Trump targets key tariffs for reinstatement: 122, 232, 301, 338 identified as potential revival points
U.S. Tariffs: Trump Administration Explores Options After Court Ruling
The Trump administration is bracing for a possible court decision ruling that the President overstepped his authority in imposing tariffs, but officials maintain that import taxes are unlikely to vanish. They are exploring various legal avenues to keep tariffs, albeit in a different form, even if the courts reverse Trump's use of emergency powers.
In anticipation of the Wednesday ruling, talks within the White House focused on contingency plans if the courts strike down Trump's extensive and untested application of emergency powers, according to two senior administration officials. "We think we have a strong case and will win," one official stated, "but we do have other tools at our disposal that we're prepared to use if necessary."
Key to these preparations is the exploration of alternate trade-related laws to enact more tariffs. The following sections detail some of the potential options the administration could exercise:
- Section 122 of the Trade Act of 1974: This law enables a president to levy tariffs up to 15% for 150 days to mitigate serious U.S. balance-of-payments deficits, i.e., when a country's imports significantly exceed its exports, often termed a trade deficit. Currently, the U.S. runs a goods trade deficit of $87.6 billion, according to the Census Bureau's advanced figures. While Trump frequently asserts that such deficits indicate the nation is being mistreated, many economists question this argument, suggesting a trade deficit can reflect a robust economy and its ability to stimulate the global economy. Initially, the administration contemplated employing Section 122 to impose greater tariffs, but shelved the plan due to the 150-day limit. If the administration opts for this approach, it could replace the current 10% universal baseline tariff on nearly every country's exports. Following the 150-day period, tariffs can only continue if Congress ratifies them.
- Section 232 of the Trade Expansion Act of 1962: This section grants the president the authority to impose tariffs on national security grounds, affecting specific sectors and requiring an investigation before tariffs can be imposed. A recent Section 232 investigation by the administration regarding critical mineral imports highlighted potential threats to U.S. defense capabilities, infrastructure development, and technological innovation. There are currently several ongoing Section 232 investigations targeting various sectors. The 25% across-the-board tariffs on steel, aluminum, cars, and car parts were all the consequences of 232 investigations. These tariffs can remain in effect regardless of the outcome of the appeal regarding the allegedly emergency-related tariffs.
- Section 301 of the Trade Act of 1974: This act empowers the USTR to investigate countries believed to be violating other nations' trade agreements or practices harmful to U.S. businesses. Trump made use of Section 301 during his first term to escalate tariffs on several Chinese imports, as well as aircraft and other European Union goods. The investigation process, however, can take weeks or even months to lead to tariffs due to the involved procedures, such as a public comment period, unlike the recently enacted tariffs.
- Section 338 of the Tariff Act of 1930: While no president has implemented this law, Trump could use it to impose tariffs up to 50% on imports from countries engaging in discriminatory trade practices against the U.S. However, such action might violate World Trade Organization agreement terms and prompt strong retaliation from affected countries.
In conclusion, the administration is preparing for various scenarios in the wake of the court ruling on Trump's tariffs. While the initial ruling could have far-reaching consequences, administration officials emphasize that Trump is determined to persist with his tariff policy, particularly as leverage in the 18 ongoing bilateral trade negotiations. "Trump is 100% committed to this," an official asserted to CNN.
The Trump administration is contemplating using Section 122 of the Trade Act of 1974 to impose tariffs if the court ruling goes against the President's authority, as this law allows imposing tariffs up to 15% for 150 days to address a significant U.S. trade deficit.
Moreover, officials are considering Section 232 of the Trade Expansion Act of 1962, which permits imposing tariffs on national security grounds, as the use of this section can keep tariffs in effect regardless of the appeal outcome regarding the allegedly emergency-related tariffs.
