Trump’s Section 122 tariffs could spur new legal battle, experts say

President Trump’s decision to invoke an unusual legal tool to enforce a global 15% tariff on U.S. imports may encounter legal challenges, according to trade experts interviewed by CBS News. The White House released a fact sheet last Friday stating that the temporary import duty, implemented under Section 122 of the Trade Act of 1974, addresses an “essential international payments issue” and will assist the Trump administration in rebalancing the country’s trade relationships.

Using Section 122 to impose new tariffs, set to take effect on Tuesday, is unprecedented, legal experts informed CBS News. Luis Arandia, a partner at Barnes & Thornburg in Washington, D.C., specializing in customs and international trade, mentioned, “No president has used it until now, so it could be subject to legal challenges.”

Section 122 grants the U.S. president the authority to levy tariffs to rectify what the statute defines as “significant and serious United States balance-of-payments deficits.” Despite this, President Trump is the first to take action under Section 122, as per the Congressional Research Service. The agency noted that Section 122 has never been utilized, and therefore, courts have not interpreted its language.

However, trade and legal experts expressed doubts about Section 122’s applicability in the present context, as the large U.S. trade deficit cited by President Trump may not qualify as a balance-of-payments deficit. The White House did not immediately respond to inquiries regarding potential challenges to the legal basis for imposing Section 122 tariffs.

The scope of Section 122 is notably narrower than the International Emergency Economic Powers Act (IEEPA), a law from 1977 that the Supreme Court recently ruled did not authorize President Trump to impose most of his administration’s tariffs. Any tariffs enforced under Section 122 can only remain in effect for 150 days, giving President Trump’s 15% tariff an expiry date of July 24. After that, Congress would need to vote to prolong the tariffs, which could prove to be politically challenging.

The new global 15% tariff under Section 122 brings the average effective tariff rate to 14.5%, including exemptions for certain goods under the 2020 United States-Mexico-Canada Agreement. Lawmakers have the option to extend Section 122 tariffs for an additional 150 days, but the Trump administration has indicated its intention to impose more enduring tariffs under alternative trade laws during this period.

In conclusion, the shift from IEEPA tariffs to Section 122 duties introduces more uncertainty for businesses, as U.S. trade policies remain in a state of flux. This uncertainty may deter companies from making long-term investment decisions, potentially impacting growth and employment opportunities.