WASHINGTON—On February 20, the US Supreme Court ruled that the US president cannot apply tariffs under the International Emergency Economic Powers Act (IEEPA). In effect, this ruling also poured cold water on the Trump administration’s approach of using country-specific tariffs as leverage to make quick trade deals.
Up until the Supreme Court’s decision, US President Donald Trump and his US trade representative (USTR), Ambassador Jamieson Greer, were able to put together a remarkable number of trade deals with a wide range of partners in record time. This effort ran from the first announcement of a deal with the United Kingdom in May 2025 to the latest ones with India and Bangladesh in early February of this year. According to the president’s 2026 Trade Policy Agenda, issued by the USTR on March 2, the administration concluded eight agreements on reciprocal trade (ARTs) and ten framework deals that will lead to ARTs or equivalent agreements.
Clearly, the IEEPA tariffs were effective leverage as the USTR pushed others to negotiate and conclude groundbreaking trade deals. Many previous administrations had sought trade agreements to address specific trade barriers, particularly high tariffs and persistent nontariff barriers (NTBs), which can restrict trade to a trickle in key sectors. For example, the USTR worked for over a decade in the World Trade Organization (WTO) beginning in the early 2000s to bring major developing countries to the table to negotiate reductions in their high tariffs, but to no avail. This failure was a central reason why the WTO has lost so much relevance and its rules on most-favored (non-discriminatory) treatment have come under attack in recent years. In previous years, the USTR released its National Trade Estimate report cataloguing foreign trade barriers, and each year it generally cut and pasted descriptions of longstanding trade restrictions and updates to add new ones.
What was lacking in these efforts to address foreign trade barriers was effective leverage. And what made the Trump administration’s record of recent achievements in such a short time possible was a new source of leverage—sudden, unpredictable, massive US tariffs under IEEPA with no regard for WTO rules on tariff bindings and MFN treatment. Now, however, that leverage seems to have disappeared in a puff of smoke only days after the Supreme Court ruling. It has been replaced by the thin gruel of a temporary tariff at a maximum level of 15 percent under Section 122 of the 1974 Trade Act for balance of payments crises. But even this tariff will expire after 150 days without congressional approval, and it, too, may rest on tenuous legal ground.
There are plenty of reasons for US trading partners to be cautious in moving forward.
So, does this mean that Trump’s leverage disappeared with the removal of the IEEPA tariffs? Does it mean that trading partners will walk away from the trade deals already negotiated or drag their feet on concluding the ones that are still pending?
Some countries might indeed reassess the current situation and conduct senior-level discussions on how they should position themselves going forward. After all, their trade negotiations with the United States on the ARTs and framework deals occurred under duress, in the face of tariff increases that had not been seen since the 1930s. With the creation of the multilateral trading system after World War II and then decades of progressive reductions in tariffs in the United States and other major developed countries, they had a high degree of certainty that tariffs would not go up again across the board, especially in the United States. That all changed dramatically with the Trump administration and the announcement of a new system of reciprocal tariffs on April 2, 2025. And now that the Trump administration has been substantially disarmed, some may wonder if tariffs have peaked and could start to drift down.
Since the lifting of the IEEPA tariffs on February 24, Trump and Greer have expressed confidence that the ART program will continue and that trading partners will stick with the deals already negotiated. In fact, there have been few signs of cold feet in this regard. While India cancelled a visit of its chief negotiator scheduled for the week after the Supreme Court decision to finalize legal text for an “interim agreement,” this was understandable. Of course, negotiators would need to double-check their mandate following such a sudden development. The European Parliament on February 23 decided to postpone its consideration of the US-European Union (EU) framework deal, reportedly out of concerns that the Trump administration may raise the Section 122 tariffs to the maximum allowable 15 percent, which could be inconsistent with US commitments under the deal. Otherwise, trading partners do not appear to be running for the exit.
There are plenty of reasons for US trading partners to be cautious in moving forward. It is clear, for instance, that the Trump administration and the USTR are proceeding with plan B, namely the initiation of trade barrier investigations under Section 301 of the 1974 Trade Act. In the first days of the Trump administration, plan B could have been plan A if the president had not been so focused on imposing tariffs immediately and without the constraints of statutory requirements that might slow the execution of his grand vision of tariffs as a solution to many problems. A more predictable, defensible, and legally credible approach could have been to initiate multiple Section 301 investigations on a country-by-country and sector-by-sector basis. It is a tried-and-true tool that has been around even before the WTO was established, and it has proven durable over the decades since. It has the advantage of providing impressive USTR authority to impose tariffs and other trade restrictions to address a full range of foreign trade barriers. The rub is that Section 301 investigations require a well-established process of consultations, opportunity for comment, hearings, timetables, and published findings that the president likely felt he could dispense with by using IEEPA authority, which, in fact, did not actually exist.
And while Section 301 investigations generally require a year or more to complete, there is a provision for expedited action. This now seems to be the USTR’s plan over the next few months before the expiration of the Section 122 tariffs. What the United States has now, then, is a new kind of leverage that can be deployed to maintain the ARTs negotiated to date, conclude the pending ones, and continue negotiations on new frameworks and eventual ARTs for virtually every other trading partner. It seems quite likely that early results in these Section 301 cases will match the reciprocal tariffs already agreed with multiple countries. These cases also provide discretion to threaten increased reciprocal tariffs as enforcement leverage if a trading partner hesitates to deliver on its end of the bargain.
However, it will be critical for the Trump administration to use this tool wisely. Even with the increased predictability offered by Section 301 procedural guarantees, random threats of additional tariffs or even total bans on trade will undermine the credibility of this plan B. For example, there remain many cases still pending under Section 232 of the 1962 Trade Act relating to national security, including semiconductors and derivative products, medical devices, robotics, and polysilicon. This authority rests with the Department of Commerce, and there have been hints that more cases may be in the works in additional sectors.