(A)Political - February 21st

Good morning everyone,

It has not been a slow week in D.C.! Let’s get into it!

SCOTUS ruled in a 6-3 decision that tariffs imposed by Trump were exclusively authorized to Congress as opposed to the Executive branch. A federal judge has just put plans on hold for Virginia Democrats who wish to gerrymander more seats away from Republicans. The U.S. trade deficit has swelled to over $900 billion in 2025.

• Executive Branch Tariffs Rejected By SCOTUS, Trump Lambasts Outcome

• Federal Judge Blocks Virginia Democrat Map Overhaul

• U.S. Trade Deficit Swells To $901 Billion In 2025

Executive Branch Tariffs Rejected By SCOTUS, Trump Lambasts Outcome

_{By: Atlas}

The Supreme Court on Friday ruled 6-3 that President Donald Trump's sweeping "Liberation Day" tariffs were unconstitutional, finding that he overstepped his authority by invoking the International Emergency Economic Powers Act to impose blanket import duties on foreign goods.

The decision, handed down at 10 a.m., invalidated tariffs ranging from 10% to 50% that Trump had levied on dozens of countries last year under IEEPA, a 1977 law that grants presidents broad powers to address international emergencies. Chief Justice John Roberts, writing for the majority, rejected the administration's argument that the law's references to "regulate" and "importation" gave the president unilateral authority to set tariff rates.

"The President asserts the independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time," Roberts wrote. "Those words cannot bear such weight."

Roberts was joined by Justices Amy Coney Barrett and Neil Gorsuch from the conservative wing, along with the court's three liberal justices — Elena Kagan, Sonia Sotomayor, and Ketanji Brown Jackson. The dissenters were Justices Brett Kavanaugh, Samuel Alito, and Clarence Thomas.

The IEEPA-based tariffs accounted for roughly 60% of the import duties Trump had imposed, including his reciprocal "Liberation Day" tariffs and fentanyl-related tariffs targeting China, Mexico, and Canada. Tariffs enacted under other statutes — including Section 232 levies on steel and aluminum — remain unaffected by the ruling.

Trump's reaction and a new executive order

Trump appeared at a White House press briefing hours after the decision, expressing sharp displeasure with the ruling and personally criticizing justices who voted against his position.

"I'm ashamed of certain members of the court, absolutely ashamed for not having the courage to do what's right for our country," Trump said.

He praised Kavanaugh, Alito, and Thomas for siding with him and characterized the liberal justices as automatic "no" votes — while pointedly noting their consistency, a remark widely interpreted as a swipe at Barrett and Gorsuch, both of whom he appointed to the bench.

Trump said foreign trading partners were "dancing in the streets" but added: "They won't be dancing for long."

Within hours of the ruling, Trump announced he would sign an executive order imposing a 10% global tariff under Section 122 of the Trade Act of 1974. The provision, enacted in 1975, allows the president to implement tariffs of up to 15% on countries that maintain "large and serious" trade surpluses with the United States without conducting a formal investigation first.

"Today, I will sign an order to impose a 10% global tariff under Section 122, over and above our normal tariffs already being charged," Trump told reporters. "And we're also initiating several Section 301 and other investigations to protect our country from unfair trading practices."

Section 122 has never previously been invoked by a president. The tariff can remain in effect for 150 days before requiring congressional approval for an extension — a potentially difficult proposition with midterm elections approaching.

The legal alternatives on the table

The administration signaled well before Friday that it had contingency plans. U.S. Trade Representative Jamieson Greer indicated in December that backup authorities existed, and Treasury Secretary Scott Bessent has acknowledged that alternative statutes are available, though "not as efficient, not as powerful" as IEEPA.

Beyond Section 122, the White House is turning to Section 301 of the Trade Act of 1974, which permits the president to impose tariffs and sanctions in response to unfair trade practices by foreign governments. Trump used Section 301 during his first term to levy duties against China, and previous administrations deployed it in the 1980s and 1990s against Japan.

Section 301 investigations, however, require up to nine months of review before tariffs can be implemented — a significantly longer timeline than the emergency powers Trump had relied on.

"For longer-term tariffs, Section 301 investigations remain the primary tool," ING economists wrote in a research note Friday. "Section 122 offers the fastest path forward."

Trump warned that the next round of tariffs could be higher than those struck down. "It depends, whatever we want them to be, but we want them to be fair for other countries," he said. "We have some countries that have treated us really badly for years, and it's going to be high for them."

The refund question and fiscal fallout

Kavanaugh's dissent raised what may become one of the ruling's most consequential practical problems: refunds. The federal government may now be forced to return billions of dollars to importers who paid tariffs under IEEPA, "even though some importers may have already passed on costs to consumers or others," Kavanaugh wrote, calling the likely refund process "a mess."

Economists at the Penn Wharton Budget Model estimated that more than $175 billion in tariff collections could be subject to reimbursement. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said the ruling puts the U.S. fiscal footing in a $2 trillion deeper hole over the longer term.

Trump suggested the refund issue would be litigated for years. "We'll end up being in court for the next five years," he said, indicating the matter would be resolved through future court decisions rather than administrative action.

Bessent, speaking at an Economic Club of Dallas event, sought to downplay the fiscal impact. "I can tell you that the total amount of revenue the Treasury will collect this year will be little changed," he said.

The administration's tariffs had been projected to generate approximately $3 trillion over the next decade.

Market reaction and global response

Wall Street's response was uneven. Stocks initially rose on the news but quickly pared gains as investors grappled with uncertainty over what the ruling means for trade policy going forward. The Dow Jones Industrial Average closed up 231 points, roughly 0.5%. The S&P 500 gained 0.69%, and the Nasdaq rose 0.9%. Many analysts noted that the ruling had been at least partially priced into markets, as Wall Street had widely expected the court to strike down some or all of the IEEPA tariffs.

Long-term Treasury yields rose slightly, and the dollar weakened modestly. Desmond Lachman, a senior fellow at the American Enterprise Institute, said he expected a stronger reaction given the fiscal implications. "The long-term interest rates are up slightly, but I would have thought they should be up a lot more," he said.

Globally, U.S. trading partners responded with cautious optimism. The European Union, which had been subject to a 15% reciprocal tariff under a deal reached with Washington last summer, said it was "carefully" analyzing the ruling and remained "in close contact with the U.S. administration" about next steps. An EU trade spokesman stressed that "businesses on both sides of the Atlantic depend on stability and predictability."

Canadian Trade Minister Dominic LeBlanc said the ruling validated Canada's position that the IEEPA tariffs "are unjustified" and signaled that Ottawa was preparing for further negotiations over the Section 232 tariffs on steel, aluminum, and automobiles that remain in place.

In London, a spokesperson for 10 Downing Street said British officials were "working with the U.S. to understand" how the ruling affects the United Kingdom but expected the country's "privileged trading position with the U.S. to continue."

Kavanaugh, in his dissent, noted that the ruling's practical impact on presidential tariff authority may be more limited than it appears. "The decision might not substantially constrain a President's ability to order tariffs going forward," he wrote, pointing to multiple other federal statutes that could justify "most (if not all) of the tariffs at issue in this case — albeit perhaps with a few additional procedural steps."

Trump appeared to agree with that assessment, if grudgingly. "Now, I'll go the way I could have gone originally," he said. "It's a little bit longer process. I thought I'd make things simple, but they didn't let us do that."

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