What has the Supreme Court ruled?
The US President had invoked the 1977 International Emergency Economic Powers Act (IEEPA), a law which authorises presidents to regulate international commerce after declaring a national emergency, to pursue his tariffs policy. Though he began invoking the IEEPA in February 2025 to tariff China, Mexico and Canada, he used IEEPA to justify the implementation of up to 50% tariffs on almost every country in the world.
Now, the US Supreme Court has ruled that the IEEPA ‘does not authorise the President to impose tariffs’. This ruling affects all tariffs implemented during last year’s ‘Liberation Day’, but does not impact sector-specific steel, aluminium, lumber and automotive tariffs as these were implemented under Section 232 of the Trade Expansion Act of 1962. Most notably, the US Supreme Court recognised that Congress, not the president, has the power to impose tariffs.
How has President Trump reacted?
President Trump announced he intended to replace the IEEPA tariffs with a new global tariff of 15% using Section 122 of the 1974 Trade Act. Under the Trade Act, the President can impose tariffs of up to 15% for up to 150 days on imports from all countries – after this, he will need approval from Congress. However, no official documentation was issued after his initial announcement of 10% and the US administration is still working on how to implement the 15%. This means that, for the time being, tariffs are being held at 10% - equivalent to the UK’s existing rate agreed under the UK-US Economic Prosperity Deal.
How could the UK be affected?
The UK Government is working closely with the US administration to understanding how the UK will be affected, though a spokesperson for Downing Street confirmed they expect the UK’s ‘privileged trading position with the US’ to continue. That being said, much remains unclear about how the ruling and President Trump’s subsequent invocation of Section 122 of the 1974 Trade Act will interact with the UK-US Economic Prosperity Deal.
Looking ahead, what legal instruments can President Trump invoke to impose tariffs?
Section 232 of the 1962 Trade Expansion Act
These are sectoral tariffs pursued in response to national security concerns. The Secretary of Commerce will investigate whether certain imports threaten to ‘impair’ US national security and, following confirmation of a threat, the President can act within 90 days. There are no fixed tariff rates or fixed duration for these tariffs, and the national security framing is particularly broad. Section 232 tariffs are currently imposed on sectors such as steel and aluminium, car and car parts, trucks and heavy vehicles, and timber and lumber.
Section 301 of the 1974 Trade Act
These are tariffs pursued in response to practices of foreign governments that are deemed unfair or discriminatory towards the US. The US Trade Representative (USTR) may investigate acts, policies or practices of foreign governments, following which the President may use ‘all appropriate action’ to obtain compliance, including tariffs or other trade restrictions. Like Section 232, Section 301 does not have a fixed rate on duty percentage or duration.
In October 2025, the USTR initiated Section 301 investigations into China’s alleged failure to comply with the US-China Phase One Trade Agreement agreed in 2020. A Section 301 investigation was also launched last year into Brazil’s policies and practices relating to digital trade and illegal deforestation.
Section 122 of the 1974 Trade Act
The President can impose temporary tariffs or quotas in cases of ‘fundamental international payments problems’ or a serious US balance of payments deficit. The law allows for tariffs up to 15% or quotas on imports from one or more countries for a maximum of 150 days in order to give the President a relatively quickly tool to address economic emergencies. This is the statute under which the President is pursuing new tariffs.
Section 338 of the 1930 Tariff Act
Used in cases of unequal impositions or discrimination against US commerce, Section 338 allows the President to impose ‘new or additional rates of duty’ on goods from or imported via a foreign country which would impose unequal impositions or discrimination against US commerce or benefit other countries at the expense of US trade. In cases of persistent discrimination, the statute allows for exclusion of imports from a foreign country. Tariffs enacted under this law have a cap of 50% and no fixed duration.
What is the CBI’s reaction?
" Whilst business had given a cautious welcome to today’s US Supreme Court Ruling to halt tariffs brought under the International Emergency Economic Powers Act (IEEPA) they will be concerned by the President’s announcement to press ahead with alternative tariff measures which would have equivalent or greater effect to the IEEPA.
"Business will be looking to the UK Government to ensure that preferential treatment for UK firms remains, continue their efforts to reduce tariffs on steel and aluminium and provide clarity and support for business as the US Administration takes its next steps."
What is the CBI doing now?
The CBI has been in touch with the government to understand what the announcements will mean for UK-US relations. We continue to regularly share insights with government on how CBI members are being impacted by the President’s tariff policies and are keen to hear directly on how your business is being affected. Please do get in touch with Erin Henwood to discuss your views.
As the sole voice of UK business in BusinessEurope, we are working with our European sister federations to assess the situation and – in particular – to understand how any changes to existing tariffs may impact Northern Ireland.