The Supreme Court ruling did not "crush" tariffs. An article clarifies Trump's various available tools and their pros and cons.

The Supreme Court’s ruling does not mean that the tariffs meticulously built by President Trump have been “crushed.” He may still leverage various tools at his disposal to bring large-scale tariffs back.

According to CCTV News, on the 20th local time, the U.S. Supreme Court ruled that the tariffs implemented by the Trump administration under the International Emergency Economic Powers Act (IEEPA) lacked clear legal authorization. This decision overturned most of the tariffs enacted during Trump’s second term, but it did not end the tariff policy itself.

While this ruling undermines Trump’s core economic policies, he can re-enable the tariff powers he used during his first term and also utilize other authorities, including a law enacted during the Great Depression in the 1930s.

Wall Street Insights, after analyzing various sources, found that Trump has at least five alternative legal tools to rebuild the tariff system beyond IEEPA, though these tools come with more restrictions compared to IEEPA.

George Washington University Trade Law Professor Kathleen Claussen told the media, “It’s hard to see a path to ending tariffs. I believe he can use other authorizations to rebuild the existing tariff framework.” In September last year, U.S. Treasury Secretary Janet Yellen also revealed that the government was considering alternative options as backups.

National Security Clause: The Most Reliant Tool

Analysis indicates that Section 232 of the Trade Expansion Act of 1962 is Trump’s most relied-upon tariff tool during his two terms. This clause authorizes the president to impose tariffs on imports for reasons of national security, with no limits on the tariff rate or duration.

In his first term in 2018, Trump used Section 232 to impose tariffs on steel and aluminum. After returning to the White House last year, he continued to invoke this authority to increase tariffs in these sectors and also imposed tariffs on automobiles, auto parts, copper products, and timber. In September last year, he further imposed tariffs under this clause on cabinets, bathroom furniture, and upholstered furniture.

The advantage of this tool is that the scale of tariffs is not limited by law, and investigations are led by the U.S. Department of Commerce, giving the government significant control over the process.

However, its limitation is that it cannot be implemented immediately. The Commerce Department must first complete an investigation and submit a report to the president within 270 days. Additionally, Section 232 targets specific industries rather than the entire country, making it less comprehensive than IEEPA. Currently, multiple Section 232 investigations are ongoing, and more industries may face similar tariffs in the future.

Countering Unfair Trade: Targeting China During the First Term

Section 301 of the Trade Act of 1974 authorizes the Office of the U.S. Trade Representative (USTR), under presidential direction, to impose tariffs on trade measures by other countries deemed discriminatory against U.S. companies or in violation of international trade agreements, with no limit on the tariff rate.

Section 301 was a tool Trump used during his first term and served as the legal basis for initiating the China-U.S. trade friction.

According to Xinhua News Agency, in March 2018, Trump signed a presidential memorandum based on the results of the “301 investigation,” planning to impose large-scale tariffs on Chinese imports and restrict Chinese investment and acquisitions in the U.S. In July and August of that year, the U.S. imposed 25% tariffs on $50 billion worth of Chinese goods in two batches. China responded with reciprocal measures of the same scale and strength. In September, the U.S. further increased tariffs on $200 billion worth of Chinese exports to 10%. In retaliation, China imposed tariffs on $60 billion of U.S. goods. The U.S. continued to escalate the trade war, totaling tariffs on about $370 billion worth of Chinese imports.

Section 301 states that tariffs imposed under it automatically expire after four years but can be extended upon application. Its drawback is that the process is complex. USTR must conduct investigations, often consult with foreign governments, and seek public comments, possibly holding public hearings.

Experts point out that while Section 301 is useful against major powers, it has flaws when targeting many smaller countries for “reciprocal” tariffs, as conducting dozens of investigations for small nations is cumbersome.

Addressing Trade Deficits: An Unused Short-term Option

Section 122 of the same 1974 Trade Act allows the president, in cases of “large and serious” international balance of payments deficits, imbalance, or imminent severe devaluation of the dollar, to impose tariffs up to 15% for a maximum of 150 days without prior investigation.

Last May, the U.S. International Trade Court ruled that if the president intends to address trade deficits through tariffs, he should use Section 122 rather than IEEPA.

However, Section 122 has never been used to impose tariffs, and its practical application is uncertain. Its main limitations are that the maximum tariff rate is only 15%, and the duration is limited to 150 days, with extensions only possible with congressional approval. Therefore, this tool is only suitable as a short-term measure and cannot support the long-term, large-scale tariff system Trump sought.

Protecting Domestic Industries: Time-limited Investigation Mechanism

Section 201 of the Trade Act of 1974 authorizes the president to impose tariffs when increased imports cause or threaten serious injury to U.S. manufacturers.

This mechanism also cannot be implemented immediately. The U.S. International Trade Commission (ITC) must first conduct an investigation and submit a report within 180 days of receiving the application. Unlike Section 232, the ITC must hold public hearings and solicit public opinions. Section 201 targets specific industries rather than entire trading partners.

Tariffs are capped at 50% of existing rates, with an initial period of four years, extendable up to eight years. If tariffs last more than a year, they must be gradually reduced. Trump used Section 201 in 2018 to impose tariffs on solar panels and residential washing machines; the former was extended and modified by Biden, while the latter expired in 2023.

The Legacy of the Great Depression: The Most Controversial Alternative

Section 338 of the Smoot-Hawley Tariff Act of 1930 authorizes the president to impose tariffs up to 50% on countries deemed to be engaging in unfair charges, restrictions, or discriminatory practices, without prior investigation and with no time limit.

This Depression-era provision has never been used to impose tariffs. Historians and economists generally agree that the Smoot-Hawley tariffs restricted global trade and worsened the Great Depression. U.S. Treasury Secretary Yellen last September indicated that the government is considering using Section 338 as a Plan B.

However, activating this nearly century-old, unused provision could trigger legal challenges.

Five Democratic House members introduced a resolution last March to abolish Section 338, indicating that its use would raise political concerns. Commentators note that U.S. trade negotiators traditionally prefer to use Section 301 sanctions rather than this highly controversial tool.

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