The U.S. Supreme Court’s 6-3 decision reversing many of the previously announced tariffs is widely celebrated in the importing community, as well as overseas. However, President Trump immediately announced additional tariffs trying to do damage control. Let’s review the potential tariff tools that he is trying to implement in the coming days and weeks.
Tariffs under Section 301
This is the primary tool that President Trump used during his first presidency from 2017 to 2021, where China was primarily targeted. During his first presidency, $550 billion worth of tariff revenue was collected due this tariff. Section 301 briefly empowers the U.S. Trade Representative to employ tariffs against countries that are viewed as implementing unfair tariff practices.
During his first presidency, this was taken into litigation many times and survived all the challenges. So, there is a high chance that this will survive the courts during his second presidency, too. The only problem with this is President Trump cannot apply Section 301 tariffs immediately. First, there must be an investigation proving that a foreign country is implementing unfair trade practices and once the findings prove the case, then these tariffs can be implemented – which can take months.
Tariffs under Section 122
This is the section that President Trump announced he would use, as soon as he learned about the U.S. Supreme Court’s tariff case decision. This ruling is based on a 1974 law which allows the President to enact tariffs based on a trade imbalance due to deficits.
This statute limits the President to a maximum of 15% tariffs with a time limit of 150 days. Congress must approve the tariffs after 150 days. This year, being an election year with only 3 months left until elections, the consensus is Congress will probably will not have the appetite to vote to extend these tariffs since affordability seems to be the main theme going into the elections this year.
Tariffs under Section 232
Section 232 tariffs are related to the Trade Expansion Act of 1962. That law authorizes the President to impose tariffs or quotas based on national security. However, this statute is very specific to certain industries. Right now, this is used for mainly semiconductors and robotics, and this statute may have certain exemptions depending on specific commodities. This section was used heavily during the first year of the Trump presidency targeting different industries.
Protectionism through Trade Embargoes
An embargo is a draconian tool that the President has the authority to impose through the International Emergency Economic Powers Act (IEEPA) of 1977 and the Trading with the Enemy Act of 1917. Using embargo powers, a President can restrict trade and freeze assets during national emergencies or wartime. Embargoes are implemented based on executive orders and bar imports or exports to specific countries. An infamous recent example of embargo powers is Cuba, which has had an embargo against it for many years. This law is valid for one year and can be renewed afterwards.
Even after the Supreme Court, the President has tariff options to continue
In short, even though the IEEPA tariffs have been rolled back by the U.S. Supreme Court, the president still has many avenues to put pressure on specific countries or industries incase a country tries to renegotiate its current trade deal.
