While President Trump invoked a new round of tariffs under the authority of Section 122 of the Trade Act of 1974, analysts and experts say the conditions for invoking them are not met and that the matter is likely to return to the Supreme Court.
Analysts: Trump’s New Tariff Regime Might Also Be Considered IllegalAfter a U.S. Supreme Court landmark decision striking down the previous unilateral tariff regime under the International Emergency Economic Powers Act (IEEPA) authority, President Trump shifted to Plan B.
Section 122, which deals with the President’s Balance of Payments authority, states that these measures can be taken whenever the administration has “to deal with large and serious United States balance- of-payments deficits, to prevent an imminent and significant depreciation of the dollar in foreign exchange markets, or to cooperate with other countries in correcting an international balance-of-payments disequilibrium.”
Andrew McCarthy, a former Assistant United States Attorney for the Southern District of New York and a notable Trump supporter, explains that there is a fundamental difference between the balance of payments and the balance of trade. While a trade deficit occurs when imports surpass exports in value, a balance of payments deficit is a broader concept encompassing all economic transactions between the U.S. and the world.
“Foreign investment in the United States, coupled with the advantages our nation accrues because the dollar is the world’s reserve currency, more than make up for the longstanding trade deficit in goods. Our overall payments are in balance. There is no crisis.”
“If he wants sweeping tariffs, he should do the American thing and go to Congress. If his tariffs are such a good idea, he should have no problem persuading Congress. That’s what our Constitution requires,” Katyal concluded.
FAQWhat is the latest announcement from President Trump regarding tariffs?Trump announced a new round of global tariffs set to take effect on February 24, increasing from 10% to 15% under Section 122 of the 1974 Trade Act.
What conditions allow the president to impose these tariffs?Section 122 allows tariffs to be implemented for 150 days when addressing significant balance-of-payments deficits or preventing depreciation of the dollar.
What are experts saying about the tariffs and their legal basis?Experts like Andrew McCarthy argue that the balance of payments is misinterpreted, stating the U.S. has no immediate crisis due to foreign investment and the dollar’s status.
