by Shanker Singham
The Supreme Court’s February 20, 2026 decision striking down President Trump’s broad global tariffs imposed under the International Emergency Economic Powers Act (IEEPA) actually clarifies the position and lends greater business certainty not less. Furthermore, Congress will soon likely play its traditional role, weighing in on tariff investigations and decisions. This could open the door for some bi-partisan action, including on the question of China’s unfair trade policies, using enhanced tools targeting these distortions in proposed trade agreements, and providing a robust defensive tool. Competere has prepared language suitable for legislation addressing these concerns which will be released soon.
That shift pushes U.S. tariff policy toward a narrower “landing zone”: tariffs justified as countermeasures to foreign barriers and anti‑competitive market distortions—not as a free‑floating instrument for revenue, reshoring, or general foreign‑policy signaling. The White House’s immediate response underscored the point: a temporary 15% global tariff under Section 122 of the Trade Act of 1974, coupled with new Section 301 investigations into unfair foreign trade practices. This is largely what I and my colleagues on the Growth Commission proposed in July of last year (Advancing-Reduction-of-Anti-Competitive-Market-Distortions-White-Paper.pdf).
Why the ruling strengthens the market distortion strand of the Trump Tariff Doctrine
In the Growth Commission’s landing‑zone work on the Trump Tariff Doctrine—including our paper “Trade Policy in the Trump Administration: Advancing Reduction of Anti‑Competitive Market Distortions”—we have argued that the durable (and economically constructive) strand is the focus on Anti‑Competitive Market Distortions (ACMDs). ACMDs are the modern barriers that shape trade outcomes: behind‑the‑border regulatory and institutional measures that restrict entry, weaken property rights, and skew competition. The Growth Commission defines ACMDs as foreign government actions that create artificial advantages for overseas firms, including discriminatory tariffs, regulations that exclude foreign competitors, weak protection of property and intellectual property, and state‑linked industrial favouritism.
Once IEEPA is off the table, the remaining broad tariff authorities are the ones tethered—explicitly or implicitly—to those distortions. That is why the decision increases predictability: the debate moves from “can the President do this?” to “what foreign barriers justify this?” In practice, that shifts tariff action toward the ACMD landing zone and away from other strands sometimes associated with the Trump Tariff Doctrine (tariffs for revenue, for reshoring, or as generalized geopolitical leverage), which do not map cleanly onto the predicates of the authorities the President must now rely on.
Section 122 first: a bridge tariff with hard limits
Section 122 is the fastest post‑IEEPA tool. It allows the President to impose duties up to 15% for up to 150 days on any and all countries in response to “large and serious” balance‑of‑payments problems, without a lengthy investigation. The President is using Section 122 to impose a temporary 15% global tariff for 150 days as a replacement for the invalidated IEEPA tariffs.
But Section 122 is a bridge, not a permanent platform. It is time‑limited, capped, and macro‑oriented. If the administration wants durable tariffs beyond that window, the center of gravity shifts to authorities grounded in foreign barriers—meaning investigations, records, and a defensible nexus between the foreign practice and the U.S. response.
Section 301 and Section 338: the barrier-based “landing zone” toolkit
Section 301 is the workhorse for durable action. It is built around investigations into foreign acts, policies, and practices that are “unreasonable” or “discriminatory” and that burden or restrict U.S. commerce. It takes months, but it is structurally aligned with ACMDs because it is, at bottom, about foreign-created distortions.
Section 338 is the escalation authority. It permits tariffs up to 50% against countries that discriminate against U.S. commerce. It is less tested (especially with respect to its unfair competition provisions) and could invite legal challenge, but its trigger is still squarely about discriminatory foreign barriers—not about raising revenue for its own sake. But this is why we believe it should be used.
The practical implication is straightforward: the more durable the tariff, the more it will need to be framed—and supported—as a calibrated response to identifiable ACMDs.
What trading partners now know: reduce ACMDs to get deals
This shift clarifies the pathway for U.S. trading partners. Under IEEPA, tariffs could be justified on broad “emergency” grounds, leaving governments and companies guessing about the real criteria for relief. Under a Section 122 → 301/338 sequencing, the criteria become more concrete: reduce the distortion, reduce the tariff.
That means trade negotiations increasingly become bargains about contestability: lowering discriminatory regulation, fixing licensing and conformity‑assessment barriers, strengthening property‑rights protection, and dismantling state-linked favoritism that blocks market entry. The Growth Commission’s landing zone framework is precisely about this: deals where U.S. tariffs can actually go down as ACMDs go down.
The Enhanced Trade Remedy: making ACMDs measurable and enforceable
One reason ACMDs persist is an enforcement gap. Competere will soon release its Enhanced Trade Remedy (ETR) proposal which recognizes the reality that while trade liberalization reduced formal tariffs, protection migrated into licensing regimes, technical regulations, standards, competition enforcement, state-linked financing, and selective application of domestic law—measures that can preserve facial compliance while materially restricting entry and distorting competition.
The ETR closes that gap by “tarifficating” distortion: translating the economic effects of ACMDs into a tariff-equivalent response calibrated to the distortion’s scale in a defined product market. It uses a cost‑based logic and an ACMD measurement framework organized around three pillars—property rights (PR), domestic competition (DC), and international competition (IC). Distortions are scored, aggregated into “distortion mass,” and translated into an ad valorem equivalent that can be adjusted down as verified reforms reduce the underlying distortion.
In a post‑IEEPA environment, this kind of measurement discipline is essential if the goal is durable, defensible tariff policy.
Conclusion
The Supreme Court decision did not end the tariff era. It narrowed the lanes—and those lanes lead toward ACMDs. For governments seeking stability, the message is clear: the credible pathway to trade deals and tariff relief is concrete reform that reduces market distortions. For businesses, the strategic imperative is to map ACMD exposure product‑by‑product and build the evidentiary record that will matter in Section 301‑style proceedings.
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