Trump's backup options for tariffs

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• Even if the Supreme Court rules against President Trump's preferred tariff law, the International Emergency Economic Powers Act (IEPA), he has several alternative legal authorities, such as Section 338 (Smoot-Hawley) and Section 122 of the Trade Act of 1974, to impose tariffs.  Copied to clipboard!
• IEPA was favored by the administration because it offered broad, quick, and unsupervised tariff authority, but alternative laws like Section 338 require proving foreign discrimination, and Section 122 is limited to 150 days and a 15% rate.  Copied to clipboard!
• Section 232 of the Trade Expansion Act of 1962 remains a powerful backup, allowing tariffs based on national security threats to specific goods with no stated limit on the rate or duration, unlike the other options.  Copied to clipboard!

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Supreme Court Tariff Outlook

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(00:00:16)

• Key Takeaway: The Supreme Court’s current math suggests a negative outcome for President Trump’s favored tariff law, potentially ending its use.
• Summary: The Supreme Court heard arguments regarding President Trump’s reciprocal tariffs law last week, and conservative justices showed pointed questions toward the government. If just two conservative justices side with the liberal justices, the law could be invalidated. Even the lawyer arguing against the administration noted that the government has backup tariff options available.

IEPA Tariff Law Analysis

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(00:02:20)

• Key Takeaway: The International Emergency Economic Powers Act (IEPA) was favored for granting the president maximum, unsupervised tariff power, despite lacking the word ’tariff’ in its text.
• Summary: IEPA was the administration’s preferred tool because it allowed for immediate action against any country without congressional oversight. However, IEPA does not explicitly mention tariffs, which was a point raised by several justices during arguments. Previous presidents used other clauses within IEPA that required more rigorous restrictions.

Backup Option: Tariff Act 1930

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(00:03:28)

• Key Takeaway: Section 338 of the Tariff Act of 1930 (Smoot-Hawley) is the closest backup to IEPA, allowing tariffs up to 50% if foreign discrimination against U.S. commerce is found.
• Summary: Section 338 of the Tariff Act of 1930, famously known as Smoot-Hawley, is a likely backup option for the administration. This law carries historical baggage for deepening the Great Depression and requires the president to find that another country is discriminating against U.S. commerce. Once established, this law permits setting tariffs on that country up to 50%.

Backup Option: Trade Act 1974

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(00:04:47)

• Key Takeaway: Section 122 of the Trade Act of 1974 offers a quick tariff tool, but it is limited to 150 days and a maximum rate of 15% without Congressional approval.
• Summary: Section 122 from the Trade Act of 1974 is an untested but quicker tool, allowing tariffs without an initial investigation. Its major constraint is a 150-day time limit, after which Congressional approval is needed to continue. Furthermore, the maximum rate allowed under this section is 15%, significantly lower than other options.

Backup Option: Section 232

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(00:06:14)

• Key Takeaway: Section 232 tariffs target specific goods based on national security threats and allow the president to set rates indefinitely and at any level, potentially up to 100% or more.
• Summary: Section 232 of the Trade Expansion Act of 1962 was previously used by Trump for steel and aluminum tariffs and is being considered for pharmaceuticals and semiconductors. This option requires an investigation proving imports threaten national security, but it grants the president the power to set the tariff rate and duration without restriction. Technically, the vagueness of the law could allow rates far exceeding 100%.

Congress’s Role in Tariffs

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(00:07:18)

• Key Takeaway: The fundamental constitutional debate centers on whether the president is overstepping Congress’s power to tax and regulate foreign commerce by using executive authority for tariffs.
• Summary: The oldest and most direct option for tariffs is for the president to go to Congress, as setting tariffs is fundamentally Congress’s power. Justice Gorsuch pressed the Solicitor General on whether accepting the president’s unreviewable authority equates to abdicating Congress’s power. Tariffs are unpopular with the public, suggesting presidents may avoid seeking Congressional approval to enact and maintain them.