Can Trump raise tariffs to 15 pc despite US SC rap?

US President Donald Trump has announced that he would increase the newly imposed global tariff to 15 per cent after the Supreme Court struck down the Republican leader’s tariff program. The move has triggered a fresh legal debate on whether he can do that within the bounds of law after the court’s order.

The US Supreme Court on Friday struck down Trump’s controversial “reciprocal tariffs” in a 6-3 majority ruling, which stated that the tariffs imposed last year under the International Emergency Economic Powers Act (IEEPA) were unlawful.

The court further stated that the IEEPA did not authorise such broad-based trade measures. The verdict scrapped the tariffs collected under IEEPA, and now the possibility of potentially massive refunds looms large on the US economy.

Trump turns to Section 122

Expressing his displeasure over the verdict, Trump lashed out at the Democratic justices who ruled against him and dubbed them a “disgrace to the nation”. The Republican leader further stated that he felt “ashamed” of conservative justices who sided with the majority as he slammed the ruling as “terrible” and “defective”.

According to a report in Politico, Trump on Saturday (February 22), invoked Section 122 of the Trade Act of 1974, a rarely used provision that allows the President to impose tariffs of up to 15 per cent for no more than 150 days to address a “large and serious balance-of-payment deficit.”

Also Read: Still seething at court ruling, Trump now says he'll raise tariffs to 15pc

“Based on a thorough, detailed, and complete review of the ridiculous, poorly written, and extraordinarily anti-American decision on Tariffs issued yesterday, after MANY months of contemplation, by the United States Supreme Court, please let this statement serve to represent that I, as President of the United States of America, will be, effective immediately, raising the 10% Worldwide Tariff on Countries … to the fully allowed, and legally tested, 15% level,” Trump wrote on Truth Social.

The report further stated that no US president has previously invoked Section 122, adding that by raising the global tariff from 10 per cent to 15 per cent, Trump effectively maxed out the authority available under that statute. The law caps both the rate and the duration. If it needs to be extended beyond 150 days, the decision needs to be approved by Congress.

IEEPA does not permit sweeping tariffs: US SC

However, the Supreme Court did not say that Trump does not have the power to impose tariffs. It ruled only that IEEPA, the emergency law he had relied on, does not permit sweeping, across-the-board import duties. As per the verdict, it was not a ruling on the legality of other trade statutes.

Also Read: What does US Supreme Court ruling on Trump’s tariffs mean for India? | Capital Beat

According to media reports, Section 122 is different from IEEPA as it was written specifically with trade imbalances in mind. However, Indian-American lawyer Neal Katyal, who recently prevailed in a case challenging Trump’s earlier tariffs, questioned whether Section 122 applies to trade deficits rather than balance-of-payments deficits.

Neal Katyal’s on Section 122

"Seems hard for the President to rely on the 15 percent statute (sec 122) when his DOJ in our case told the Court the opposite: Nor does [122] have any obvious application here, where the concerns the President identified in declaring an emergency arise from trade deficits, which are conceptually distinct from balance-of-payments deficits,” he stated in a post on X.

Also Read: Who is Neal Katyal, the Indian-origin lawyer who challenged Trump’s tariffs?

"If he wants sweeping tariffs, he should do the American thing and go to Congress. If his tariffs are such a good idea, he should have no problem persuading Congress. That's what our Constitution requires,” Katyal added.

What other legal routes are open to Trump

Although there are other legal routes Trump can use to impose tariffs, none are simple. For instance, Section 301 of the Trade Act of 1974 allows tariffs after a formal investigation into unfair trade practices. But the process can take months or longer.

Also Read: After court junks Trump’s tariffs, what happens to USD 133 bn collected so far?

Then there is Section 232 of the Trade Expansion Act of 1962, which permits product-specific tariffs on national security grounds, as Trump did with steel and aluminium in 2018. But it cannot be used to impose blanket global tariffs, reported PTI.

The refund question

Meanwhile, the financial consequences of the Supreme Court ruling loom as tariffs collected under IEEPA were deemed unlawful, and refunds could total roughly $175 billion. The Supreme Court did not outline how repayments should be handled, leaving lower courts to sort out the mechanics.

So can Trump raise tariffs to 15 per cent despite the court’s ruling? For now, he can under Section 122 of the Trade Act of 1974 but only for 150 days. Any extension beyond it will require approval from Congress.

(With agency inputs)