org/publications/problem-tariff-american-economic-history-1787-1934?gad_source=1&g ad_campaignid=22458109145&gbraid=0AAAAADusmueUdvVwJwVhgaoaGIPyBGsi6&gclid=CjwKCAjw1 N7NBhAoEiwAcPchp4TWZXp4TcRggtD7tYiNmrQMSjj94KhnniUzoohO0Lb2ENPTUQdtMhoCzEo 

[11] Adam Hayes, Understanding the Trade Act of 1974: Key Details and Real-World Application, Investopedia (2025), https://www.investopedia.com/terms/t/trade-act-of-1974.asp 

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The IEEPA Tariffs and the Supreme Court's Decision

        During Trump’s second term in office, he implemented various tariffs through the International Emergency Economic Powers Act (IEEPA) of 1977. This act states that in times of national emergency regarding "unusual and extraordinary" threats from foreign actors, the president can regulate international commerce and trade, although it doesn’t expressly authorize tariffs [12]. The act is foundational to the legality of wartime sanctions and disciplinary actions against threats to American democracy. In President Trump’s case, he invoked the act to create tariffs against Canada, Mexico, and the People’s Republic of China due to concerns of illegal drugs entering the United States [13]. Furthermore, these relationships with countries that are seen to be sources of illegal drug trafficking were used to justify the enactment of a new 10% tariff worldwide. The effects of these tariffs were felt through rising prices and taxes on average American households, some by at least 600 dollars [14]. These tariffs all fall under emergency declarations and have since been the subject of various legal suits brought by states, companies, and other outside parties [15]. Trump v. V.O.S. Selections, Inc. and Learning Resources, Inc. v. Trump, initially decided by appellate courts, found that the IEEPA cannot reasonably grant the executive branch the power to create tariffs [16]. Although finalized in September 2025, these decisions were not granted full legal backing because they were seen as outside of the court’s jurisdiction, pushing the cases to the Supreme Court for a decision. It wasn’t until February 20, 2026, that the court struck the tariffs down in a 6-3 split [17]. The Court cited Article 1, Section 8 of the United State’s Constitution, which grants congress exclusive authority over taxation. Furthermore, drawing on past cases like Gibbons v. Ogden, the Court states that, “Congress alone . . . [has] access to the pockets of the people [18].” However, the Court upheld the tariffs that fell under Section 232 as legal. This ruling, while important, isn’t as consequential as these tariffs were enacted well before the Trump Administration and were welcomed by both sides of the political spectrum [19]. Overall, the Supreme Court overturned the legality of tariffs under the IEEPA, effectively nullifying a major component of the President's economic policy. That being said, the President has reinstated his tariffs under new doctrine that has yet to be challenged.

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[12] Library of Congress, The International Emergency Economic Powers Act: Origins, Evolution, and Use (2026), https://www.congress.gov/crs-product/R45618.

[13] Library of Congress, Supreme Court Rules Against Tariffs Imposed Under the International Emergency Economic Powers Act (IEEPA) (2026), https://www.congress.gov/crs-product/LSB11398. 

[14] Erica York and Alex Durante, Tracking the Impact of the Trump Tariffs & Trade War, Tax Foundation (2026), https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/ 

[15] Library of Congress, Supreme Court Rules Against Tariffs Imposed Under the International Emergency Economic Powers Act (IEEPA) (2026), https://www.congress.gov/crs-product/LSB11398.

[16] Kimberly Clausing and Maurice Obstfeld, What the Supreme Court's Tariff Ruling Changes, and What it Doesn't, Peterson Institute for International Economics (2026), https://www.piie.com/blogs/realtime-economics/2026/what-supreme-courts-tariff-ruling-changes-and-what -it-doesnt

[17] Learning Resources, Inc. v. Trump, 607 U.S. ___ (2026) https://www.supremecourt.gov/opinions/25pdf/24-1287_4gcj.pdf

[18] Learning Resources, Inc. v. Trump, 607 U.S. ___ (2026) https://www.supremecourt.gov/opinions/25pdf/24-1287_4gcj.pdf

[19] Erica York and Alex Durante, Tracking the Impact of the Trump Tariffs & Trade War, Tax Foundation (2026), https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/

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President Trump’s Tariff Response and Their Effects

        Although President Trump’s initial tariffs have been ruled unlawful, he has since implemented new tariffs under Section 122 of the Trade Act of 1974. This section allows the President to impose temporary 15% tariffs for up to 150 days to address the large trade deficit and other international payment problems [20]. The president argues that the tariffs will stimulate the economy, create new jobs, and incentivize domestic production [21]. The tariffs have had a mixed response nationally and globally. Average Americans may not be significantly affected due the temporary nature of these tariffs, a trend reflected globally as well [22]. Outside of economics, these new tariffs are already subject to investigations, which raise the possibility of repeal [23]. Thus, there is still uncertainty about what will occur with the new tariffs under Section 122. President Trump’s tariffs remain a point of contention across the United States, and their long-term impact on the country’s economy has yet to be fully understood. Like most economic policies, their full effects can only be understood over time.

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[20] Library of Congress, Supreme Court Rules Against Tariffs Imposed Under the International Emergency Economic Powers Act (IEEPA) (2026), https://www.congress.gov/crs-product/LSB11398.

[21] The White House, Fact Sheet: President Donald J. Trump Imposes a Temporary Import Duty to Address Fundamental International Payment Problems, The White House (2026), https://www.whitehouse.gov/fact-sheets/2026/02/fact-sheet-president-donald-j-trump-imposes-a-temporar y-import-duty-to-address-fundamental-international-payment-problems/

[22] J.P. Morgan Chase & Co., US Tariffs: What’s the Impact on Global Trade and the Economy? J.P. Morgan Chase & Co. (2026), https://www.jpmorgan.com/insights/global-research/current-events/us-tariffs

[23] Callum Jones, Trump Claims He Has ‘Absolute Right’ to Impose New Tariffs After Supreme Court Blow, The Guardian (2026), https://www.theguardian.com/us-news/2026/mar/16/trump-tariffs-absolute-right-claim-supreme-court-ruling

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