Trump Pivots to Section 122 for New Tariffs: Understanding the Unprecedented Trade Lever

United States - Ekhbary News Agency

Trump Pivots to Section 122 for New Tariffs: Understanding the Unprecedented Trade Lever

In the wake of a significant Supreme Court decision Friday that curtailed the President's expansive authority to levy tariffs under the International Emergency Economic Powers Act (IEEPA), former President Donald Trump has quickly pivoted to an alternative trade law: Section 122 of the Trade Act of 1974. This strategic shift underscores a determination to re-implement broad import taxes, despite judicial limitations, and marks a potentially historic moment for U.S. presidential economic policy as it involves invoking a provision never before utilized.

The implications of this move are substantial. The global respite from Trump-era tariffs, which many anticipated after the Supreme Court's ruling, appears destined to be short-lived. For months, top Trump officials had indicated they possessed a 'Plan B' should the nation's highest court block their signature economic policy. Now, that contingency plan is being activated, with Trump announcing his intention to sign an executive order to impose 10% tariffs on all nations, effectively replacing a portion of the tariffs overturned by the Supreme Court.

Section 122: A Temporary Emergency Measure

Unlike the IEEPA, which President Trump previously leveraged to impose sweeping and largely unlimited tariffs, Section 122 comes with explicit statutory limitations on both the duration and magnitude of tariffs. It was specifically designed to address short-term economic emergencies, not to serve as a foundation for long-term trade policies. This provision grants the President authority to impose temporary restrictions, such as tariffs or quotas, on goods from other countries based on specific conditions, primarily related to balance of payments issues.

Under Section 122, a president can apply a temporary surcharge that cannot exceed 15% on all foreign goods. Crucially, these tariffs can only be imposed for a maximum period of 150 days. After this 150-day window, congressional approval is required to extend the measures. A significant feature of Section 122 is that it does not mandate the lengthy investigations often required by other trade statutes, as noted by the Cato Institute. This allows for rapid presidential action to impose global tariffs. However, a 'reality check' suggests that despite the duration limit, a president could theoretically allow the tariffs to lapse, declare another balance of payments emergency, and restart the timeline, effectively prolonging the measures.

Historical Context and Original Intent

The Trade Act of 1974, within which Section 122 is embedded, was enacted during a period of considerable economic uncertainty in the United States. Its primary objective was to safeguard the U.S. currency and address significant trade deficits that had emerged. Section 122 itself was specifically crafted after President Richard Nixon declared a goal of improving the U.S. balance of payments. Congress approved the act to provide the president with emergency authority to prevent 'depreciation of the dollar in foreign exchange markets' and to correct 'an international balance-of-payments disequilibrium.' This historical context highlights that while Trump's current application stems from a different judicial constraint, the underlying intent of Section 122 aligns with presidential action to protect the U.S. economy during perceived crises.

Other Trade Levers at Trump's Disposal

Beyond Section 122, Trump has also referenced other statutory tools that could be employed to impose tariffs. These include:

• Section 301 of the Trade Act of 1974: This provision allows the U.S. Trade Representative (USTR) to investigate whether a country is engaging in unfair trade practices and subsequently impose tariffs. Trump utilized this authority extensively in his first term, notably against Chinese imports, many of which remain in place.
• Section 232 of the Trade Expansion Act of 1962: This statute permits the restriction of imports from products or sectors deemed a threat to national security. Following a Commerce Department investigation, the president can impose tariffs or other trade restrictions. The Trump administration famously used this to levy tariffs on steel and aluminum.
• Section 338 of the Tariff Act of 1930: This provision allows the U.S. government to impose tariffs on goods from countries that discriminate 'against the commerce of the United States.'

While these alternative trade authorities lack the immediate breadth and flexibility of the IEEPA, they collectively offer a robust framework for a president determined to reshape U.S. trade policy. As Greta Peisch, former general counsel for USTR under former President Biden, noted: 'There's no perfect match. No trade authority is as quick or flexible as IEEPA, though it could be that over time the administration could match the structure.' This ongoing dynamic underscores the complex interplay between executive power, legislative intent, and judicial oversight in shaping America's global economic posture.

Ekhbary News Agency