Former House Speaker Paul Ryan shared concerns this week about the future of President Trump’s emergency tariff strategy, warning that the Supreme Court may soon limit the authority underpinning it a development that could shake financial markets and complicate the administration’s trade approach.
Ryan noted that the legal foundation Trump used to justify the tariffs the 1977 International Emergency Economic Powers Act (IEEPA) is now under judicial scrutiny. Trump’s use of the law marks the first time a president has invoked it to impose tariffs, and a federal appeals court is currently reviewing its applicability. Ryan said it’s likely the Supreme Court will reject IEEPA as a valid legal basis for setting these duties, given that the law doesn’t explicitly reference tariffs.
Should the court take that step, Trump would have to fall back on alternative trade statutes, like Section 232, 201, or 301 all of which, according to Ryan, are more complex and restrictive.
He warned that financial markets, which had previously reacted strongly to the introduction of tariffs before stabilizing, might be underestimating how unpredictable the situation remains. Investors may be assuming the current framework is permanent, but Ryan cast doubt on that assumption, suggesting it could be disrupted at any time.
He also criticized the administration’s approach to setting tariffs, arguing that it lacked a consistent policy rationale. For example, Ryan pointed to the 50 percent tariff placed on Brazilian goods despite the fact that the U.S. has a trade surplus with Brazil. He said such decisions seemed to be driven more by personal impulses than data or long-term strategy.
Ryan’s concerns were echoed in recent oral arguments before the Federal Circuit Court of Appeals, where judges questioned whether IEEPA was ever intended to give presidents such sweeping tariff authority. One judge expressed doubt that Congress meant to allow a president to override a carefully constructed tariff schedule with minimal oversight.
Meanwhile, the impact of these trade policies is starting to show in economic indicators. Inflation appears to be creeping upward, with the personal consumption expenditures index rising to a 2.6 percent annual rate in July and the consumer price index reaching 2.7 percent. Businesses, faced with higher import costs, may be passing those increases on to consumers.
The labor market also appears to be slowing. After revisions, the U.S. has added just 106,000 jobs since May, with only 73,000 new positions reported in July. While it’s not yet clear what’s driving the slowdown, some economists suspect that tariffs and general business uncertainty may be weighing on hiring.
Another factor could be the administration’s strict immigration policies. If companies are struggling to fill open roles due to a shrinking labor pool, the employment slowdown may not reflect weakening demand but instead a tighter labor supply.
Economist Claudia Sahm recently explained that the cause of the slowdown will eventually become clearer through data on wage growth and unemployment. If wages stagnate and unemployment rises, it’s likely the result of weakened business conditions. If the opposite occurs, it may point to a reduced labor supply brought on by immigration restrictions.
Either way, Ryan’s comments suggest growing unease about the economic and legal sustainability of Trump’s tariff strategy, especially as the courts prepare to weigh in.