The Supreme Court is expected to rule soon on whether the International Emergency Economic Powers Act (IEEPA)—a law that allows presidents to regulate commerce during national emergencies—gives President Trump the authority to impose tariffs.
TPC estimates that if the Court overturns the IEEPA tariffs and they are not replaced under a different authority, taxes on households will be reduced by $1.4 trillion over ten years, saving families an average of $1,200 in 2026.
The effect on household tariff burdens would be meaningful, but not nearly as large as eye-popping import tax rates like 50 percent might suggest. If IEEPA tariffs are lifted and there are no replacement tariffs, we estimate the average tariff rate would decrease by about 8 percentage points.
Why so little change? Because many imports are already exempt from IEEPA tariffs.
FIGURE 1
Earlier tariffs imposed by President Trump
For most of modern US history, tariffs were not a major revenue source. From 2010 through 2017, for example, US average effective tariff rates were below 1.6 percent. That changed beginning in 2018, when President Trump imposed tariffs on solar panels and washing machines imported from most countries, citing Section 201 of the Trade Act of 1974.
He also imposed tariffs on steel and aluminum imported from all but a few countries, citing Section 232 of the Trade Expansion Act of 1962. Later, various exceptions defanged these tariffs, including those for imports of steel and aluminum from major trading partners like Canada, Mexico, and the European Union.
The first Trump administration also imposed tariffs on many Chinese imports, citing Section 301 of the Trade Act of 1974, which allows the president to impose tariffs on countries whose policies burden or restrict US commerce. Combined, these tariffs raised the average effective tariff rate to 2.6 percent.
A novel interpretation of IEEPA
On April 2, 2025, the Trump administration cited IEEPA when imposing “reciprocal” tariffs between 10 and 50 percent on nearly every country that trades with the US, arguing that foreign trade and economic practices have created a national emergency. These reciprocal tariffs followed another set of IEEPA tariffs aimed at alleged drug smuggling from China, Mexico, and Canada.
But IEEPA does not explicitly mention tariffs, and some argue that it only gives the president the power to “regulate” or “prohibit” imports during a national emergency. If the Supreme Court rules against the Trump administration, IEEPA tariffs would no longer be applied.
IEEPA tariffs are expansive, but include many exceptions
These tariffs have two somewhat contradictory features. Despite initial delays and subsequent trade deals, they are expansive. The overall average tariff rate is now 17.0 percent according to TPC estimates, compared to the 2.6 percent average rate in the first Trump term.
But the average tariff rate pales in comparison to posted rates. Consider just the non-reciprocal IEEPA tariffs on Brazil (40 percent), Canada (35 percent), China (10 percent), India (25 percent), and Mexico (25 percent).
The gap arises because the levies’ fine print already exempts many imports. Focusing on IEEPA alone, TPC calculates those tariffs constitute only 8.1 percentage points of the average tariff rate. So a Supreme Court ruling against the administration will only bring moderate relief.
For example, imports compliant with the United States-Mexico-Canada Agreement (USMCA), a characterization which applies to a large share of goods from Canada and Mexico, are not subject to IEEPA tariffs. The “Annex II” list of exceptions also exempts a huge number of goods from tariffs. In addition, IEEPA tariffs are written to exempt goods already subject to Section 232 tariffs. TPC estimates that without these exceptions curtailing the number of imports covered by IEEPA, the current average tariff rate could have reached as high as 30.8 percent.
Section 122 could only replace IEEPA for a short time
Some analysts have argued that the executive branch can cite Section 122 of the Trade Act of 1974 to impose tariffs motivated by trade deficit concerns. But Section 122 tariffs would not be able to exceed a rate of 15 percent and duration of 150 days, unless Congress agrees to an extension.
Because of these rules, Section 122, if used to its fullest extent, would generate a temporary spike in tariffs—an average tariff rate of 24 percent until the end of May, falling to 9.0 percent after that (Figure 1).
Section 122 would raise $112 billion more in 2026 than if IEEPA was overturned without replacement. But due to its time limit, it will raise no revenue in subsequent years, which means projected revenue will still be far lower than that under current policy.
An overturn would bring some relief, but likely not for long
An average rate below 10 percent would represent a substantial reduction in tariff burden compared with a rate near 20 percent. However, even if IEEPA tariffs are overturned, tariff policy is still expected to shift rapidly, with at least seven types of goods under investigation for future Section 232 tariffs, in addition to more than a dozen Section 301 investigations. The continued uncertainty is likely hindering business investment decisions.
But one thing is certain: Regardless of the Supreme Court ruling, tariffs would remain at historically high levels.
