Trump’s New Tariffs Could Be Higher Than 15% For Some Countries

Key Concepts

• Section 122 of the Trade Act of 1974: A US law allowing the President to adjust tariffs to address balance of payment deficits.
• International Economic Emergency Powers Act (AIPA): A law previously used by President Trump to impose tariffs, now deemed unconstitutional by the Supreme Court for broad application without Congressional approval.
• Liberation Day Tariffs: The earlier tariffs imposed by Trump under AIPA, struck down by the Supreme Court.
• Supplemental Proclamation: A planned presidential directive to implement the new 15% tariffs “where appropriate.”
• Balance of Payment Deficit: The economic condition the new tariffs are intended to address.

New Tariff Structure and Legal Context

US Trade Representative Jameson Greer indicated on February 25th that President Trump’s proposed 15% global tariff will not be universally applied. This follows the Supreme Court’s February 23rd ruling against Trump’s earlier “Liberation Day” tariffs, which were implemented using the International Economic Emergency Powers Act (AIPA). The Court’s 6-3 decision stipulated that the President requires Congressional approval to impose tariffs under AIPA.

The administration intends to issue a “supplemental proclamation” to implement tariffs of 15% “where appropriate,” with the possibility of even higher rates for certain countries. Greer stated, “It'll go up to 15 for some and then it may go higher for others, and I think it will be in line with the types of tariffs we've been seeing.” This suggests a tiered system based on specific trade relationships and potentially, perceived unfair trade practices.

Continuity and Existing Trade Agreements

A key objective of the new tariff structure is to maintain continuity with existing levies despite the Supreme Court’s ruling. Greer, speaking to Bloomberg, emphasized the administration’s goal to “establish new mechanisms to maintain continuity with the levies recently struck down.” The US anticipates that some trade partners will voluntarily continue adhering to the tariffs previously imposed under AIPA.

Specifically, the US expects to maintain its current tariff arrangement with China, which ranges between 30% and 50%. This indicates a willingness to preserve existing trade barriers with China, even without the legal backing of AIPA.

Presidential Authority and the State of the Union

During his State of the Union address on February 24th, President Trump asserted that trade partners would likely maintain existing deals due to his increased negotiating power. He argued that his ability to impose potentially “far worse” tariffs is now greater following the Supreme Court’s “unfortunate involvement.” This statement suggests a strategy of leveraging the threat of higher tariffs to secure favorable trade terms.

Implementation and Timeline of New Tariffs

Following the Supreme Court’s decision, Trump announced a new 10% global tariff, effective February 27th, under Section 122 of the Trade Act of 1974. This section allows the President to adjust tariffs to address balance of payment deficits. Trump subsequently stated on Truth Social that he would raise these tariffs to 15%.

These tariffs are set to expire in 150 days without Congressional action, though the administration retains the option to reimplement them. This creates a time-sensitive situation, potentially requiring Congressional involvement to make the tariffs permanent.

Synthesis

The recent developments represent a shift in the Trump administration’s tariff strategy following a significant legal setback. While the initial plan for a uniform 15% global tariff remains, its implementation will be nuanced, with rates varying based on individual trade relationships. The administration is prioritizing continuity with existing tariffs, particularly with China, and leveraging the threat of higher tariffs to maintain negotiating leverage. The new tariffs, implemented under Section 122, are temporary and require Congressional action for permanence, creating a potential point of contention.