Washington D.C. – – Following a Supreme Court ruling that curtailed his authority to impose tariffs using the International Emergency Economic Powers Act (IEEPA), U.S. President Donald Trump has invoked a rarely used provision of the Trade Act of 1974 to implement new import duties. The move, announced , introduces a 10% global tariff on imports, a measure intended to circumvent the legal obstacle presented by the court’s decision.
The Supreme Court’s ruling effectively blocked tariffs imposed under IEEPA, a law that grants the President broad powers to regulate international commerce during national emergencies. However, the court’s decision did not invalidate the President’s broader authority to impose tariffs through other legislative avenues. Trump swiftly responded by turning to Section 122 of the Trade Act of 1974, a provision designed to address significant U.S. Balance-of-payments deficits.
Section 122 allows the President to impose temporary tariffs of up to 15% for a period of 150 days. This mechanism, created during a period of economic instability in the 1970s, offers a quicker route to implementing tariffs than some other trade laws, as it does not require a formal investigation prior to imposition. The current tariffs are set at 10%, but the President retains the ability to raise them further under other sections of trade law, according to legal experts.
The initial 10% tariff, implemented via executive order, is intended to replace some of the duties previously levied under IEEPA. However, the temporary nature of the Section 122 tariffs introduces a significant degree of uncertainty. After the 150-day period expires, Congressional approval would be required to maintain the tariffs, a prospect that appears challenging given opposition from some Republican lawmakers who have expressed concerns about the impact on key allies like Canada.
“For the next 150 days, there will be much more uncertainty as to how tariffs are stacked up, how they apply, if the existing trade deals still apply, etc.,” said Heng Koon How, head of markets strategy at UOB, highlighting the potential for volatility in the global trade landscape.
Beyond Section 122, the Trump administration retains other legal tools for imposing tariffs. Section 301 of the Trade Act of 1974, which targets unfair trade practices, and Section 232 of the Trade Expansion Act of 1962, which addresses national security concerns, remain available. Section 232 is already utilized for industry-specific tariffs on steel, aluminum, lumber, and automobiles.
The Supreme Court’s decision has also cast a shadow over a series of recent trade agreements, raising questions about their future viability. While President Trump has indicated that some agreements will remain in effect, details remain unclear, and some trade partners are concerned they may be subject to the new 15% global rate in addition to previously negotiated tariffs.
“So, it’s a consideration for every country (if) they want to … on a diplomatic level disturb the status quo,” explained Edmund Sim, a partner at Appleton Luff International Lawyers in Washington DC. “It would be difficult for countries, for example, those at last week’s Board of Peace meeting, to revisit agreements they already have with the US.” The Board of Peace meeting, held recently, saw international leaders gather to discuss regional stability and economic cooperation.
The legal basis for the new tariffs rests on the assertion that the U.S. Faces “large and serious” balance-of-payments deficits, a condition stipulated by Section 122. This justification, however, is likely to face scrutiny, as the U.S. Trade deficit remains a complex issue with multiple contributing factors. The effectiveness of the tariffs in addressing these deficits is also a subject of debate among economists.
The administration’s decision to invoke Section 122 underscores the President’s commitment to protecting American industries and reshaping global trade relationships. However, the temporary nature of the tariffs and the potential for Congressional opposition suggest that the current situation is unlikely to represent a long-term solution. The coming months will be crucial in determining the future of U.S. Trade policy and its impact on the global economy.
The shift to Section 122 represents a tactical adjustment rather than a fundamental change in the President’s trade strategy. The administration continues to explore all available legal avenues for imposing tariffs, signaling a willingness to pursue a protectionist agenda despite legal setbacks. The implications of this approach for international trade relations and global economic stability remain to be seen.
