Balance of Power Podcast

Weekly Washington Policy Pulse: SCOTUS Tariffs Ruling, SOTU Preview

Date: February 23, 2026
Host: Joe Mathieu (Bloomberg)
Guests: Nathan Dean (Bloomberg Intelligence Senior Policy Analyst); Holly (Bloomberg Intelligence Senior Litigation Analyst)

Episode Overview

This episode dives deep into the recent U.S. Supreme Court ruling restricting presidential tariff authority and previews major themes expected at President Trump’s upcoming State of the Union (SOTU) address. The conversation focuses on the fallout from the Court’s decision, President Trump’s evolving tariff strategy, potential legal and congressional hurdles, and what Washington watchers should look for during the SOTU, particularly regarding trade, healthcare, and affordability.

Key Discussion Points & Insights

1. Supreme Court Ruling: Presidential Tariff Authority (00:39–04:30)

• Ruling Summary: The Supreme Court decided the president may not use the International Emergency Economic Powers Act (IEEPA) to impose tariffs, determining such tariffs amount to taxation—a power reserved for Congress.
  • Quote: “The Supreme Court found that the tariffs were a tax and that taxing power is firmly vested in Congress.” — Holly (02:13)
• Implications: Any tariffs imposed using IEEPA, such as those on India and Brazil, are likely to be struck down.

2. Trump’s New Tariff Approach: Section 122 & Executive Orders (02:13–04:44)

• Section 122 Use: Trump turned to Section 122 of the Trade Expansion Act to impose a 10%, then 15% tariff for up to 150 days if there’s a “serious balance of payments deficit.”
  • Courts unlikely to override the president’s judgment about what constitutes such a deficit.
  • Some legal shakiness due to shifting justifications (10% to 15%).
• Congressional Role: Section 122 only grants authority for 150 days without congressional approval, but Congress is unlikely to intervene.
  • “I don’t anticipate we’ll ever see Congress have to opine on this for two reasons...” — Nathan Dean (04:44)

3. Shifting Tariff Tools: Section 301 and Section 232 (05:57–08:24)

• Section 301: Allows for tariffs against countries violating trade agreements or discriminating against U.S. commerce. Used extensively for China since 2018, requires investigation by U.S. Trade Representative.
• Section 232: Enables tariffs for national security threats (sector-specific, e.g., steel, autos), requires an investigation by the Department of Commerce.
• Europe’s “Playing Games”: Trump’s remarks about nations “playing games” likely targeted the EU, referencing stalled negotiations over the ratification of a trade deal.
  • “The question is whether...the President has legal authority under section 301 to say they’re not honoring trade agreements. And it’s not clear...” — Holly (07:34)

4. Winners and Losers: Effective Tariff Rates (08:24–10:30)

• Bloomberg’s analysis (via Nicole Gorton Carratelli) shows country-level differences—some see tariff rate increases, others a decrease (notably China).
  • Timestamps for Chart Reference: [08:24]
• Ongoing debate around the true nationwide effect of Trump’s Section 122 plan as it “falls short of replacing” the previous IEEPA tariff regime.

5. Legal Challenges, Refunding, and Implementation (10:30–16:27)

• Legal Delays: Courts have previously stayed rulings on tariff legality until all appeals are exhausted. No expectation of immediate rescission or refund on struck tariffs.
• Section 301 Duration: No time limit—tariffs can last indefinitely if adequate investigations find wrongdoing.
• Investigation Requirements: Each country/tariff needs its own investigation period; cannot simply “blanket” new tariffs onto additional countries without due process.
• Refund Chaos: The Supreme Court sidestepped refund logistics. Likely will require importers to follow agency procedures and possibly litigation if denied.
  • Quote: “Some lawyers are recommending to their clients, you know, do both because there are these deadlines and they don’t want the deadlines to expire.” — Holly (15:36)
  • “If you’re a trade lawyer...you’re probably going to have really good job security for the next three years.” — Nathan Dean (16:07)

6. State of the Union Preview: Three Key Themes (16:27–21:19)

a. Geopolitical Tensions

• Spotlight on Iran, possible limited strike, and continued negotiations.
• Domestic experts defer to Bloomberg’s international team for more analysis.

b. Healthcare Reform

• Expected mention of changes to the Affordable Care Act and the possibility of using budget reconciliation (single fiscal-year, filibuster-proof, but tough with slim House margins).
  • “If President Trump talks about things...that require legislative change...we have a 20% chance of that happening this year. The votes just aren’t there.” — Nathan Dean (18:37)

c. Affordability Agenda

• Trump likely to discuss credit card rate caps, banning corporate single-family home purchases, housing reform.
• Since many proposals require legislation or lengthy regulation, most are unlikely to materialize quickly.
  • Bulldog pulpit strategy: “If it requires an act of legislation, it’s probably not likely to happen. And if it requires the executive order, then it’s either going to be tested in the courts or he’s going to try and do it via the bully pulpit.”
• Banning corporate home purchases could gain traction amid bipartisan interest.

Notable Quotes & Memorable Moments

• On the Supreme Court’s Tariff Ruling:
  • “The Supreme Court found that the tariffs were a tax and that taxing power is firmly vested in Congress...So what that means is that any tariffs he’s imposed using IPA are probably going to be struck.” — Holly (02:13)
• On Section 301 Trade Wars:
  • “He’s used this before in 2018 against China on $300 billion worth of goods from China when he said they were violating trade agreements with respect to intellectual property.” — Holly (05:57)
• On Congressional Inaction:
  • “I don’t anticipate we’ll ever see Congress have to opine on this for two reasons...” — Nathan Dean (04:44)
• On Legal Maneuvering:
  • “Some lawyers are recommending to their clients...apply to [the] customs agency and file a lawsuit. And some...recommended they do that before the Supreme Court even rules because some of the deadlines are passing.” — Holly (15:36)
  • “If you’re a trade lawyer...you’re probably going to have really good job security for the next three years.” — Nathan Dean (16:07)
• On SOTU Legislative Odds:
  • “If President Trump talks about things...that require legislative change...we have a 20% chance of that happening this year.” — Nathan Dean (18:37)
• On the Bully Pulpit:
  • “President Trump trying to use the bully pulpit. Think of things like, you know, pressuring these banks to issue these credit cards...or just over the weekend, he was pressuring Netflix over, you know, Susan Rice, one of their board members.” — Nathan Dean (20:10)

Key Timestamps

• Main Policy Pulse Introduction: 00:39–01:01
• Supreme Court Tariff Authority Ruling: 01:01–04:30
• Section 122 and Executive Orders: 02:13–04:44
• Section 301/232 & Trump’s Next Moves: 04:44–08:24
• Tariff Rate Winners/Losses Analysis: 08:24–10:30
• Refunds, Legal Challenges: 10:30–16:27
• SOTU Preview: 16:27–21:19

Tone & Language

The conversation is analytical, direct, and “inside baseball,” with an emphasis on legal nuance and procedural hurdles. There’s urgency but also context—questions are clearly market- and policy-focused, with a touch of dry Washington humor (“the betting markets...is he going to shake John Roberts hand or not?”).

Summary Takeaways

• The Supreme Court limited the president’s authority to unilaterally impose tariffs under national emergency laws, requiring more explicit congressional authorization.
• Trump is shifting strategies, using alternative statutes (especially Section 122 and possibly 301/232), but each comes with its own limits, procedures, and legal risks.
• Markets and importers will face months—perhaps years—of litigation and procedural uncertainty about tariffs and refunds.
• The SOTU speech is expected to focus on foreign policy, the ACA, tariffs, and affordability—but significant legislative breakthroughs are unlikely in this divided Congress.
• Much future action is likely to stem from executive orders or attempts at influence rather than new laws.

For listeners seeking more granular analysis or direct access to charts, Nathan Dean and the Bloomberg Intelligence team offer follow-up via the Bloomberg Terminal or email.