Lagatar24 Desk
Washington: US President Donald Trump’s newly imposed 15% tariffs, introduced after the Supreme Court struck down his earlier tariff mechanism, may once again face legal challenges. Economists and legal experts are questioning whether the administration’s reliance on Section 122 of the Trade Act of 1974 is legally sustainable.
Shift From IEEPA to Section 122
The Supreme Court recently invalidated the administration’s use of the International Emergency Economic Powers Act (IEEPA) to implement tariffs. In response, the Trump administration began collecting new 15% tariffs under Section 122 of the Trade Act of 1974, a rarely used provision that allows temporary duties of up to 15% for 150 days to address serious balance-of-payments deficits.
The administration justified the move by citing a $1.2 trillion annual US goods trade deficit, a current account deficit equal to 4% of GDP, and a reversal in the US primary income balance. However, legal analysts point out that Section 122 is specifically intended for balance-of-payments crises, not general trade deficits.
Economists Reject Crisis Argument
Several economists have dismissed the claim that the United States is facing a balance-of-payments emergency. Former IMF First Deputy Managing Director Gita Gopinath stated that the US is not experiencing the typical signs of such a crisis, such as surging borrowing costs, currency instability, or restricted access to financial markets.
Experts including RSM chief economist Joe Brusuelas and former US Treasury official Mark Sobel argued that the US dollar remains stable, Treasury yields are steady, and financial markets are functioning normally. They emphasized that a trade deficit is conceptually different from a balance-of-payments crisis.
Justice Department’s Earlier Position Raises Questions
Legal vulnerability may stem from the administration’s own prior stance. In earlier court filings defending the IEEPA tariffs, the Justice Department had argued that Section 122 did not apply to trade deficits. Former Acting Solicitor General Neal Katyal said this contradiction could make the new tariffs easier to challenge in court.
Legal observers note that while it is unclear who will initiate litigation, advocacy groups and business organizations are closely monitoring the situation. However, even if challenged, courts may not be able to issue a final ruling within the 150-day timeframe allowed under Section 122.
Alternative Legal Pathways Available
Meanwhile, the administration may pursue more permanent trade measures under established provisions such as Sections 232 and 301, which relate to national security and unfair trade practices. These frameworks are generally viewed as legally stronger compared to Section 122.
