INVESTIGATION: Trump, Tariffs and the Courts — The White House Seeks an Elusive Legal Basis

INVESTIGATION: Trump, Tariffs and the Courts — The White House Seeks an Elusive Legal Basis

Introduction: When the judges say no, twice

The Supreme Court, then the Trade Court

In less than four months, two top-tier American courts invalidated the legal foundations of Donald Trump's trade tariffs. On February 20, 2026, the U.S. Supreme Court issued its decision in Learning Resources, Inc. v. Trump, invalidating the customs duties imposed under the International Emergency Economic Powers Act (IEEPA). On May 7, 2026, a divided panel of the U.S. Court of International Trade (CIT) invalidated the 10% surcharge imposed under Section 122 of the Trade Act of 1974, in the cases Oregon v. United States and Burlap and Barrel, Inc. v. United States.

These two decisions, separated by less than a quarter, constitute a legal earthquake without precedent in the history of modern American commercial policy. No administration had ever seen its two principal tariff legal bases invalidated successively by the courts in such a short period. And yet, on June 26, 2026, Trump threatened to impose a 100% tariff on exports from any European country applying a digital tax — without naming the legal basis that would allow him to do so. This investigation attempts to answer a simple question: on what legal basis can the White House still levy tariffs?

What this sequence reveals

First act: the Supreme Court and the fall of IEEPA

IEEPA: a tool designed for crises, used for trade

The International Emergency Economic Powers Act, adopted in 1977, gives the American president extraordinary powers to regulate economic transactions with foreign countries in cases of national emergency. Trump had invoked it beginning in 2025 to justify a series of "reciprocal" customs duties, arguing that American trade deficits constituted a national security threat. These tariffs had hit dozens of countries, including European Union members, at rates ranging from 10 to over 25%.

The Supreme Court's decision in Learning Resources, Inc. v. Trump, issued on February 20, 2026, held that the use of IEEPA to levy broad general commercial customs duties exceeded the powers conferred by law on the president. The Court determined that IEEPA was a crisis tool designed for precise emergency responses, not a mechanism for structural commercial policy. This decision created a reimbursement mechanism for affected importers and suspended all IEEPA tariffs, at least for companies that had contested the impositions.

The immediate consequences of the decision

Second act: Section 122 and the government's countermove

A 50-year-old statutory provision pulled from obscurity

Immediately after the Supreme Court's IEEPA decision, the Trump administration pivoted to Section 122 of the Trade Act of 1974. This provision, originally designed to allow temporary adjustments to the balance of payments, authorizes the president to impose a global surcharge of up to 15% on all imports for a period of 150 days, renewable if Congress approves an extension. The administration imposed a 10% surcharge under this provision, seeking to maintain universal trade pressure while the IEEPA appeals ran their course.

On May 7, 2026, the CIT invalidated this surcharge in a 2-1 divided panel decision. The majority judges held that the conditions required by Section 122 — specifically the need to demonstrate a serious balance-of-payments problem — were not met in the current context. The dissent argued that the court should defer more to the executive in trade matters. The immediate effect was limited: the judgment applied only to the three plaintiff importers in the case. All other importers in the United States continue to pay the 10% surcharge during the appeal process.

The limited effect of the CIT ruling

The appeal before the Federal Circuit

The Federal Circuit as last line of defense

The American government immediately appealed the CIT decision of May 7 to the U.S. Court of Appeals for the Federal Circuit. This court, specialized in international trade and intellectual property among other areas, will have to decide whether Section 122 can be used as a broad commercial policy instrument, or whether its application is strictly limited to situations of acute balance-of-payments crisis in the technical sense.

The outcome of this appeal is uncertain. Commercial lawyers are divided. Some believe that the traditional deference granted to the executive in trade matters could lead the Federal Circuit to reverse the CIT decision. Others point out that the post-IEEPA judicial dynamic has altered the landscape: American courts now appear less willing to accept expansive interpretations of presidential tariff powers. In the meantime, importers who have contested the surcharge are closely monitoring the proceedings. The others are absorbing the cost.

What the Federal Circuit will have to decide

The 100% threat: what legal basis?

Trump threatens again — without naming the law

In his declaration of June 26, 2026, Trump threatened to impose a tariff of 100% on exports from any European country applying a digital services tax. This threat contains a key phrase: the tariff would "supersede trade agreements" concluded with those countries. But Trump did not mention the legal basis that would allow him to impose such a tariff.

Under the current state of American law after the IEEPA and Section 122 decisions, the remaining options are limited. The administration can invoke Section 232 of the Trade Expansion Act of 1962 for national security reasons — but it is already being used for steel and aluminum, and its extension to digital services would be legally contestable. It can invoke Section 301 of the Trade Act of 1974 for unfair trade practices — a longer process requiring a documented investigation. It can attempt new legislative formulations — but Congress is unpredictable. What the administration no longer has is a fast and universal legal basis.

The remaining legal options

What jurisprudence says: are the courts changing doctrine?

Chevron deference and its decline

To understand why American courts are invalidating Trump's tariffs, one must understand the evolution of judicial deference doctrine toward the executive. For decades, the so-called Chevron doctrine directed federal courts to defer to executive agencies' interpretations when the law was ambiguous. This doctrine had allowed many regulatory and commercial policies to survive legal challenges.

The Supreme Court has however limited and nuanced Chevron deference in several recent decisions. In the tariff context, the IEEPA decision of February 2026 signals that the Court is now prepared to closely examine whether legislative texts actually authorize what the executive claims to be doing — even in traditionally sensitive domains like commercial policy. This doctrinal shift is fundamental: it means that future administration attempts to find alternative legal bases will be subjected to the same level of scrutiny.

What the decline of Chevron deference actually changes

Section 122: a tool designed for what, exactly?

The forgotten history of a Trade Act of 1974 provision

Section 122 was adopted in the context of the Bretton Woods crisis and the end of dollar-gold convertibility decided by Nixon in 1971. Its drafters aimed to give the executive a temporary tool to respond to serious balance-of-payments imbalances — a specific economic reality of the 1970s marked by oil shocks and monetary instability. The text explicitly provides that the surcharge cannot exceed 150 days without a Congressional extension, and must be justified by a documented balance-of-payments problem.

The use of this section by Trump in 2026 to maintain a general tariff policy, in a context where the American trade deficit is old and structural but does not constitute an acute balance-of-payments crisis in the technical sense, was therefore fundamentally questionable in terms of the letter of the law. The CIT said so clearly in its May 7 decision. The question the Federal Circuit will have to decide is whether the current geopolitical context can be assimilated to the type of economic emergency that Section 122 was designed for in 1974.

The limited effect of the CIT ruling

The impact on American importers

American businesses as collateral victims

While the administration and the courts battle over the constitutionality of tariffs, American importers continue to absorb the costs. According to the Skadden analysis published in May 2026, companies that paid the 10% Section 122 surcharge before the CIT ruling of May 7 are theoretically entitled to reimbursements — but the process is complex, lengthy, and limited to plaintiffs who have taken legal action. The vast majority of importers who have been paying this surcharge for months have no certainty about their right to recovery.

The most affected sectors are those whose supply chains are highly integrated with foreign partners: consumer electronics, industrial equipment, textiles, processed food. These companies have absorbed the costs or passed them on to American consumers in the form of inflation on specific product categories. This diffuse cost, politically barely visible, is the daily economic reality of Trump's tariff regime — whatever its legal basis.

Who pays the cost of uncertainty?

The remaining options: Section 232, Section 301, or legislative necessity?

An impoverished legal arsenal

If IEEPA is invalid and Section 122 is contested, the administration still has other tools — but all present significant constraints. Section 232 allows tariffs for national security reasons and is already being used for steel (25%) and aluminum (25%). Extending it to other sectors would require new formal investigations and would likely face new legal challenges, in a climate where courts are now examining these claims with unprecedented rigor.

Section 301 allows retaliatory tariffs against trade practices judged unfair, after investigation by the U.S. Trade Representative (USTR). This route is legally more solid — Section 301 tariffs on Chinese imports have survived courts since 2018. But it requires an investigation process that can take several months and must target specific practices, not generalized to all imports. As for the legislative option — having Congress vote a new law to give Trump the tariff powers the courts are taking away — it depends on a legislative majority that the White House does not fully control.

Section 232 and Section 301: strengths and limits

The constitutional precedent: who decides trade policy in the United States?

A question as old as the Constitution

At its core, what the IEEPA and Section 122 cases raise is a fundamental constitutional question: is trade policy, in the United States, a prerogative of Congress or the executive? Article I of the American Constitution explicitly attributes to Congress the power to regulate commerce with foreign nations and to impose customs duties. But for decades, Congress has delegated to the executive, through laws like IEEPA or the Trade Act of 1974, rapid-action powers in trade matters.

What the courts seem to be saying in 2026 is that this delegation has textual limits — that Congress cannot give the executive more than it intended to give in the text of the law, and that courts are competent to verify that these limits are respected. This is a significant institutional rebalancing. If the Federal Circuit confirms the CIT decision on Section 122, and if the Supreme Court does not revisit the IEEPA case, the administration will need to obtain from Congress a new legal basis for any broad tariff policy — an uncertain and potentially lengthy political process.

What the Constitution actually says

What this means for America's trading partners

Europe, Canada, Mexico: a structural uncertainty

For the trading partners of the United States — and in particular for the European Union, which has just approved the Turnberry Agreement — this American legal instability creates a fundamental uncertainty. A trade agreement signed with an administration whose tariff instruments have been invalidated by the courts is an agreement whose implementation depends not only on political good will, but also on the solidity of the alternative legal bases that administration will manage to construct.

Canada and Mexico, bound to the United States by the CUSMA agreement, are also following this judicial sequence with attention. If the Trump administration attempts to impose additional tariffs on CUSMA partners by invoking alternative legal bases, the question of compatibility with the agreement's dispute settlement mechanisms will arise immediately. American jurisprudence in 2026 will have effects beyond American borders.

What this uncertainty changes for Europe

The stake beyond the courts: the democratic legitimacy of tariff policy

Who actually mandates American trade policy?

The judicial decisions on IEEPA and Section 122 raise, implicitly, a question of democratic legitimacy. The tariffs imposed by Trump have had massive economic effects: on consumer prices, on supply chains, on foreign exporting companies, on American jobs in import-dependent sectors. These decisions, which deeply engage the American and global economy, were made by executive decree, without a Congressional vote.

Courts that invalidate these tariffs are not saying that the United States cannot have a protectionist trade policy. They are saying that if the American people, through their representatives in Congress, want to give the executive the powers to conduct such a policy, they must do so explicitly and legally. This democratic requirement, as uncomfortable as it is for an impatient White House, is a foundation of the rule of law.

What the courts have preserved

The June 26 threat: political signal or opening of a third path?

What is Trump actually preparing?

Trump's declaration of June 26, 2026 on digital taxes can be read in several ways. First reading: it is preventive bluffing before the 4th of July, designed to deter European member states from proceeding with their national digital taxes without having to act. Second reading: it is the signal of an ongoing Section 301 investigation against digital-tax countries — a procedure that would allow targeting those countries specifically with retaliatory tariffs. Third reading: the administration is testing the idea of a new executive basis — perhaps a combination of different statutory provisions — to get around judicial decisions.

None of these three readings is entirely satisfactory. The first underestimates Trump's capacity to follow through. The second corresponds to no Section 301 investigation officially opened against European digital taxes as of June 26, 2026. The third depends on a legal creativity that American courts have shown they are no longer willing to accept without scrutiny. The truth may be simpler: Trump threatens because threatening is his method, regardless of the solidity of the available legal arsenal.

The three possible readings

Conclusion: A tariff empire on feet of legal clay

What the investigation establishes

This investigation establishes three central facts. First, the two principal legal bases for Trump's tariff policy — IEEPA and Section 122 — were invalidated by American courts in the six months preceding June 2026. Second, the government is appealing and maintaining the tariff regime in practice through the procedural limitations of the rulings, but this precarious equilibrium depends on the outcome of the appeals before the Federal Circuit and, potentially, a new Supreme Court passage. Third, the 100% tariff threat of June 26, 2026 has no explicitly named legal basis and fits in a context where the administration's fast legal arsenal is being judicially dismantled.

What remains to be established

What this investigation cannot yet establish with certainty: the outcome of the appeals before the Federal Circuit, the probability that Congress will vote a new legal basis for tariffs, and the European response to the digital tax threats. What I can say with certainty is that we are witnessing one of the most important institutional conflicts in contemporary American commercial history: an arm-wrestling match between an executive that wants to govern by decree and courts that tell it the Constitution and the laws have precise words. The rule of law holds — for now. But every day the administration improvises a new threat without a named legal basis is a day that erodes confidence in the predictability of the American system.

Afterword: what business lawyers are advising right now

Navigating uncertainty as strategy

In the weeks following the CIT decision of May 7, 2026, firms like Skadden published client alerts recommending that importers carefully document all surcharges paid under Section 122, file protective claims with customs authorities, and monitor the outcome of appeals before the Federal Circuit. These recommendations illustrate the daily reality of legal uncertainty: companies do not know whether they have been paying legally or illegally for months. They do not know whether they will be reimbursed. They do not know whether the 100% threat hanging over them since June 26 will materialize.

This uncertainty has a name in economics: regulatory risk. And regulatory risk kills investment, delays decisions, and burdens operational costs. This is not theory — it is what thousands of American and international companies are living through, companies that had hoped the Turnberry Agreement would finally bring some stability. Instead, they got 48 hours of peace before the next threat.

An unequal match but not yet lost

The legal history of Trump's tariff policy in 2025-2026 is the story of an arm-wrestling match between the will of an executive to govern by proclamation and the resistance of a judiciary that reminds it that laws have a text. The Supreme Court said no to IEEPA on February 20. The CIT said no to Section 122 on May 7. The administration is still looking for its third path. The courts are waiting.

What this says about the world we live in

What is playing out in American courts in 2026 is not just a question of trade law. It is a question about the nature of power in liberal democracies: is it limited by texts, procedures, and judges? Or can it, by invoking urgency or national interest, claim what it wants without having to answer to the law? The judicial decisions of 2026 say, for now, that power is limited. This is not a final victory — it is a battle. And it continues.

By Maxime Marquette, columnist

Columnist's transparency note

What I am and what this investigation is not

I am a columnist-analyst, not a lawyer. This investigation is based on publicly verifiable sources — court decisions, legal firm analyses, press reporting. It does not constitute legal advice and does not claim to predict the outcome of ongoing judicial proceedings. The cases Learning Resources, Inc. v. Trump (Supreme Court, February 20, 2026) and Oregon v. United States / Burlap and Barrel, Inc. v. United States (CIT, May 7, 2026) are documented facts. Their interpretations are mine, assumed.

What I don't know

I do not know what legal basis Trump is seeking to use for the 100% threat of June 26. I do not know whether the Federal Circuit will confirm or overturn the CIT decision on Section 122. I do not know whether Congress will vote a new tariff legal basis. What I know is that this uncertainty is real, documented, and that businesses — American and European alike — are experiencing it every day while the proceedings run their course.

Sources

Primary sources

Skadden — US Trade Court Strikes Down Section 122 Tariffs, but Ruling's Fate Uncertain — May 20, 2026

Washington Times — Trump threatens 100% tariff on European nations over digital services tax — June 26, 2026

New York Times — Trump Threatens to Impose 100% Tariff on European Countries Over Tech Taxes — June 26, 2026

Bloomberg — Trump Vows 100% Tariff on Countries Over Digital Services Taxes — June 26, 2026

The Guardian — European Parliament finally approves Trump tariff deal — June 16, 2026

Secondary sources

PBS NewsHour — Trump threatens 100% tax on European imports if countries impose tax on digital services — June 26, 2026

EFE — EU approves final trade pact with US — June 25, 2026

Euronews — Trade MEPs back EU-US deal despite watered-down safeguards — June 2, 2026

Washington Examiner — Trump threatens 100% tariff on European countries over digital services tax — June 26, 2026

Bloomberg — EU Gives US Trade Deal Final Approval Ahead of Trump Deadline — June 25, 2026