4 moves the Trump administration could make if courts strike down its tariffs

Business Insider

5 hours ago

President Donald Trump has four more swings at implementing his tariffs — even if courts strike down his use of the IEEPA.
Experts in international trade told Business Insider that Trump could take four different routes to imposing trade barriers without Congress. All four are doable, though significantly more complicated, and are unlikely policies he could change at will overnight.
"Now we're over a hundred days into the tariffs, andtariffs are a very top-of-the-agenda item," Drew DeLong, lead in geopolitical dynamics practice at Kearney, a global strategy and management consulting firm, told BI.
"There are a number of motivations underneath tariffs, and whether his current tariffs stay, he will find ways to continue to amplify pressure on trading partners," DeLong added.
After small businesses sued Trump and his various trade officials over tariffs, the US Court of International Trade ruled unanimously on May 28 that he doesn't have the authority to levy sweeping tariffs using the IEEPA — a 1970s law typically used for economic sanctions during national emergencies.
The Court of Appeals for the Federal Circuit resumed the tariffs a day later, but their fate remains uncertain.
"That decision, if it is favorable to Trump, would still go to the Supreme Court for review," said Kent Jones, Professor Emeritus of international economics at Babson College. "Many conservative judges, even Trump appointees, have tended to view Trump's use of IEEAP as overstepping the limits of delegating tariff-making power from Congress to the President."
Here are four things the Trump administration could do next to keep trade barriers up without Congress.
Section 122
DeLong said Section 122 of the Trade Act of 1974, also known as the Balance of Payments Act, could be the White House's first choice if it wants to "continue the pressure immediately" on trading partners.
The act's official language allows it to be applied only if there are "large and serious United States balance-of-payments deficits," otherwise known as trade deficits.
"Section 122 is probably going to be a top pick," Robert Shapiro, an attorney of international trade at Thompson Coburn LLP, told BI. "That gives Trump some vehicle, but it's a limited 15% for 150 days, and then he has to go to Congress."
"That would open the door for Congress to pass a whole bunch of trade actions, but the administration obviously didn't want to go through that first," Shapiro added.
Section 232
Section 232 under the Trade Expansion Act of 1962 allows the White House to raise duties on imports it deems a threat to national security.
A recent probe into critical mineral imports, for example, argued that the US is overly dependent on foreign sources for materials essential to defense, infrastructure, and innovation.
DeLong said that at the moment, there are at least eight ongoing Section 232 investigations, including those involving copper, timber, and semiconductors. He said the recent June 3 tariff hike on steel and aluminum from 25% to 50% is also being done under section 232.
Jones said, however, that each section 232 tariff requires a formal investigation, and the sectors it could be applied to are limited.
"The problem with section 232 is that it requires a separate action for each industrial category of goods against which tariffs can be imposed," said Jones. "The perceived advantage of the IEEPA was that it allowed broad tariff coverage across the board to all industries."
Section 301
Section 301 of the Trade Act of 1974 gives the US Trade Representative — now Jamieson Greer — broad authority to investigate whether other countries are violating existing trade agreements or hurting American businesses.
DeLong said that the first Trump administration leaned heavily on the provision to impose tariffs on hundreds of billions of dollars worth of Chinese goods and aircraft from the European Union.
But section 301 would require a formal investigation and even a public comment period.
"The problem with sec. 301, however, is that it requires a separate determination of specific foreign unfair or discriminatory trade practices, country by country," said Jones.
"The IEEPA, again, seemed to give the President more flexibility in declaring an emergency against all global imports into the US without the need to document specific foreign practices," Jones added.
Section 338
DeLong said Section 338 of the Tariff Act of 1930 could theoretically allow any US president to impose up to a 50% tariff on countries that discriminate against the US. However, he said this would be a very uncommon approach that could again bring the tariff argument into uncharted territories.
"That has not been used — and I don't think I'm understating this —in decades, or ever," said DeLong of section 338. "That would be relatively new."