The Supreme Court of the United States struck down President Donald Trump’s tariffs that were imposed using the International Emergency Economic Powers Act (IEEPA) on Friday. Within hours of the Supreme Court decision, Trump said he would invoke Section 122 of the Trade Act of 1974, a rarely used law that allows temporary tariffs to deal with balance-of-payments problems.
The administration’s broader tariff plan may continue, but now under a different legal route. Trump said he would sign an executive order to impose a 10% tariff on imports from all countries, replacing some of the duties the court had cancelled. He also said other trade laws are still being considered. The Supreme Court ruling only blocked one legal method, not tariffs in general.
What is section 122 of the Trade Act of 1974?
Section 122 allows the US president to impose temporary tariffs of up to 15% for 150 days. These tariffs can be used to address what the law calls “large and serious” US balance-of-payments deficits, meaning situations where the country imports much more than it exports.
This law was created in the 1970s, a time of economic trouble. Lawmakers were worried about trade imbalances and pressure on the US dollar. So Congress gave the president emergency powers to act quickly to protect the country’s financial position. Unlike some other trade laws, Section 122 does not require a formal investigation before tariffs are imposed. This makes it faster to use.
How long can these tariffs last?
Tariffs under Section 122 automatically end after 150 days unless Congress votes to extend them. However, trade experts say a president could let the tariffs expire and then possibly bring them back again by declaring a new balance-of-payments emergency.
The Supreme Court ruled that IEEPA does not give the president the power to levy tariffs. Section 122 is different because it clearly allows temporary import charges, but only for a limited time and at limited rates.
IEEPA was passed in 1977. It gives the president powers during a declared national emergency involving unusual and extraordinary foreign threats. In the past, IEEPA has mostly been used to impose sanctions, freeze foreign assets, and block financial transactions and not to impose tariffs.
What other trade laws can the administration use?
Section 301 (country-specific action) – This is also part of the Trade Act of 1974. It allows the US Trade Representative to investigate unfair trade practices by specific countries and impose retaliatory tariffs. Trump used Section 301 during his first term to impose tariffs on Chinese imports. Many of those tariffs are still in place.
Section 232 (national security grounds) – This comes from the Trade Expansion Act of 1962. It allows tariffs or import restrictions if the Commerce Department finds that certain imports threaten national security. This law was used to impose tariffs on steel and aluminium.
Section 338 (discriminatory trade practices) – This is part of the Tariff Act of 1930. It allows tariffs on countries that discriminate against US trade. However, it has rarely been used in recent times.