When Tariffs Become Treaty Claims: Can U.S. Trade Measures Trigger Investor-State Arbitration?

In September 2025, Roberto Castro de Figueiredo argued on this Blog that President Trump’s reciprocal tariffs could distort competition among multinationals investing in the U.S. and thereby trigger most-favoured-nation (“MFN”) concerns under U.S. investment treaties. That intervention was timely and important. But the legal landscape has since shifted, dramatically. On 20 February 2026, the U.S. Supreme Court held in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (“IEEPA”) does not authorize the President to impose tariffs. The White House responded the same day by ending the additional ad valorem duties imposed under the relevant IEEPA-based executive orders, while preserving other tariff tools, including duties under Section 232 and a temporary import surcharge adopted under separate statutory authority.

That sequence matters for investment treaty analysis. The central question is no longer only whether tariffs, as a category, may interact with investment protections. I argue elsewhere in the affirmative, that although tariffs are usually treated as trade measures, the U.S. 2025 tariff actions can, when imposed or administered in an arbitrary, discriminatory, disproportionate, or non-transparent manner, give rise to viable investor-state claims under U.S. investment treaties, especially under Fair and Equitable Treatment (“FET”), and in some cases National Treatment (“NT”), MFN, or protection against expropriation provisions, subject to treaty wording, proof of damage, and essential security exceptions. Instead, the central question now is whether a tariff regime that was justified as a national and economic security response, but later found to lack domestic legal basis, can more readily be characterised as treaty-relevant treatment of covered investors and investments, and give rise to investor-State claims.

In my view, Learning Resources does not automatically convert tariff disputes into viable investor-State claims. It does, however, materially strengthen two lines of argument that were already latent in the treaty framework: FET violations and the limits of essential security exceptions.

Trade Measures, Investment Injury

Investment tribunals do not supervise tariff policy as such. Nor should they become shadow trade courts. But the familiar trade/investment divide is increasingly blurring in practice. For many foreign investors, the “investment” is not merely a factory on U.S. territory; it is a factory embedded in a transnational production chain. Tariffs imposed on indispensable imported inputs can therefore do more than re-price goods at the border. They can disrupt production schedules, undermine long-term supply contracts, alter pricing assumptions, and erode the profitability of the in-territory investment itself.

That distinction is critical. A WTO claim addresses inter-State trade obligations and is primarily compliance-oriented. By contrast, an investor-State claim targets individualized injury to a covered investment and seeks compensation. Once one starts from the operational reality of foreign-owned manufacturing in the U.S., it becomes difficult to insist that tariff shocks are always external to investment protection. In some factual configurations, they are not.

Why NT and MFN Are Still Difficult

Even after Learning Resources, however, the most obvious treaty claims remain doctrinally challenging. NT and MFN theories face an immediate problem: tariffs are ordinarily origin-based, not nationality-based. If a U.S. manufacturer and a foreign-owned U.S. manufacturer both import the same component from the same country, both will generally face the same duty rate. On those facts alone, differential treatment is difficult to establish.

The stronger non-discrimination theories therefore do not attack the tariff in the abstract, but focus on the architecture and administration of the tariff regime: exclusions, carve-outs, quotas, licensing decisions, negotiated country arrangements, and other discretionary mechanisms that may change the competitive conditions of investors operating in the U.S. If domestic firms systematically obtain access to relief that similarly situated foreign-owned firms cannot secure, NT may come into play. If one class of foreign-owned manufacturers benefits from country-specific accommodations while another suffers persistent tariff exposure on functionally identical inputs, an MFN argument becomes more plausible.

This is precisely why Castro de Figueiredo’s earlier post remains important. The best tariff-related treaty claims are unlikely to succeed as frontal attacks on tariff policy. They are more likely to succeed, if at all, as challenges to discriminatory administration.

Why FET Now Moves to the Center

Where Learning Resources changes the picture most significantly is FET. Under U.S. treaty practice, FET is usually tied to the customary international law minimum standard of treatment, and the treaty text makes clear that it does not create additional substantive rights beyond that baseline. Tribunals are therefore generally reluctant to transform FET into an open-ended review of economic regulation. A claimant cannot simply point to commercial disappointment or higher input costs and call it arbitrary treatment.

However, domestic illegality appears relevant. If the legal basis for the IEEPA tariffs has now been rejected by the Supreme Court, investors will be far better placed to argue that at least some aspects of the tariff regime were not merely burdensome, but legally ultra vires. That does not, however, establish a treaty breach by itself. The defect of the tariffs’ legal basis can become powerful evidence in an FET case built around arbitrariness, instability, or bad faith.

The point becomes even sharper when one moves from tariff imposition to tariff administration. Consider a regime in which one agency signals that a product qualifies for relief while another nevertheless assesses duties; or a regime in which exclusion criteria shift without intelligible explanation; or one in which similarly situated applicants receive inconsistent outcomes for no transparent reason. Those fact patterns were already at tension with FET requirements. After Learning Resources, claimants may now argue that the underlying regime was structurally arbitrary from the start.

Essential Security Is Not an Analytical Shortcut

Any claimant must, of course, contend with the most obvious U.S. defence: the essential security exception. These clauses are a recurrent feature of U.S. treaty practice and were designed precisely to preserve regulatory space for measures adopted in the name of national security, public order, or emergency.

Nevertheless, arbitral practice, especially the Argentine financial crisis cases, such as LG&E v. Argentina, CMS v. Argenina, Enron v. Argentina, show that tribunals do not necessarily accept national emergency language at face value and that the threshold for invoking the national security exception is exceptionally high. Tribunals carefully assess the gravity, necessity, treaty wording, and, in some cases, good faith. Not every economic disruption is an “essential security” crisis and not every assertion of emergency will preclude review. Moreover, if the legal basis of the underlying tariffs is successfully challenged in domestic law, the respondent state’s reliance on a security exception becomes significantly harder to sustain.

If the IEEPA tariffs were beyond presidential authority as a matter of domestic law, the U.S. may find it harder to maintain that those same measures should be insulated from treaty scrutiny as good-faith acts necessary to protect essential security interests. A tribunal would still need to examine the precise treaty language, but the domestic-law defect weakens the intuitive force of the argument that the tribunal should simply step aside.

What This Means for Claimants

None of this suggests that a wave of successful claims against the U.S. is imminent. To begin with, jurisdictional obstacles will remain formidable, not least because claimants must establish a covered investment, an applicable treaty, and a sufficiently direct nexus between the impugned measure and the investment-related damage.

Still, the broader lesson is clear. Tariff regimes are not categorically immune from investment treaty scrutiny. The strongest claims will not be those that ask tribunals to second-guess trade policy at a high level of abstraction, but those that connect discrete features of tariff design and administration to concrete injury suffered by a covered investment, and that show arbitrariness, discrimination, inconsistency, or lack of legal basis in ways that investment law can recognise.

The significance of this issue extends beyond the present U.S. tariff cycle. It speaks to a structural development in international economic law. As States increasingly use tariffs to pursue industrial policy, supply-chain security, and geopolitical leverage, the boundary between border measures and investment interference becomes harder to police. The more aggressively tariffs are used for non-traditional trade purposes, the more likely it is that investors will try to recast trade shocks as treaty claims.

That is why the real significance of Learning Resources may lie beyond U.S. constitutional law. It sharpens a question that investment tribunals are increasingly likely to face: when does a border measure stop being just a trade restriction and become treaty-relevant treatment of an in-territory investment? The answer is still fact-sensitive and treaty-specific. But after Learning Resources, it is considerably harder to dismiss that question at the threshold.