Just one week following the Supreme Court’s dismantling of a cornerstone of President Trump’s tariff regime, questions are arising about the legal foundation for the tariffs that are replacing them.
Trump has substituted the emergency tariffs, struck down by the High Court, with new global tariffs based on an unverified legal authority found in Section 122 of the Trade Act of 1974.
Several economists and trade specialists contend that the conditions necessary to justify these previously unused Section 122 tariffs do not actually exist, rendering them susceptible to judicial invalidation as well.
The reality is that while these new charges will almost certainly face legal challenges, their outcome might not significantly impact Trump’s broader tariff ambitions. This is because Section 122 represents only a single page in Trump’s new trade blueprint.
These tariffs serve merely as a 150-day holding pattern before more permanent measures can be implemented. By the time any legal dispute over the Section 122 tariffs plays out, Trump will likely have transitioned to more solid replacements.
“The new tariffs are simply smoke and mirrors for other options,” Carsten Brzeski and James Knightley of ING wrote in a recent client report.
The other choices on the tariff menu cannot be deployed immediately, as they necessitate time-consuming investigations before they can take effect.
Therefore, Section 122 is “a bridge to buy time. The real objective is tariff increases, not specific situations like national security or trade balance,” said Erica York, Vice President of Federal Tax Policy at the Tax Foundation, in a phone interview with CNN.
Empty container terminal at the Port of Oakland following the Supreme Court’s ruling that Trump exceeded his authority by imposing tariffs in Oakland, California, on February 23, 2026.
Empty container terminal at the Port of Oakland following the Supreme Court’s ruling that Trump exceeded his authority by imposing tariffs in Oakland, California, on February 23, 2026. Carlos Barria/Reuters
The Next Front in the Trade War
Trump officials have already been exploring other tariff avenues, some of which Trump has utilized before.
For instance, United States Trade Representative Jamieson Greer announced that the administration will launch several investigations under Section 301 of the Trade Act of 1974 to combat “unjustified, unreasonable, discriminatory, and burdensome acts, policies, and practices of many trade partners.”
Greer stated that these Section 301 investigations will be conducted on an “expedited timeline” and cover “most major trading partners.”
Furthermore, there are the national security tariffs under Section 232 of the Trade Expansion Act of 1962 affecting steel, aluminum, copper, and other goods. Greer indicated the administration is initiating 232 investigations into imports of rice and other sectors.
According to The Wall Street Journal, the administration is preparing to start Section 232 investigations into US imports of everything from large-scale batteries and iron fittings to plastic piping and telecommunications equipment.
Another option: invoking the infamous Smoot-Hawley tariffs, which, as immortalized in “Ferris Bueller’s Day Off,” exacerbated the Great Depression.
This could be a potent weapon.
Section 338 of the Tariff Act of 1930 allows the president to raise tariffs up to 50% on any country that “discriminates” against US trade. However, Section 338 has never been used before and could face legal challenges.
“Large and Serious” Deficits
For now, Trump is relying on Section 122 to gain time.
Evidently, this statute grants the president authority to impose tariffs for a maximum of 150 days. This contrasts with the International Emergency Economic Powers Act, the 1970s law Trump leaned on for the emergency tariffs but which the Supreme Court ultimately rejected.
The complication, however, is that the law is intended to address “large and serious U.S. balance of payments deficits.”
There is ongoing debate and considerable confusion as to whether that situation truly exists today. The U.S. clearly runs a massive trade deficit, but that is distinct from a full-blown balance of payments crisis.
The balance of payments encompasses all economic transactions between the United States and other countries. The trade deficit, conversely, is primarily driven by imports and exports.
While the United States has had a staggering trade deficit for decades, the balance of payments is near zero.
“There is no question about the U.S. ability to pay the world, meaning there is no crisis. High cholesterol, but no heart attack,” wrote Gopinath, now a Harvard University economics professor, in an X post. “A 150-day tariff cannot fix persistent trade deficits, and the U.S. is not having a heart attack.”
Section 122 is a relic from the 1970s, created after President Richard Nixon took the U.S. off the gold standard.
Alan અમારી, a U.S. Treasury official during the Nixon administration, recalls that the U.S. was indeed experiencing a crisis at the time and was literally running out of gold.
“There was a balance of payments crisis that was palpable,” Wolf, now a senior fellow at the Peterson Institute for International Economics, told CNN by phone. “There is no crisis today. If there were, financial markets would be in a deep freefall.”
Wolf stated there is no definitive answer regarding whether courts will accept the existing conditions as justification for the Section 122 tariffs.
“We will only know that in years,” he said.
Of course, this offers little comfort to the countless small businesses and corporations paying the Section 122 duties—not to mention consumers who pay indirectly through higher prices and reduced employment.
WSJ: Trump is “picking statutes,” just like Biden
Some conservatives have dismissed the legal rationale of Section 122.
“These new tariffs are even more overtly illegal than the IEEPA tariffs Trump imposed,” argued Andrew S. McCarthy in the conservative journal National Review.
“Mr. Trump’s interpretation of Section 122 is flawed,” an opinion piece in The Wall Street Journal recently stated, comparing Trump’s Plan B to what they called President Biden’s unsuccessful “picking of statutes” after his student loan forgiveness attempt was blocked by the courts.
Others, including Brad Setser, a senior fellow at the Council on Foreign Relations, have argued that there is a “reasonable argument” the U.S. does indeed have a “large and serious” balance of payments deficit, but it’s unclear if that will be resolved in time.
“I don’t think a lawsuit over the fundamental issue of payments and balance of payments deficits will be resolved in 150 days,” Setser wrote on X, “so my bet is the tariffs expire before a court rules.”
It is unlikely Congress would greenlight an extension beyond the 150-day limit of Section 122.
Some suggest that theoretically, Trump could let the Section 122 tariffs expire and then simply restart the 150-day clock by declaring another emergency.
Wolf, the Peterson Institute fellow, does not believe the courts would look kindly upon such a maneuver.
“I don’t think the courts would appreciate that joke,” he said.
About the Author
