The Government Does Not Give Up on a Bad Policy. It Finds a New Legal Justification.
On February 20, 2026, the United States Supreme Court ruled 6-3 that the International Emergency Economic Powers Act does not authorize the President to impose tariffs. The decision was clear, the majority was decisive, and the legal reasoning was straightforward: if Congress wants to give the President tariff authority, it must do so explicitly. IEEPA is a sanctions statute, not a trade statute.
One might expect this to end the tariff program that had been operating under IEEPA since 2025. It did not. Within weeks, the administration announced that the same tariffs would continue under a different legal authority: Section 122 of the Trade Act of 1974, which permits a 15 percent surcharge on imports for 150 days. The deadline for that authority is July 24, 2026 - three days from today.
Treasury Secretary Bessent has stated that when Section 122 expires, the tariffs will “snap back to exactly where they were” under alternative authorities - specifically Section 301 (unfair trade practices) and Section 232 (national security). The USTR has already launched Section 301 investigations targeting 60 economies, including Vietnam, India, and others. The hearings concluded on July 9.
The pattern could not be clearer. The policy was blocked by the courts, so the government found three new legal justifications for the same policy. This is not governance. It is a shell game.
Let us walk through what is happening, why it matters, and what question nobody in Washington is asking.
What Tariffs Actually Do
Before we examine the shell game, let us be clear about what tariffs are. A tariff is a tax on imported goods. It is paid by the importing company, which passes the cost to consumers in the form of higher prices. The foreign producer does not write a cheque to the US Treasury. American companies and American consumers do.
This is not a controversial statement among economists. A 2019 study by the Federal Reserve Bank of New York, the International Monetary Fund, and leading academic researchers found that the cost of the 2018-2019 tariffs fell almost entirely on American consumers and importers. Foreign exporters did not lower their prices to absorb the tariff. American consumers paid it.
The Peterson Institute for International Economics has repeatedly documented that tariff revenue comes out of consumer pocketbooks. The Tax Foundation estimates that the effective tariff rate on Chinese goods has reached 33.9 percent under the layered tariff structure of 2024-2026. That cost flows through to every imported product Americans buy.
This does not mean tariffs are always wrong. There are legitimate uses for tariffs: retaliating against unfair trade practices, protecting industries critical to national security, creating negotiating leverage. But every tariff carries a cost, and that cost is paid by the people who buy things. The question is always whether the benefit justifies the cost.
Which brings us to the shell game.
The Legal Whac-A-Mole
The administration’s tariff program has gone through four legal justifications in roughly eighteen months. Let us track them.
Phase one: IEEPA. The administration imposed tariffs under the International Emergency Economic Powers Act, arguing that trade deficits constitute a national emergency. The Supreme Court disagreed. The ruling was 6-3. It was not close.
Phase two: Section 122. When the Court ruled, the administration pivoted to the Trade Act of 1974, which permits temporary surcharges of up to 15 percent for 150 days. This was always a stopgap. The 150-day clock expires July 24.
Phase three: Section 301. Simultaneously, the USTR launched Section 301 investigations into 60 economies. Section 301 allows tariffs in response to unfair trade practices. The hearings concluded July 9. The administration has stated that these investigations will produce “affirmative determinations” by late July - conveniently timed to replace the expiring Section 122 authority.
Phase four: Section 232. Section 232 allows tariffs on national security grounds. The administration has indicated it will use this authority for certain products and countries, adding another layer to the tariff structure.
The shell game works like this: when one legal authority is blocked or expires, the administration moves the same tariffs under a different authority, claiming that each new authority is justified on its own terms. The tariffs themselves never change. Only the justification does.
What This Reveals
A policymaker who believes in tariffs would defend them on their merits. They would say: “We believe tariffs are good policy for the following reasons. Here is the evidence. Here are the costs we expect and the benefits we project.”
That is not what is happening. What is happening is: “The courts blocked our legal authority, so we found a new one. The new authority expires, so we have found two more. The tariffs remain the same regardless of which law we cite.”
This is the behavior of someone who knows the policy cannot survive democratic scrutiny but believes it can survive legal maneuvering. If the policy were popular, the administration would ask Congress to pass a tariff law. Congress has the constitutional authority to levy tariffs. If the tariffs were genuinely in the national interest, Congress would enact them, and the debate would be open and public.
The administration has not asked Congress to pass a tariff law. It has not introduced tariff legislation. It has not held a public debate about the costs and benefits of its tariff program. Instead, it has searched through the statute book for obscure legal authorities - some from the 1970s, some from the 1960s - that can be stretched to cover the existing tariff structure.
The legal authorities are interchangeable. The goal is to keep the tariffs in place by any means necessary, regardless of whether they are working.
The Deeper Principle: Bastiat’s Seen and Unseen
Frederic Bastiat wrote about this problem in 1850. In his essay “What Is Seen and What Is Not Seen,” he explained that good economics requires looking beyond the immediate effects of a policy to its hidden consequences. The seen effect of a tariff is the factory job saved. The unseen effect is every job lost because consumers have less money to spend on other things, every small business that cannot absorb higher input costs, every export market lost to retaliation.
Bastiat’s insight is that the seen effects are visible and politically powerful. The saved factory holds a press conference. The workers thank the administration. The story leads the evening news. The unseen effects are dispersed across millions of consumers and thousands of businesses. No one holds a press conference to announce that their small business is absorbing an extra cost. No one marches on Washington to protest a few pennies on every imported product.
The current tariff shell game is Bastiat’s essay brought to life. Every new legal justification draws attention to the process - “we are fighting for American workers” - and away from the outcome - “American consumers are paying more for everything.” The administration is not defending the policy on its merits because it does not want the public to examine the merits. It wants the public to watch the legal drama.
The Cost of the Shell Game
The legal whac-a-mole has real costs beyond the tariffs themselves.
Uncertainty is a tax of its own. Businesses that import goods cannot plan when the legal basis for the tariff changes every few months. Do they invest in new supply chains? Do they wait to see if the next court challenge succeeds? Do they pass the cost to consumers today or absorb it and hope the tariff disappears? Each piece of uncertainty reduces investment, slows growth, and raises costs.
A 2026 survey by the supply chain resilience firm Resilinc found that 82 percent of supply chain leaders reported disruption from the shifting tariff landscape. They did not report disruption from the tariffs themselves - they reported disruption from not knowing which tariffs would apply, under which authority, for how long.
Retaliation is another hidden cost. Every country targeted by US tariffs has responded with tariffs of its own. American farmers lost export markets when China retaliated against the 2018 tariffs. American whiskey producers lost the European market. American manufacturers lost access to components that are only available from countries that are now subject to tariffs.
The administration’s response to retaliation has been consistent: more tariffs. The pattern that began in 2018 has not changed. Tariffs provoke retaliation. Retaliation provokes more tariffs. The legal authorities shift, but the dynamic remains the same.
Compared to What?
The standard defense of the tariff program is that other countries cheat, and the United States must defend itself. This argument has merit. China’s industrial subsidy system, its forced technology transfer requirements, and its manipulation of currency and trade rules have cost American workers and companies real opportunities.
The question is not whether unfair trade practices exist. The question is whether the current approach is the best way to address them.
Compared to what? Compared to a targeted, transparent tariff program enacted by Congress, with clear goals, measurable outcomes, and a sunset clause? Compared to working through the World Trade Organization’s dispute resolution system? Compared to negotiating bilateral trade agreements that address specific practices? Compared to doing nothing?
The current approach fails every comparison. It is not targeted - it applies to 60 economies simultaneously. It is not transparent - the legal authority shifts every few months. It has no clear goal - is the goal to reduce the trade deficit, to bring manufacturing back to the United States, to punish China, to raise revenue? It has no measurable outcome and no sunset clause.
The worst comparison is the most important one. Compared to a policy that honestly names its costs, identifies its winners and losers, and submits itself to democratic debate, the current tariff shell game is not just bad policy. It is an evasion of accountability.
The Lens
The next time you see a headline that the administration has found a new legal authority for the tariffs, stop and ask: if the policy is working, why does it need a new justification?
If tariffs are good policy, Congress will enact them. If they are popular, the administration will defend them on their merits. If they are effective, the evidence will show it.
The legal shell game exists for one reason: the people running it know that the policy cannot survive an honest debate. They cannot ask Congress to authorize the tariffs because Congress would have to weigh the costs and benefits in public. They cannot defend the policy on its merits because the merits are weak and the costs are high. So they search through the statute book for a legal authority that has not yet been challenged, move the tariffs under it, and hope nobody notices that the policy is exactly the same as it was before.
Notice anyway. Ask the question. And when the next legal authority is announced, remember: the goal is not to find a legal basis for the policy. The goal is to avoid having to defend it.
Next time someone tells you the administration is fighting for American workers with tariffs, ask: if the policy is working, why won’t they let Congress vote on it?