Last week’s Supreme Court decision striking down President Trump’s invocation of the International Emergency Economic Powers Act of 1977 (IEEPA) to levy tariffs was a serious, but not necessarily deadly, blow to the self-styled “Tariff Man’s” defining economic policy agenda. That means American manufacturers and hirers, who are not exactly enjoying smooth sailing, are not out of the unpredictable waves yet.
Still, the ruling was a needed reminder that the United States was formed by a group of people trying to rid themselves of taxes on goods they wanted to import. What goes around, comes around. The original Tea Party patriots set in motion events that culminated with a constitution that gives Congress, not the president, the exclusive power to tax, whether by tariffs or otherwise.
Of course, Congress can legislate that power to the executive branch under certain circumstances, and has done so many times. Unfortunately for Trump, the IEEPA refers to regulatory steps taken to address emergencies, not tariffs, and the Court did not see a suitable vehicle for a wide-ranging tariff program. The U.S. Court of Appeals for the Federal Circuit ruled similarly in August 2025 and the Court of International Tariffs had ruled unanimously the same way in May.
No, the ruling was not unexpected, but manufacturers now face a new, court-unleashed tidal wave of uncertainty washing over waters already tossed and turned.
Tariff-based uncertainty
Trump now turns to other authorities that are less attractive for him but still appear viable, such as Section 122 and 301 of the Trade Act of 1974 or Section 122, or Section 338 of the Tariff Act of 1930. All require some regulatory procedures; they cannot be instantly or permanently implemented by simply signing an executive order.
Time will determine how all the previous tariff-based trade agreements signed by a host of U.S. trading partners will survive, and if and when some $140 billion in already-collected tariff revenues may become subject to refund.
To put things together again, Trump immediately ordered 10% tariffs on all U.S. imports. A day later, in the spirit of keeping uncertainty alive, he said he would raise the level to 15%, the maximum allowed by Section 122, which allows for 150 days of action before expiration.
For those invested in the U.S. economy, the level of tariffs and their coverage are not always the real wrecking bar. It’s not knowing what Trump will do tomorrow, next month or next year. Before cranking bulldozers to construct a plant that will take years to complete, CEOs need to know that the rules of the game won’t change. They need certainty. Of course, the uncertain and even arbitrary use of tariffs is part of what makes the instrument so attractive to the dealmaking Trump. What is a bane for international rivals is leverage for him.
The effect on manufacturing
Trump has regularly pointed to expanded manufacturing jobs as one key objective. Have tariffs helped? You be the judge.
In January 2026, total manufacturing employment stood at 12.59 million workers, a bit shy of where it stood a year earlier in January 2025. While manufacturing employment growth was dead in the water, manufacturing production did increase 2.5% year-over-year, compared with zero growth the prior year.
Also telling is a 2025 manufacturing survey from the consulting firm Deloitte, which noted that more than three-quarters of manufacturers “consistently cited trade uncertainty as their top concern.”
A look at the daily Economic Policy Uncertainty Index provides another data point. It’s based on the frequency of certain words in 10 major U.S. newspapers and used in heavy statistical analysis to explain U.S. capital investment and GDP growth. Periods of high uncertainty correspond with pauses and lower investment in core capital goods (those that go into expanded manufacturing facilities).
From 2021 through 2024, the index bounced along with a mean value of about 249. With the start of the second Trump administration in 2025, it began to accelerate. It hit 773 on April 6 when Trump’s announced his tariff-based trade war, headed south, and bounced violently in response to more tariff changes. On February 22, following the Court’s ruling, the daily index rose to 725. We were back where it all started in April.
Autos: a case study in uncertainty
European auto producers have wrestled with tariff uncertainty since Trump’s first administration, when ire focused on German brands such as Mercedes, VW and BMW. Based on Trump’s zero-sum trade interpretation, where exporters win and importers lose, the EU was “ripping us off” and shipping thousands of vehicles here monthly but buying few from us. Trump never highlighted Mercedes, BMW, and VW having massive U.S. investments and tens of thousands of American workers who, in addition to serving the domestic market, were themselves exporting to the rest of the world.
Without warning on January 16 of this year, Trump announced an arbitrary and sudden return to the pre-summer-negotiation EU tariffs levels — his way of punishing Europe for their opposition to his announced plan to take Greenland “one way or the other.” On January 21, the uncertainty index registered 543.
In response, EU President Ursula von der Leyen said: "The European Union and the United States have agreed to a trade deal last July. And in politics as in business — a deal is a deal.” Then, on January 26, Trump reversed the reversal. The index fell back to 285.
In the midst of all this, VW Group’s Audi division was on the verge of announcing a final decision on the construction of a $4 billion U.S. manufacturing plant, their first in the U.S., which would employ 4,000 workers. South Carolina or Tennessee had been suggested as sites. It was not to be. On January 26, VW President Oliver Blume said: "With the tariff burden remaining unchanged, a large additional investment isn't financially viable.”
Leading the world’s second largest auto producer, following Toyota — one which operates in 30 countries and is therefore very familiar with the risks of tariff uncertainty — Blume explained that “Stable, reliable framework conditions are crucial for industry. That’s why we continue to focus on dialogue and international cooperation — on both sides of the Atlantic.”
VW left open the possibility that Audi production might someday happen at the firm’s large Chattanooga plant or its new Scout Motors plant under construction at Blythewood, S.C. But for now, uncertainty had killed the deal.
Final thoughts
Despite, and even partly because of, the encouraging Supreme Court ruling, much of the U.S. economy can be considered adrift in a sea of Trump-inspired uncertainty. It is obvious that the president’s tariff and trade policy, though helpful to some firms and workers, is a hindrance to the manufacturing the president wishes to bring back.
Thankfully, there is far more to the U.S. economy than imports — which accounted for 10.4% of GDP at the end of 2025 — and foreign companies who, under less adversarial circumstances, would hire lots of Americans. But until things change, America’s prospects as an industrial power will not be as bright as might otherwise be the case.
