After being deemed illegal, why was Trump able to announce an additional 10% global tariff? Is there more?

According to CCTV News, on February 20th local time, U.S. President Trump stated that he will sign an order to impose an additional 10% tariff on global goods, based on the existing conventional tariffs already levied, pursuant to Section 122 of the U.S. Trade Act of 1974.

That same day, the U.S. Supreme Court announced a ruling that the Trump administration’s large-scale tariff policy invoked under the International Emergency Economic Powers Act (IEEPA) was unlawful. Following this, Trump made the above statement at a press conference.

He also clarified other potential avenues for imposing tariffs, namely Section 232 of the Trade Expansion Act of 1962, Section 201, Section 301 of the Trade Act of 1974, and Section 338 of the Tariff Act of 1930.

U.S. Trade Representative Grier also stated that tariffs based on Section 122 would be implemented and signed today. Meanwhile, investigations under Section 301 are legally persistent.

Duming, Vice Dean of the Faculty of Law at Durham University in the UK, a professor of transnational law and co-director of the Global Policy Institute, told First Financial that the Trump administration is “caught between a rock and a hard place” regarding tariffs and can only continue to show its cards.

He emphasized that the so-called immediately usable “Section 122” allows the U.S. government to impose tariffs of up to 15% on trading partners within 150 days. During this period, the Trump administration may initiate more investigations into specific industries, such as under the “Section 301” investigation, and should be cautious about repeatedly using Section 122. According to his review of the law, there are no clear prohibitions against repeated use of this section.

Why Announce an Additional 10% Global Tariff

Simply put, when the U.S. faces a severe trade deficit or significant, potentially uncontrollable depreciation pressure on the dollar in foreign exchange markets, the president can invoke Section 122. However, the temporary tariffs imposed under this section cannot exceed 15%.

Regarding time limits, as previously mentioned, this tariff authority is temporary, lasting a maximum of 150 days. If an extension is needed, approval from Congress is required.

Experts and industry insiders interviewed by First Financial agree that, compared to other investigation-based legal provisions—such as the potentially year-long Section 301 investigation—the currently immediately available option is Section 122.

Duming explained that after the Supreme Court ruling declared tariffs under IEEPA unlawful, the U.S. faces a situation where it has already reached trade agreements with many countries and regions. If no additional tariffs are imposed, the tariffs faced by those countries and regions with trade agreements may be lower than those without agreements. This would “break” the entire tariff policy structure of the Trump administration.

On the same day, U.S. Treasury Secretary Yellen stated that, according to the Department of the Treasury’s calculations, tariffs imposed using Section 122, along with potentially strengthened Section 232 and Section 301 tariffs, could keep U.S. tariff revenue nearly unchanged by 2026.

George Washington University International Trade Law Professor Sherman said that if the Trump administration intends to implement the additional 10% tariffs under Section 122, it must declare that the U.S. is facing a “serious and significant international balance of payments deficit or imminent substantial depreciation of the dollar.”

Duming further explained that, although extensions require congressional approval, “re-implementing” a new Section 122 is not necessary. This approach is certainly problematic, but there is room to exploit loopholes.

Jason Furman, former chief economist of the Obama administration and chairman of the White House Council of Economic Advisers, and a professor at Harvard Kennedy School, recently told First Financial that he roughly estimates that U.S. tariff levels by the end of 2026 are likely to be lower than at the start.

Regarding whether “President Trump will always back down” (TACO), he said, “Overall, there are more cases of Trump canceling threats and granting tariff exemptions than tightening tariffs.”

Furman explained that tariffs are relatively unpopular politically in the U.S. “The core economic issue in current U.S. political debate is price affordability, that is, the level of prices, and tariffs clearly impact this.”

Are There Four More Cards?

Besides Section 122, the Trump administration still has four other tariff options: Section 232 of the Trade Expansion Act of 1962, known as the “Section 232 investigation”; Section 301 of the Trade Act of 1974; Section 338 of the Tariff Act of 1930; and Section 201 of the Trade Act of 1974.

Currently, it is expected that one of the measures the Trump administration might take is to more broadly utilize the “Section 232 investigation,” which has already been used to impose tariffs on automobiles, steel, aluminum, copper, and timber.

Additionally, the Trump administration has launched “Section 301 investigations” into trade practices of countries like Brazil and may initiate more investigations.

Yellen also stated on the 20th that tariffs authorized under Sections 232 and 301 will be utilized.

However, regarding “Section 301 investigations,” experts and industry insiders interviewed believe that the Trump administration will not immediately use this investigation, as it is time-consuming, requires congressional approval, and involves investigations that could take at least a year.

Section 338 of the Tariff Act of 1930 is another possible provision, though rarely used in recent years. It allows the U.S. government to immediately impose tariffs of up to 50% on countries that discriminate against U.S. trade, and can be used to address “unreasonable charges, taxes, regulations, or restrictions.”

In addition, compared to the announced use of Section 122, Section 201 is a more classic and commonly used trade protection tool. It is a global emergency import relief mechanism, also known as safeguard measures.

Typically, the U.S. International Trade Commission (USITC) conducts investigations and makes damage determinations. The decision is directly made by the president without complex industry damage investigations. The tariff cap has no fixed limit and is decided by the president based on USITC recommendations, historically reaching 30%-50%. Its duration is up to four years, extendable to eight years.

(Source: First Financial)