“Wherever law ends, tyranny begins.” — John Locke
The U.S. Supreme Court’s decision on February 20, 2026, will be remembered less as a trade ruling than as a constitutional moment. In a 6–3 judgment, the Court struck down President Donald J. Trump’s sweeping global tariffs imposed under the International Emergency Economic Powers Act (IEEPA), concluding that the statute did not authorize the president to levy what were, in substance, taxes.
The legal reasoning was straightforward. While IEEPA allows the executive to “regulate” imports during national emergencies, it does not explicitly delegate the power to impose tariffs. Under the Constitution, the authority to tax and to regulate foreign commerce rests primarily with Congress. For measures of vast economic and political consequence, the Court held, clear congressional authorization is required.
This was not a ruling about the merits of protectionism or free trade. It was a ruling about the architecture of power.
Since returning to office, Mr. Trump has elevated tariffs from a policy instrument into a governing philosophy. Trade deficits, fentanyl trafficking, national security and industrial revival were all invoked to justify rapid and expansive tariff actions. Tariffs became less a technical tool of trade policy than a lever of negotiation, pressure and political messaging.
But when emergency authority becomes a standing method of economic governance, the line between regulation and unilateral taxation begins to blur. That line, the Court has now insisted, still matters.
From Judicial Defeat to Regulatory Retaliation
Within hours of the ruling, the administration pivoted. Mr. Trump announced a new 10 percent global tariff under Section 122 of the Trade Act of 1974 — a provision that allows temporary duties, capped at 15 percent and limited to 150 days, in response to balance-of-payments concerns. Other statutory pathways — Sections 232 and 301 among them — remain available.
At the same time, the White House moved aggressively to sustain and expand the suspension of duty-free “de minimis” treatment for small imports, especially postal shipments. Millions of low-value parcels that once entered the United States with minimal friction are now being subjected to new duties and administrative controls.
The response was telling.
When courts narrowed the main channel of authority, pressure was redirected to secondary routes. If sweeping emergency tariffs were legally vulnerable, granular regulations and temporary statutes would carry the burden.
It was not a retreat. It was a rerouting.
In effect, legal frustration in Washington was being translated into regulatory pressure on global trade flows.
Leverage With a Deadline
The Section 122 tariff is economically blunt but strategically precise. It establishes a baseline cost of market access and compresses negotiations into a single metric.
Yet it is inherently temporary. With a statutory time limit of 150 days, the measure functions as leverage with an expiration date. It forces either congressional engagement, further legal maneuvering or negotiated outcomes.
Markets understand the difference between temporary pressure and durable architecture. The former generates volatility. The latter sustains confidence. The new framework delivers the first, not the second.
Predictability Under Strain
For decades, the United States anchored the global trade system not only through market size and military power, but through predictability. Rules, procedures and institutional continuity functioned as a form of geopolitical capital. Even when policies shifted, the system retained coherence.
When tariffs are perceived as instruments of executive discretion rather than products of statutory process, that predictability erodes. Trading partners and multinational firms begin to treat U.S. trade policy not as a rules-based framework, but as a variable contingent on political cycles.
Negotiations tilt toward short-term transactions rather than durable arrangements.
Order gives way, gradually, to bargaining.
The growing use of small-parcel regulation and temporary tariffs reflects this transformation. Trade governance is becoming more reactive, more tactical and more closely tied to domestic political dynamics.
The $10 Trillion Narrative
The White House has celebrated what it calls “The Trump Effect.” Officials cite $9.6 trillion in announced domestic and foreign investments since Mr. Trump’s return to office — a sweeping list of sovereign pledges, corporate expansions and industrial commitments.
The number is politically potent. But its composition invites scrutiny.
Some announcements reflect projects conceived under previous administrations. Others are conditional, long-term or partially overlapping with existing commitments. Many depend on regulatory stability and legal continuity.
More fundamentally, investment totals alone do not settle the institutional question.
If capital inflows are secured through tariff leverage or implicit pressure tied to market access, then the mechanism by which investment is obtained matters as much as the headline figure. When trade governance shifts from rule-based multilateralism to leader-centered dealmaking, the character of American economic leadership changes with it.
Investment attracted by leverage is inherently more fragile than investment secured by institutional trust.
Vulnerability Through Scale
Scale, paradoxically, heightens vulnerability.
The larger the fiscal and economic stakes — whether measured in projected tariff revenue or in trillions of dollars of investment — the more essential the legal foundation becomes. The Court’s ruling also leaves open complex questions about the disposition of already-collected tariff revenues, raising the prospect of prolonged litigation and further uncertainty.
The risk is not that tariffs will disappear. They will not.
The risk is that executive power, unmoored from clear legislative boundaries, introduces structural volatility into the system — volatility that markets eventually price in through higher risk premiums, shifting supply chains and cautious capital allocation.
When authority is continuously rerouted rather than consolidated through legislation, uncertainty becomes embedded.
From Policy to Power Struggle
From the vantage point of international order, the expansion of tariff politics does not necessarily signal the collapse of multilateralism. It signals something subtler: the gradual erosion of institutional trust.
When statutory limits are repeatedly stretched, U.S. trade policy begins to resemble a sequence of tactical maneuvers rather than a stable framework of rules.
Allies notice. So do adversaries.
Trade partners are now compelled to factor not only geopolitics and economics into their decisions, but also the evolving relationship between the White House and the judiciary.
Domestic institutional conflict is becoming a global economic variable.
A Turning Point, Not an End
The Supreme Court’s ruling marks a turning point not because it ends tariff activism, but because it reasserts the boundary between power and law. Trade policy will continue to evolve. But whether it evolves within constitutional guardrails will determine the durability of American leadership.
The administration’s rapid shift to temporary tariffs and expanded parcel controls suggests that legal limits will be met less with accommodation than with circumvention.
The world is watching how the United States responds.
It can treat the overreach as the excess of a single presidency — an episodic disruption in an otherwise stable system. Or it can use this moment to restore the constitutional discipline that has long underwritten its economic credibility.
*The author is the managing editor of AJP
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