The U.S. Supreme Court just kneecapped one of the most aggressive trade levers Washington has pulled in decades, and energy markets are now left sorting out what sticks and what doesn’t.
In a 6–3 ruling, the Court struck down most of President Trump’s across-the-board tariffs imposed under the International Emergency Economic Powers Act. The majority opinion was this: the Constitution does not hand taxing authority to the executive branch. That wipes out the 10%-plus blanket tariffs rolled out since April 2025 and undercuts the emergency rationale used to target Mexico, Canada, China, and others.
What survives? Sector-specific tariffs on steel, aluminum, autos and auto parts remain intact under separate trade statutes. But the broad IEEPA hammer — the one used to pressure trading partners into concessions — is effectively off the table.
Over the past year, the administration leaned hard on tariffs as negotiating leverage. Trade agreements with India, Indonesia, Taiwan, and Vietnam included commitments to increase U.S. energy imports, including LNG, crude, LPG, refined products. Those deals were wrapped up quickly, some would say urgently, as the legal challenge wound its way up to the Supreme Court.
One could argue the gamble worked for the most part. Energy exports became a bargaining chip, and in several cases, buyers stepped up. U.S. LNG volumes and crude flows to Asia were already strong; tariff pressure added urgency.
But the fiscal backdrop has now shifted. Since the start of Trump’s second term, Washington collected nearly $284 billion in customs duties. This is roughly $204 billion more than a year earlier. The effective tariff rate climbed to about 13%, up from 2.6%.
Now the White House is expected to pivot to Section 122 of the 1974 Trade Act to impose a potential 10% tariff tied to balance-of-payments concerns. That authority caps tariffs at 15% and limits them to 150 days without congressional approval. In other words, it will give the administration a shorter leash and less firepower.
Energy exporters are unlikely to panic. The steel and aluminum tariffs remain. Long-term LNG contracts remain. But the era of sweeping emergency tariffs as a standing energy-trade cudgel just ended.
By Julianne Geiger for Oilprice.com
