- The Supreme Court’s decision striking down the administration’s use of IEEPA tariffs has not resolved uncertainty in U.S. trade policy but instead introduced new legal and political complexities.

- Although the ruling reaffirms congressional authority over tariffs, the administration retains alternative legal tools, contributing to continued unpredictability in trade measures and economic planning.

- In response, South Korea faces sustained volatility in its trade environment and must balance short-term engagement with Washington with longer-term economic stabilization and diversification efforts.

The latest Supreme Court (SCOTUS) decision striking down President Trump's use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs was widely anticipated — but its consequences for U.S. trade partners like South Korea are anything but settled. Rather than resolving the questions that has defined U.S. trade policy in recent months, the ruling has opened a new chapter of uncertainty that Seoul will have to navigate carefully.

What Comes Next in the U.S.?

The Trump administration wasted no time signaling its intentions. Immediately following the ruling, the White House announced it would invoke Section 122 of the Trade Act of 1974 to impose a 10% global tariff for 150 days; President Trump subsequently declared shortly thereafter that he will raise that figure to 15%. To date, the only legal action taken was to impose the global tariff at 10% - for now. Legal experts question whether Section 122 is even legal, since its use requires a balance of payments crisis that does not currently exist.

Even so, the administration has other tools at its disposal. Section 338 of the Tariff Act of 1930 allows tariffs if other countries "uniquely discriminate" against the United States. Sections 232 and 301 — covering national security and unfair trade practices respectively — remain on the table as well, though both require investigative reviews that take time. Meanwhile, over 3,000 lawsuits related to the now-invalidated IEEPA tariffs are working their way through the courts, with more than $175 billion in collected tariff revenue potentially subject to refund. The road ahead is legally and politically messy.

Crucially, the Court's majority ruling included "the major questions doctrine" warning that Congress should not be assumed to have relinquished its constitutional tariff authority, found explicitly in Article I, Section 8, through vague statutory language. This signals that future unilateral tariff actions by the executive branch will face legal scrutiny, adding yet another layer of uncertainty to an already volatile environment.

A Fragile Deal Under Pressure

For South Korea, the stakes of the SCOTUS ruling are particularly high. Even before the Court issued its decision, relations with Washington had grown tense: President Trump had publicly accused Seoul of deliberately stalling on its first $20 billion investment tranche — part of a broader $350 billion commitment South Korea made in exchange for a reduced IEEPA tariff rate of 15% instead of 25% — while the U.S. Trade Representative had briefly floated the possibility of reverting to the original 25% rate. That November 2025 agreement, itself the product of months of difficult negotiations beginning with President Lee Jae Myung's first Washington summit in July and only formally announced at the APEC Summit in October. It now rests on uncertain legal ground since the tariff relief it was premised on has been struck down. Despite all of this, the South Korean Ministry of Industry, Trade, and Resources (MOTIR) decided to maintain the terms of the November agreement — a pragmatic choice, given that the administration still holds leverage through existing Section 232 tariffs on automobiles and steel, and could impose new ones on pharmaceuticals or semiconductors.

The Paradox of Certainty: Why the Ruling May Make Trump More Unpredictable

On the surface, the SCOTUS ruling appears to impose a measure of order on U.S. trade policy. By reaffirming that Congress — not the president — holds primary authority over tariffs under Article I, Section 8, and signaling that future unilateral executive action will face serious legal scrutiny, the thinking may be that the decision places limits on the administration’s ambitions. Some governments, most notably China, may read this as the imposition of meaningful guardrails. If courts can strike down IEEPA tariffs, the reasoning goes, Trump’s leverage is more limited than it appeared, and negotiations can proceed on firmer ground.

Paradoxically, it is precisely this impression of constraint that makes the administration’s behavior more unpredictable. The reason is straightforward: revenue. The IEEPA tariffs generated over $175 billion for the federal government over roughly a year of collection. That revenue is now at legal risk, with thousands of refund lawsuits working their way through the courts. It is important to recognize that the administration did not build its tariff strategy around legal grounds; it built it around leverage and revenue. Losing the legal basis for that revenue stream does not make it walk away from tariffs — it will scramble harder to find replacements.

This scramble is itself the engine of volatility. Each time the administration reaches for a new legal instrument — Section 122 one day, Section 338 the next, with the threat of Section 232 or Section 301 always in the background — it introduces a fresh round of uncertainty for businesses and foreign governments trying to plan around U.S. trade policy. Unlike the IEEPA tariff, which was sweeping but at least singular and legible, the patchwork of sectoral and contingent measures are harder to anticipate and price in. Countries that believe the SCOTUS ruling has clipped the administration’s wings may find themselves caught off guard by measures they did not see coming.

For South Korea, this realization matters. The volatility already visible in its 2025 trade data is not simply a byproduct of high tariffs; it reflects the difficulty of operating in an environment where the rules of engagement shift faster than businesses can adapt. A single large tariff, however painful, can eventually be priced in. A constant adjustment of which legal authority will be invoked next, targeting which sector, under which set of political conditions, will be costly and time consuming. If other governments feel comfortable about the SCOTUS ruling and ease their vigilance, Seoul should resist that temptation. The ruling changed the legal vehicle; it did not change the destination.

The Trade Data Tells the Story

South Korea's 2025 trade figures reflect the turbulence. Total goods trade with the United States fell marginally from roughly $200 billion in 2024 to $196 billion in 2025, with exports declining from $128 billion to $122.9 billion — the first such decrease since 2016. The trade surplus with the U.S. shrank by over 11%, dropping from $55.6 billion to $49.5 billion.

The monthly data also shows that automotive exports (South Korea's largest goods export category to the U.S.) fell sharply in the second and third quarters of 2025, recovering only after the bilateral summit in August. Volatility in trade increased across the board in 2025, not just with the United States but also with China and other trading partners. Notably, trade with China proved even more volatile than trade with the U.S., suggesting that American trade policy is sending shockwaves well beyond bilateral channels.

What Seoul Should Do

With trade accounting for over 85% of its GDP, South Korea's economy is exposed to these swings in U.S. policy. Its declining population and small domestic market also leave it with limited alternatives to export-led growth. The government has begun diversifying — pursuing new trade agreements with new partners, supporting South Korean shipbuilders in bidding for Canadian submarine contracts, and expanding exports to Asia, Europe, and Latin America. But these efforts take time, and no market can substitute for the United States in the near term.

The most realistic path forward is a dual strategy: stay engaged with Washington to manage short-term disruptions, while exercising strict fiscal and monetary discipline to buffer against potential economic shocks. With a U.S.-China summit on the horizon and more legal battles over tariffs almost certain, one thing is clear — uncertainty is no longer an exception in U.S. trade policy. For South Korea, it is the new normal.

This essay is an abbreviated version of a more thorough analysis published by the Stimson Center.