What Tools Does Trump Now Have To Impose Tariffs?
The decision of the Court of International Trade that the International Emergency Economic Powers Act (IEEPA) does not authorize Trump’s major tariffs has, for now, put IEEPA off the table as a tool that Trump can use to impose tariffs. As I noted on my post on this decision, I think there is a high likelihood that the Supreme Court will ultimately agree with this decision. The Supreme Court in recent years has expressed concern about the use of vague statutory language as the basis of executive actions that have a large impact on the economy, and has used two doctrines—nondelegation and major questions—to strike down such executive action. I am confident that the Court would agree with the Court of International Trade that the massive “reciprocal” tariffs are not authorized. I think it is a closer call as to how the Court would address the Trace Court’s fentanyl-related tariffs, but the Court is likely to agree with the Trade court as well.
If the Court upholds the Court of International Trade, does that mean Trump cannot impose tariffs through other means? Sadly, no. As Goldman Sachs noted in a research note issued Wednesday night, there are at least three statutes that Trump could attempt to use. Fortunately, unlike IEEPA, each is subject to a process and a set of limitations that might mitigate the harm done by the tariffs. Each would, as well, still be subject to challenge in court.
What is not in doubt is that Trump will not give up. He is a true believer in tariffs. So this post will lay out—as best I can as a non-expert—what authorities Trump might use.
The most likely tariff tool that Trump will use is Section 232 of the Trade Expansion Act, which authorizes the President to restrict imports that are found to threaten or impair national security. Indeed, the Trump tariffs on steel, aluminum and automobiles are not affected by the Court of International Trade decision because these tariffs did not rely on IEEPA, but instead relied on Section 232.
Section 232, however, requires a process and has some limitations that may make this authority available only as to some imported goods. Before the President can impose tariffs using this authority, the Department of Commerce has to conduct an investigation to determine the import’s effect on national security. These investigations can take weeks or even months to complete. From the language and history of Section 232, I think that this authority could only be used for specific imported goods and not broad worldwide tariffs such as the reciprocal tariffs that Trump attempted to impose in April. Accordingly, I would expect that this authority would be used to impose sector-wide tariffs on particular product classes—such as pharmaceuticals and semiconductors.
An interesting issue is whether the courts would carefully examine the purported “national security” justifications for section 232 tariffs. For example, what if Trump attempted to use section 232 to impose tariffs on Chinese Christmas decorations or toys? Would the courts strike down these tariffs?
Historically, the courts have been highly deferential to section 232 national security determinations. The Court of Federal Claims in Maple Leaf Fish Co. v. United States, 762 F.2d 86 (Fed. Cir. 1985) cautioned that courts have “a very limited role” in reviewing presidential trade actions “of a highly discretionary kind,” and such tariffs can only be set aside if there is “a clear misconstruction of the governing statute, a significant procedural violation, or action outside delegated authority.” There were challenges to Trump’s Section 232 tariffs on steel and aluminum, but these were unsuccessful. Of course, it was an easy case to make that steel and aluminum have national security implications.
Despite the history of deference by the courts in Section 232 decisions, given that there is a congressional requirement for an investigation of national security, I think the delegation doctrine and major question doctrine—both of which have largely been developed by the Supreme Court after the Maple Leaf Fish decision-- demand that there be at least some court review whether the national security determination is supported by the record. It may be a high deferential review, but I think the courts will reject claims of national security that appear silly.
A second authority is Section 122 of the Trade Act of 1974, which was discussed at length by the Court of International Trade in its IEEPA decision. It allows the President to impose trade restrictions to address the following:
(1) to deal with large and serious United States balance-of-payments deficits.
(2) to prevent an imminent and significant depreciation of the dollar in foreign exchange markets, or
(3) to cooperate with other countries in correcting an international balance-of-payments disequilibrium
Notably, the Court of International Trade used the existence of Section 122—which was designed to address trade imbalances—as one basis for rejecting the use of IEEPA: “Section 122 removes the President’s power to impose remedies in response to balance-of-payments deficits, and specifically trade deficits, from the broader powers granted to a president during a national emergency under IEEPA by establishing an explicit non-emergency statute with greater limitations.”
(Aside: I think that this same argument would be effective to stop the use Section 232 for market-wide across the board tariffs on all products as the means of addressing trade imbalances. Section 122 is the sole tool Congress gave to address trade imbalances).
Trump could use Section 122 to impose his 10% tariff on all goods.
While Section 122 does not require an investigation and could be used to impose across-the-board tariffs worldwide, there are limitations on this authority that would make it very unattractive to Trump: the tariffs would last for only 150 days and could only be extended by an Act of Congress.
Another authority listed by Goldman Sachs is Section 301 of the Trade Act of 1974, which allows actions to impose trade sanctions on foreign countries that violate U.S. trade agreements or engage in acts that are "unjustifiable" or "unreasonable" and burden U.S. commerce. This Section requires an investigation by the Special Trade Representative, which could takes weeks or months. Given the language and history of Section 302, this might be an effective tool to impose sanctions to address particular unfair trade practices of certain countries, but it likely could not be used to impose worldwide tariffs such as the reciprocal tariffs.
The courts have shown a willingness to review Section 301 decisions. During the first Trump Administration, the Court of International Trade held that Section 301 determinations are subject to review under the Administrative Procedures Act and found the record inadequate in a case involving tariffs against China.
Finally, there is an authority that has never been used—Section 338 of the Tariff Act of 1930. Section 338 allows the imposition of new or additional tariffs on countries that have discriminated against commerce of the United States. In particular, the Section can be used when another country imposed “any unreasonable charge, exaction, regulation, or limitation which is not equally enforced upon the like” not imposed on similar articles of other countries” or “discriminates in fact against the commerce of the United States.” As with section 301, Section 338 requires an investigation, and the additional tariff is capped at 50%.
Given that Section 338 is focused on countries that discriminate against U.S. products versus other countries, this authority is likely to be of limited value in challenging tariff and non-tariff policies imposed on all nations.
I realize that this is a lot to absorb, but here are my key take-aways:
The Court of International Trade’s decision on IEEPA is not the last word. Trump has numerous other authorities he can use to impose increased tariffs.
Only one statute, however (Section 122), seems to authorize across the board tariffs (such as a flat 10% tariff on all goods, and this authority is limited to 150 days and can only be extended by Congress. Moreover, the existence of this authority as the sole authority that Congress granted the President to address trade imbalances—with its limitations—would be used by courts to reject more expansive uses of the other authorities.
Accordingly, the most likely response by the Trump Administration will be the use of sector specific tariffs (most likely using Section 232) or country-targeted tariffs based on unfair trade practice (under Section 301).
Since these authorities require investigations that will take both time and resources, I would expect that the new Trump tariffs will be far more limited. For example, they may try to impose Section 232 tariffs on new industries beyond aluminum, steel and automobiles, and Section 301 tariffs on China and perhaps the European Union.
The bottom-line is that the adventure continues. To me the most interesting thing to watch for is whether the Republicans in Congress—facing a tariff-driven stagflation in 2026—will step in and take action.