President Trump's tariffs are currently under consideration by The Supreme Court, and according to Treasury Secretary Scott Bessent, the outcome may be inconsequential even if the administration's position is unsuccessful.
TL;DR
- Supreme Court reviews President Trump's tariffs justified by IEEPA and national emergency.
- Treasury Secretary Bessent suggests tariffs could be reimposed using alternative trade act sections.
- Alternative justifications include Section 301, Section 232, or new Congressional legislation.
- Bessent believes tariffs are a tool to rebalance trade and boost domestic production.
At issue is the Trump administration’s use of the International Emergency Economic Powers Act (IEEPA) to justify some of its tariffs, including its baseline 10% duty on almost all nations. IEEPA, passed by Congress in 1977, gives the President “broad authority” on economic issues like tariffs after declaring a “national emergency,” for which the White House has pointed to elevated fentanyl imports from abroad.
Although not guaranteed, it’s possible the Supreme Court will decide the fentanyl crisis can’t be used as an emergency to justify broad tariffs on U.S. Trading partners, which would make many of the administration’s tariffs invalid. In that case, the White House will just pivot to another justification to make tariffs permanent, said Bessent during the New York Times DealBook Summit this week.
“We can recreate the exact tariff structure with 301’s, with 232’s, with the, I think they’re called 122’s,” he said, referring to several sections of various trade acts that could serve as alternatives to the administration’s current justification for its tariffs.
When asked by interviewer and DealBook editor Andrew Ross Sorkin if these actions could endure indefinitely, Bessent responded “permanently.” He subsequently clarified that duties imposed by Section 122 of the Trade Act of 1974 would not be permanent.
To summarize, the Constitution grants Congress authority regarding tariffs, yet over time it has afforded the executive branch greater discretion to impose them via the trade legislation cited by Bessent.
Each of the options Trump's advisors might explore carries its own advantages and disadvantages. Section 122 would represent the fastest route to reimposing duties should the Supreme Court rule against them, as it bypasses the need to scrutinize a trading partner's actions. Employing this rationale would permit the administration to impose duties as high as 15%, with certain limits, though this would be limited to 150 days before legislative approval becomes necessary.
As Bessent noted, the remaining two sections lack any temporal restrictions or caps on the duty rate that might be imposed, despite containing additional provisos. To legitimize duties under Section 301 of the Trade Act of 1974, the current administration would be required to undertake an inquiry into the conduct of its trade counterparts, which it perceives as “unjustifiable” or “unreasonable.”. Trump achieved this effectively during his initial term to validate duties on China in 2017.
Another option for the administration is to invoke Section 232 of the Trade Expansion Act of 1962, arguing that tariffs are warranted due to national security concerns. This rationale is currently being employed by The White House to support its duties on steel, aluminum, and automobiles, which are not currently facing judicial review by The Supreme Court.
Experts have previously informed Coins2Day that Trump might also request that Congress enact legislation granting the president explicit power to impose tariffs. This would likely garner support from both major parties, according to international trade law specialist and University of Kansas Law School professor Raj Bhala told Coins2Day, though it would necessitate certain limitations regarding the extent and potentially the length of these tariffs.
Even with the administration's contingency plans available, Bessent expressed confidence in the White House's prospects before the Supreme Court.
He additionally stated that an unfavorable court ruling would be “a loss for the American people,” and highlighted that China consented to enhance oversight of shipments of precursor chemicals essential for fentanyl production earlier this year—a resolution he credits to the leverage generated by the administration's tariffs.
“I have been very consistent on this, that tariffs are a shrinking ice cube. The ultimate goal is to rebalance trade and to bring back domestic production,” Bessent said.
