INTRODUCTION
In May 2025, the Conference Board’s Consumer Confidence Index leaped to 98.0 from April’s revised 85.7, marking its largest one-month gain since 2011 (98.0 versus 85.7). This surge followed the May 12, 2025, temporary “truce” in the U.S.-China tariff war, when both nations agreed to roll back certain punitive levies and resume high-level negotiations. The rebound ended a five-month slide during which the Index had plunged to near five-year lows, reflecting widespread anxiety about escalating trade restrictions and their inflationary impact.
At its core, consumer confidence captures households’ perceptions of present economic conditions and expectations for the next six months. It influences spending—the engine of over two-thirds of U.S. GDP—and serves as a barometer for policy makers assessing the health of the economy. The sudden uptick highlights the intimate link between international trade policy and domestic economic sentiment: when uncertainty about tariffs and supply-chain disruptions recedes, household willingness to spend tends to recover rapidly.
Yet beneath this numerical solace lies a complex interplay of legal, constitutional, and policy tensions. The May truce, brokered by executive decree under the International Emergency Economic Powers Act (IEEPA) and Sections 232 and 301 of the Trade Act of 1974, raises questions about the scope of presidential authority in trade matters versus the constitutional prerogatives of Congress (U.S. Const. art. I, § 8). Moreover, it spotlights how emergency powers—originally designed for narrow national-security or humanitarian crises—have become a tool for routine economic policymaking.
This article argues that the consumer-confidence rebound illuminates broader legal and societal tensions: between the need for agile executive action to stabilize markets and the constitutional requirement for legislative oversight; between the exigencies of geopolitical competition and the democratic principle of bicameral deliberation; and between short-term economic relief and the long-term rule-of-law implications of executive overreach. As “the rebound was already visible before the May 12 U.S.-China trade deal but gained momentum afterwards,” observes Stephanie Guichard, Senior Economist at the Conference Board, so too did questions escalate about whether such executive-driven tariff adjustments can—or should—be repeated without clearer statutory guidance.
LEGAL AND HISTORICAL BACKGROUND
The U.S. Constitution vests in Congress the power “To lay and collect Taxes, Duties, Imposts and Excises” (U.S. Const. art. I, § 8, cl. 1). Historically, tariff schedules were set directly by congressional statute. The landmark Tariff Act of 1930—commonly known as the Smoot-Hawley Tariff—raised duties on over 20,000 imported goods, exacerbating the Great Depression by triggering retaliatory tariffs abroad and slashing world trade by 66% between 1929 and 1934. That debacle underscored the need for more flexible and measured trade policy tools.
Trade Act of 1974, Section 301
Congress responded in 1974 by enacting Section 301 of the Trade Act of 1974, delegating authority to the Office of the U.S. Trade Representative (USTR) to investigate and address “unjustifiable” or “discriminatory” acts, policies, or practices of foreign governments that burden U.S. commerce. Under Section 301, the President may impose retaliatory tariffs or other measures, subject to procedural requirements including consultation with advisory committees and publication of proposed actions. Since its enactment, Section 301 has served as the principal statutory basis for U.S. tariffs on China, notably the 2018-2020 actions imposing duties ranging from 7.5% to 25% on hundreds of Chinese goods.
Trade Expansion Act of 1962, Section 232
Section 232 of the Trade Expansion Act of 1962 authorizes the President to impose tariffs on imports deemed a threat to national security, following a Department of Commerce investigation. President Trump invoked Section 232 in 2018 to levy 25% on steel and 10% on aluminum, citing national-security justifications; similar measures targeted finished vehicles in 2019. Courts have largely upheld Section 232’s validity, though critics argue that broad “national security” definitions can blur emergency and routine economic policy.
International Emergency Economic Powers Act (IEEPA)
Originally enacted in 1977, IEEPA grants the President authority to regulate commerce during declared national emergencies involving “unusual and extraordinary threat[s]” to the U.S. national security, foreign policy, or economy. Traditionally used to impose sanctions (e.g., against Iran, North Korea), Trump’s administration invoked IEEPA in 2025 to justify “Liberation Day” tariffs—blanket duties on nearly all major trading partners based on a declared emergency arising from the U.S. trade deficit. In May 2025, the U.S. Court of International Trade struck down these tariffs as exceeding IEEPA’s scope, emphasizing that Congress did not intend to delegate “unbounded tariff power” without legislative checks. The ruling noted that the trade deficit did not constitute the requisite “unusual and extraordinary threat” under IEEPA.
World Trade Organization (WTO) Obligations
As a WTO member, the U.S. is bound by multilateral commitments under the General Agreement on Tariffs and Trade (GATT). Dispute-settlement panels have repeatedly found U.S. Section 232 and Section 301 measures inconsistent with WTO rules, though remedies are pending. The 2021 U.S.-China “Phase One” deal included a commitment not to retaliate within WTO procedures, but those provisions expired amid renewed tariff threats in 2025, further complicating U.S. compliance with international adjudication.
Precedent-Setting Court Decisions
Key rulings shaping executive tariff authority include Barapind v. USTR (2019), upholding Section 301 and deferring to executive findings; Chamber of Commerce v. USTR (2020), affirming procedural compliance; and the May 29, 2025, Court of International Trade decision invalidating IEEPA-based tariffs.
As Duke Law Professor Tim Meyer observes, “These authorities are incredibly broad, especially Sections 232 and 301, but they all require an investigation of some kind before the administration can act”. Yet the IEEPA episode demonstrates the peril of stretching emergency powers into everyday trade policy, raising calls for legislative reform.
CASE STATUS AND LEGAL PROCEEDINGS
The legal battle over President Trump’s “Liberation Day” tariffs illuminates the operational tensions between the branches:
Court of International Trade Ruling (May 29, 2025): A unanimous panel held that IEEPA does not authorize broad tariffs unrelated to genuine emergencies, invalidating tariffs on Canada, Mexico, and China imposed under that statute. The court emphasized that tariff power resides with Congress and that IEEPA’s “extraordinary threat” requirement was unmet by a mere trade deficit.
Appeals Court Stay: The U.S. Court of Appeals for the Federal Circuit granted a temporary stay, permitting the administration to continue collecting duties during appeal. In a hearing, judges pressed the Justice Department to justify invoking IEEPA for economic measures.
Administrative Response: The White House, through National Economic Council head Kevin Hassett, dismissed the ruling as “a hiccup,” pledging to pursue alternative legal avenues, notably Section 301 and Section 232, for targeted tariffs.
Congressional Oversight Push: Rep. Young Kim (R-CA) introduced the REPORT Act on May 8, 2025, requiring Presidents to notify and justify tariff changes to Congress within 48 hours, aiming to restore legislative oversight.
Ongoing WTO Disputes: China, the EU, and other trading partners have filed WTO challenges against U.S. Section 232 and Section 301 duties, seeking retaliatory remedies pending U.S. compliance.
To date, no Supreme Court review has been sought; the dispute remains at the appellate level, with briefing scheduled through summer 2025. Meanwhile, federal district and appellate courts are considering related suits by small businesses and states challenging IEEPA-based tariffs, with the Brennan Center filing amicus briefs urging strict construction of emergency powers.
VIEWPOINTS AND COMMENTARY
Progressive / Liberal Perspectives
Progressive voices caution that unchecked executive tariff powers undermine democratic accountability and risk disproportionately harming lower-income and marginalized communities sensitive to price increases. Leah Li, Senior Policy Counsel at the Brennan Center for Justice, warns: “Broad tariffs without legislative oversight undermine due process and shift burdens onto families struggling with high living costs.”. The Brennan Center has advocated reforming IEEPA to explicitly prohibit its use for routine economic measures, underscoring that Congress designed IEEPA to address genuine emergencies like terrorism or pandemics, not trade deficits.
Brookings Institution trade expert Douglas Irwin notes that while tariffs can be a useful negotiating tool, “reliance on unilateral measures bypasses the collaborative frameworks that have kept global trade relatively stable since World War II.” He argues for more robust congressional-executive engagement, such as Congressional-Executive Agreements, to lend democratic legitimacy and market predictability.
Civil rights and consumer advocates, including Public Citizen, emphasize that tariff-induced price hikes on household goods deepen economic inequality. “When executives unilaterally impose wide tariffs, consumers pay the price,” states Robert Weissman, President of Public Citizen, calling for legislative safeguards to protect everyday Americans.
Conservative / Right-Leaning Perspectives
Conservative analysts emphasize the necessity of decisive executive action to counter persistent trade imbalances and ensure national security. “If Congress lacks the will to enact meaningful trade remedies, the President must use available tools to defend U.S. industries,” asserts Genevieve Veith of the Heritage Foundation, praising Section 301 as a vital countermeasure against China’s unfair practices.
Former USTR official Robert Lighthizer contends, “waiting for lengthy congressional action only cedes leverage; swift executive measures pressure trading partners to negotiate in good faith.”. He emphasizes that Section 301’s mandatory procedural review and public comment periods provide sufficient checks on executive discretion.
The Federalist Society’s Aaron Street argues that IEEPA’s emergency-powers framework was deliberately written broadly to enable presidents to respond to evolving threats, including economic warfare. “National emergencies can manifest as severe trade breakdowns that threaten U.S. sovereignty,” he insists, urging courts to defer to executive interpretations.
Republican lawmakers, including Senate Finance Committee Chair Ron Johnson, have defended the administration’s tariff authority, arguing Congress has historically delegated tariff powers to the President. Johnson states: “Our trade statutes give the executive branch flexibility to safeguard American jobs; judicial second-guessing risks undermining U.S. competitiveness.”
COMPARABLE OR HISTORICAL CASES
Smoot-Hawley Tariff Act of 1930: As previously noted, the Tariff Act of 1930 raised U.S. duties to unprecedented levels, triggering international retaliation and a collapse in trade, exacerbating the Great Depression. “Smoot-Hawley stands as a cautionary tale of protectionism gone awry,” reflects MIT economic historian Peter Temin.
Bush-Era Section 201 Steel Tariffs (2002): President George W. Bush imposed 30% tariffs on steel and aluminum imports under Section 201, citing injury to domestic producers. The measures prompted WTO challenges and negotiations that led to tariff rollbacks within a year. “The steel tariffs demonstrated both the promise and perils of emergency measures: they provided temporary industry relief but strained alliances,” notes Cato Institute trade scholar Angela Huyssen.
Obama Softwood Lumber Dispute (2009-2015): The U.S. initiated antidumping duties on Canadian lumber under Section 201 and bilateral Softwood Lumber Agreement negotiations ensued. The protracted dispute illustrates how legal processes—WTO complaints, domestic petitions, and legislative authorizations—can both check and legitimize executive action.
2018 Section 232 Aluminum and Steel Tariffs: Imposed under the Trump administration, these measures prompted global reprisal, including EU, Canada, and China duties on U.S. products. “Section 232 steel tariffs represent the modern frontier of using national-security authority for trade leverage, testing WTO rules and alliance cohesion,” observes Georgetown University professor Michael Allen.
Phase One U.S.-China Trade Deal (2020): Under threat of escalating Section 301 tariffs, China agreed to purchase additional U.S. goods and enhance IP protections. The deal exemplifies how tariff threats can yield negotiated outcomes but also highlights that temporary fixes may not address structural trade frictions.
POLICY IMPLICATIONS AND FORECASTING
Short-Term Consequences:
The immediate uptick in consumer confidence and stock markets—Dow Jones rising over 700 points on the truce announcement —underscores the potency of trade-policy signals. Lower anticipated import costs buoy consumer spending and corporate earnings forecasts. However, households remain wary: 31.8% view jobs as plentiful and 18.6% see them as hard to get, suggesting persistent labor-market fragility.
Long-Term Governance Risks:
Reliance on emergency powers for routine trade policy invites perpetual legal uncertainty. As the Brennan Center warns, “Absent legislative reform, each administration may expand its own view of emergencies, eroding separation of powers”. Repeated IEEPA or national-security invocations risk judicial resistance and international reprisal, undermining U.S. leadership.
Legislative Reforms:
Bipartisan proposals like the REPORT Act aim to restore congressional primacy in tariff decisions. CRS reports indicate Congress may also revisit IEEPA and the NEA to tighten definitions of “emergency”. The 118th Congress, facing midterm elections in November 2026, could prioritize clarifying delegation, perhaps through sunset provisions or mandatory congressional resolutions for tariff adjustments.
Global Standing and Alliances:
Unilateral U.S. tariffs have strained ties with key allies, prompting discussions of alternative frameworks like plurilateral agreements excluding recalcitrant partners. The EU and Japan are exploring joint approaches to China that could marginalize U.S. influence if Washington is seen as unreliable.
Impact on Civil Liberties and Public Trust:
The use of sweeping emergency powers for economic purposes risks eroding public trust in government’s respect for constitutional limits. Should courts continue rebuffing executive overreach, citizens may perceive the rule of law as contingent rather than absolute.
Economic Forecasting:
Economists at Goldman Sachs predict that if a permanent tariff rollback occurs, U.S. GDP growth in Q3 2025 could accelerate by 0.3 percentage points; conversely, reinstating broad IEEPA-based tariffs could shave 0.2 points off growth and raise core CPI by 0.1% over the year. Market volatility is likely to persist, particularly around court rulings and legislative developments.
CONCLUSION
The dramatic rebound in U.S. consumer confidence following the May 2025 U.S.-China trade truce underscores the profound influence of trade policy on economic sentiment. However, this moment of relief conceals deeper constitutional and policy tensions: the executive’s need for agility in geopolitically fraught trade negotiations versus Congress’s constitutional authority to regulate commerce and levy duties. The recent Court of International Trade ruling invalidating IEEPA-based tariffs marks a critical judicial assertion that emergency powers have limits, echoing historical lessons from Smoot-Hawley that overreaching trade measures can backfire economically and legally.
Synthesizing divergent viewpoints reveals that while both progressives and conservatives agree on the necessity of tools to address unfair trade practices, they diverge on the means: one side advocating robust legislative oversight and strict statutory confines, the other emphasizing executive flexibility and deference to presidential judgment. “The real constitutional crisis of 2025 is not just an overreaching executive but a supine legislature,” warns The Guardian editorial, urging Congress to reassert its prerogatives.
As the U.S. navigates this trade-policy crossroads, policymakers must balance prompt economic stabilization against long-term adherence to the rule of law. The coming months—through appellate decisions, potential congressional reforms, and renewed WTO disputes—will determine whether the United States can forge a durable path that aligns democratic accountability with effective global trade engagement. “The challenge ahead,” as Brookings scholar Douglas Irwin concludes, “is to institutionalize a process where both Congress and the President collaborate to safeguard American interests without undermining the constitutional fabric.”
For Further Reading
- Consumer Confidence Rebounds After U.S.-China Trade Truce
- US Consumer Confidence Jumps After US-China Trade Truce
- Consumer sentiment jumps after U.S.-China trade truce
- US consumer confidence hits 4-year high on trade truce
- US consumer confidence rebounds after five straight months of declines amid tariff anxiety
