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 for such broad tariff applications 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 decision. Greer, speaking to Bloomberg, emphasized the administration’s goal to “establish new mechanisms to maintain continuity with the levies recently struck down.” The administration 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 Congressional Role

President Trump, in his State of the Union address on February 24th, expressed confidence that trade partners would maintain existing deals, arguing his power to negotiate “far worse” deals is now greater following the Supreme Court’s “unfortunate involvement.” This statement highlights the administration’s belief in the President’s negotiating leverage.

The current tariffs are being implemented under Section 122 of the Trade Act of 1974, which allows the President to adjust tariffs to address balance of payment deficits. However, these tariffs are set to expire in 150 days without Congressional action. The administration retains the option to reimplement them. Initially announced at 10% on February 25th, Trump subsequently stated via Truth Social that he would raise the new tariffs to 15%.

Legal and Economic Implications

The Supreme Court’s ruling significantly curtails the President’s unilateral authority to impose tariffs based solely on national security concerns as interpreted through AIPA. The shift to Section 122 of the Trade Act of 1974, while providing a legal basis for tariffs, introduces a time limit and necessitates potential Congressional involvement for long-term implementation. The tiered tariff structure, signaled by Greer, suggests a more targeted approach than the previously proposed blanket 15% tariff, potentially mitigating some of the economic disruption.