The Supreme Court will soon decide a big case involving the legality of tariffs that former President Donald Trump slapped on imports. This ruling could fundamentally reshape the new landscape of international trade. If the court were to strike down these tariffs, the positive ramifications on U.S. trade relations and economic stability would be monumental. Section 122 Trade Expansion Act tariffs are implemented in an expedited manner without the extensive investigations and deliberations. These tariffs are limited in time and breadth.
In particular, Section 122 allows a president to impose tariffs of up to 15% for no longer than 150 days. This provision is specifically designed to address “large and serious United States balance-of-payments deficits.” It most importantly provides the president with tools to act boldly and quickly. This enables immediate action in response to severe economic circumstances without the requirement of a prior study. Yet, after that initial 150-day period, continuation of these tariffs is subject to congressional oversight and approval.
The Role of International Emergency Economic Powers Act
In the last few years, Trump has used the International Emergency Economic Powers Act (IEEPA) to up the tariffs. Instead of these provisions as found in Section 122, the IEEPA provides no such limit on the duration or height of tariffs. This law takes a decidedly more open-ended approach, which can mean years of investigations and two years of public comment periods. Section 301 investigations—which Trump used to great effect—can often take weeks or even months to result in tariff decisions.
As of late September, those tariffs have cost American importers close to $90 billion in tariffs paid. These tariffs have more than doubled duties imposed. As an example, they reached 50% on significant trading partners like India and Brazil, and even topped an incredible 145% on imports from China earlier this year. Against this backdrop, U.S. Trade Representative Jamieson Greer recently launched a probe into China’s fulfillment of trade agreement requirements.
Future Implications and Alternatives
Should the Supreme Court invalidate Trump’s tariffs, it is anticipated that the administration would seek alternative methods to impose similar tariffs. According to Goldman Sachs economists, “We would expect the administration to use other authorities to impose substantially similar tariffs.” This means a high probability that big trading partners would see no net change in their tariff liability.
Even Trump himself seemed to recognize that they need some contingency plans, saying, “We’ll have to develop a game two plan. This points to a more assertive future for strategic use of good relations with trade rivals regardless of the court’s decision.
Though discussions on tariffs rage on, it is important now more than ever to watch how these impose upon American importers and stack upon our international relations. The reliance on varying legal frameworks in pursuit of the same goal only serves to exacerbate the confusing state of U.S. trade policy under this administration.