You’ve probably heard the claim that only Congress has the "power of the purse." It’s in every civics textbook. Article I, Section 8 of the Constitution literally says Congress has the power to "lay and collect Taxes, Duties, Imposts and Excises."
So, why is the president the one always making the headlines for slapping a 25% tax on steel or threatening a 100% tariff on cars?
Honestly, the answer is a bit of a legal loophole—or rather, a massive series of them that Congress built itself over the last 90 years. While the Constitution gives the power to the legislative branch, the lawmakers have spent decades handing over the keys to the Oval Office.
The "National Security" Joker Card
The most famous way a president acts alone is through Section 232 of the Trade Expansion Act of 1962. This is the big one. It basically says if the Secretary of Commerce decides that an import "threatens to impair the national security," the president can do almost whatever they want to "adjust" those imports.
There isn't a strict definition of what "national security" means here. In 2018, and again more recently in 2025, we saw this used for everything from aluminum to semiconductors. Just this month, in January 2026, the White House issued a new proclamation under Section 232 targeting advanced computing chips.
The logic? If we rely too much on other countries for tech or metal, we’re vulnerable.
Because the law is so vague, the president doesn't need a vote. They just need a report from their own Department of Commerce. Once that report lands on the desk, the president has 90 days to decide on a "remedy." That remedy is usually a tariff.
The IEEPA: The "Nuclear Option" of Trade
Then there’s the International Emergency Economic Powers Act (IEEPA) of 1977. This is the law currently causing a massive headache for the Supreme Court.
Originally, IEEPA was meant for freezing the assets of terrorists or sanctioning rogue regimes. But recent administrations have pushed the envelope. In April 2025, the "Liberation Day" tariffs were announced, using IEEPA to claim that the entire U.S. trade deficit was a "national emergency."
The legal fight over this is wild.
Critics say IEEPA lets the president "regulate" or "prohibit" transactions, but it never actually uses the word "tariff." As of late January 2026, everyone in the trade world is refreshing the Supreme Court's opinion page. If the justices decide the president overstepped, we could see $130 billion in refunds heading back to businesses.
Unfair Trade and the Section 301 Hammer
If a country is "cheating"—meaning they have "unjustifiable" or "discriminatory" trade practices—the president reaches for Section 301 of the Trade Act of 1974.
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This isn't about national security. It’s about revenge. Sorta.
If the U.S. Trade Representative (USTR) investigates and finds that a foreign government is hurting U.S. commerce (like stealing intellectual property), the president can green-light tariffs. This is exactly how the massive duties on Chinese electric vehicles and lithium batteries were justified.
Can Congress actually stop this?
Technically, yes. Practically? It’s hard.
Congress could pass a law tomorrow to take back this power. But the president would almost certainly veto it. To override that veto, you’d need a two-thirds majority in both the House and the Senate. In the current political climate, getting that many people to agree on anything is nearly impossible.
There are also shorter-term powers:
- Section 122 (Trade Act of 1974): Allows a 15% across-the-board tariff for 150 days to deal with a balance-of-payments deficit.
- Section 201: Used when a sudden "surge" of imports (like solar panels) hurts a specific U.S. industry.
What this means for your wallet
When the president imposes tariffs without Congress, the price doesn't stay at the border.
If you're a business owner, you've likely seen your "landed cost" skyrocket. A 2025 Goldman Sachs study found that about 40% of these tariff costs are eaten by U.S. consumers, while another 40% is absorbed by the companies themselves. Only about 20% actually hurts the foreign exporter.
Basically, a tariff is a tax you pay to your own government for the privilege of buying something from abroad.
Actionable Insights for 2026:
If you are an importer or a business owner feeling the squeeze, here is what you need to be doing right now:
- Check the "De Minimis" Status: The exemption for low-value shipments (under $800) was largely eliminated in late 2025. If you were relying on small-parcel shipping to avoid duties, that door is mostly shut.
- File "Protective Refund Claims": If you've been paying IEEPA-based tariffs, talk to a customs lawyer about filing for a refund now. If the Supreme Court rules against the administration in the coming weeks, you don't want to be at the back of the line for your money.
- Audit Your HTS Codes: The government is getting aggressive with "misclassification." If you're labeling a product as a "toy" to avoid a "furniture" tariff, you’re asking for an audit and a massive fine.
- Watch the "Inclusion" Process: Under Section 232, the administration has started letting businesses request that more derivative products be added to the tariff list to protect them from foreign competition. If your industry is struggling, you might actually want to be on the list.
The bottom line is that the president has more power over your supply chain than your local representative does. Until the courts or a super-majority in Congress changes the rules, the White House is the ultimate gatekeeper of American trade.