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Section 122 tariffs expire on July 24. Congress won’t extend them. The Section 301 investigations that were supposed to replace them haven’t even started. And a Middle East war is eating the bandwidth of an administration that just lost its most powerful trade weapon.
On February 20, the United States Supreme Court ruled 6-3 that the International Emergency Economic Powers Act does not authorise the president to impose tariffs. The decision, delivered by Chief Justice John Roberts in Learning Resources Inc. v. Trump, struck down the legal framework behind roughly three-quarters of the new tariffs erected since early 2025. The Tax Foundation estimates more than $160 billion was collected under IEEPA before the ruling — revenue the government may now be required to return. Over 2,000 companies have already filed suit in the Court of International Trade seeking refunds, Bloomberg reported by month’s end.
That much has been covered. What hasn’t been adequately examined is what comes after. The administration’s fallback — a flat 15% global tariff under Section 122 of the Trade Act of 1974 — is a temporary measure by design. It expires in 150 days, on July 24, unless Congress votes to extend it. And Congress, as things stand, will not.
A Statute Nobody Has Ever Used
Section 122 was written in the aftermath of the Nixon shock. It gives the president authority to impose a temporary import surcharge of up to 15% if the United States faces what the statute defines as “fundamental international payments problems.” It has never been invoked — not during the Plaza Accord, not during the Asian financial crisis, not after 2008. Trump became the first president to use it, signing a proclamation on February 20 imposing a 10% surcharge effective February 24, then raising it to the statutory ceiling of 15% the following day, as Bloomberg and the White House confirmed.
The legal footing is, to put it diplomatically, contested. The Peterson Institute noted that Section 122 was designed to address balance-of-payments deficits — a concept the administration’s own lawyers argued in the IEEPA case is “conceptually distinct” from the trade deficits Trump has characterised as an emergency. Consider the numbers. The US ran a $901.5 billion trade deficit in 2025, per Commerce Department data published February 19. But the country has no balance-of-payments crisis in any conventional sense: foreign capital continues to flow into dollar-denominated assets at scale. The dollar depreciated roughly 9% in effective terms since Trump took office, but that is not unusual for a floating-rate era, and it does not remotely resemble the kind of imminent collapse the statute contemplates.
Fresh legal challenges are expected. But they may prove unnecessary. The 150-day clock will likely run out before the judiciary weighs in.
Congress Won’t Extend. The Votes Aren’t There.
Both chambers of Congress passed resolutions disapproving of the IEEPA tariffs before the Supreme Court ruling. An ABC News/Washington Post/Ipsos poll published in late February found that 64% of Americans disapprove of Trump’s handling of tariffs. The midterm elections are in November. Asking members of the House and Senate to vote, on the record, to extend a tariff regime the Supreme Court has just declared illegal under a different statute — five months before voters go to the polls — is not a request many incumbents will welcome.
The Brookings Institution made this point explicitly: the 150-day requirement forces elected officials to take responsibility for tax policy in a way the IEEPA framework never did. That is, in constitutional terms, exactly how the system is supposed to work. Article I, Section 8 of the Constitution grants Congress — not the executive — the power to lay and collect duties. The Roberts majority leaned heavily on that principle, with three justices invoking the major questions doctrine to reinforce the point.
Treasury Secretary Scott Bessent told reporters that the new tariffs would result in “virtually unchanged tariff revenue in 2026.” That claim rests on an assumption: that Congress will cooperate, or that alternative authorities will be activated in time. Neither is certain.
Section 301 Is the Backup. It Takes Months.
The administration’s medium-term strategy is clear enough. USTR Ambassador Jamieson Greer announced on February 20 that the office would initiate “several” new investigations under Section 301 of the Trade Act of 1974, covering most major trading partners across sectors including industrial overcapacity, pharmaceutical pricing, digital services taxes, and seafood trade. Two investigations — into Brazilian trade practices and China’s Phase One compliance — are already underway, per USTR’s own filings.
The problem is time. Section 301 requires a formal investigation process: petitions, consultations with the foreign government, public hearings, a determination by the Section 301 Committee, and then — if action is warranted — a tariff order. During Trump’s first term, the Section 301 investigation into Chinese technology practices took roughly a year from initiation to tariff implementation. Even on an “accelerated timeframe,” as Greer described it, completing investigations into a dozen or more countries before July 24 would be without precedent.
Section 232 of the Trade Expansion Act, which allows tariffs on national security grounds, remains intact. The existing steel and aluminium levies, expanded over the past year to cover copper, automobiles, auto parts, lumber, semiconductors, and heavy trucks, are not affected by the ruling. But Section 232 requires Commerce Department investigations and applies to specific products, not across-the-board rates. It cannot replicate the revenue base of the IEEPA regime.
The Trade Deals Are Unravelling
The timing could hardly be worse. The IEEPA tariffs served a dual purpose: they raised revenue and they functioned as leverage in bilateral negotiations. The deals signed over the past year — with the EU, Japan, the UK, India, China, and others — were negotiated under the threat of tariff rates that no longer have legal backing. Several partners have noticed.
The European Parliament postponed its ratification vote on the US-EU framework deal for a second time, with trade committee chair Bernd Lange telling CNBC the bloc was prepared to retaliate if necessary. Japan’s trade minister Ryosei Akazawa pressed Washington to ensure that Tokyo, which committed $550 billion in investment under its deal, would not face the same 15% Section 122 rate as countries that agreed to nothing at all. India paused its interim trade deal days before a scheduled Washington visit. As Natixis chief Asia-Pacific economist Alicia García-Herrero observed, partners who struck deals are effectively paying for the same treatment as everyone else.
The administration insists the deals will hold. Greer told Fox Business that the US intends to maintain China tariffs at 35% to 50% using alternative methods. But the mechanism for doing so — particularly after Section 122 lapses — remains opaque. A gap of even a few weeks between the expiry of Section 122 and the completion of Section 301 proceedings would create a window in which the US has limited unilateral tariff authority beyond the existing Section 232 and Section 301 measures already in force.
The Iran War Makes Everything Harder
All of this is playing out against the backdrop of a military conflict that is consuming the administration’s attention and complicating its economic narrative. Oil prices have risen above $83 a barrel. Goldman Sachs projects US CPI could reach 2.7% by May in its baseline scenario, or 3% under a sustained oil shock, per CNBC reporting. The Yale Budget Lab estimates the current tariff regime will cost the average household around $600 if Section 122 expires on schedule, or roughly $1,000 if it is somehow made permanent.
The irony is thick. The administration invoked Section 122 on the basis of a balance-of-payments emergency. But the single largest near-term threat to America’s external accounts is not Chinese imports or European subsidies. It is an energy shock originating in the Persian Gulf — one that will widen the trade deficit, not narrow it, as oil import costs surge. Commerce Department data published before the conflict showed the goods deficit alone hit a record $1.24 trillion in 2025, up 2% from 2024, despite a full year of aggressive tariffs.
The constitutional picture, at least, is clearer than it has been in decades. The Supreme Court stated unambiguously that the power to impose tariffs belongs to Congress. Six justices — three conservative, three liberal — agreed on that principle. What remains deeply unclear is whether Washington’s political system, consumed by a war abroad and a midterm campaign at home, is capable of using that power coherently. The 150-day clock started on February 24. It does not pause for geopolitics. And when it runs out, the United States will face something it has not confronted since before the Trump era: a trade policy that requires legislation.
