What are Section 122 tariffs and how will they differ from Trump’s earlier tariffs?

Hours after the US Supreme Court on Friday (February 20) struck down Donald Trump’s tariffs under the 1977 International Emergency Economic Powers Act (IEEPA), the president announced 10% tariffs under a different trade law: Section 122 of the Trade Act of 1974. He announced in a social media post on Saturday that this 10% rate would be increased to 15%, the maximum permissible tariff limit under the new provision. According to the White House Fact Sheet notifying the 10% rate, these tariffs will become effective from Tuesday (February 24). Addressing a news conference, Trump said that the new set of tariffs could prove to be even more painful and lasting than the ones they would replace. “I can charge much more than I was charging,” he said, adding that he could still “destroy foreign countries” by other means. The new set of tariffs excludes certain import categories, namely critical minerals, pharmaceuticals, energy products, some electronics, agricultural products including beef, automobiles and parts, aerospace products, goods subject to Section 232 tariffs, as well as imports under the existing Free Trade Agreement between the US, Canada and Mexico. In a 6-3 ruling, the Supreme Court had ruled that Trump did not have the authority to bypass Congress and invoke the national economic emergency law, traditionally used by presidents in a sanctionary capacity, to impose sweeping tariffs on imports. This had brought into question the status of the Liberation Day tariffs announced on April 2, 2025, announcing a baseline 10% rate on all trading partners and country-specific “reciprocal” tariffs. Notably, this ruling does not affect the tariffs announced under other statutes (Section 232, Section 301, the fentanyl tariffs). ## What is Section 122? Trump’s choice of Section 122 marks yet another use of an instrument associated with Richard Nixon to pressure American trading partners. In 1971, Nixon invoked the Trading with the Enemy Act of 1917 (TWEA) to briefly impose a 10% tariff on all imports, while the US struggled to resolve its balance-of-payments crisis with the collapse of the fixed exchange rate system. Trump has cited this precedent as a rationale for his tariffs under the IEEPA, which succeeded the TWEA. Nixon’s next action was enacting Section 122, which directs the President to take measures, including imposing a temporary import surcharge, or tariff, when necessary to address “large and serious United States balance-of-payments deficits” or certain other situations that present “fundamental international payments problems.” However, any measures announced under this provision are temporary and must adhere to specific conditions. The surcharge cannot exceed 15%, and can only be in place for, at most, 150 days, unless Congress approves an extension. In an analysis for Foreign Policy in December, Clark Packard, researcher at the Cato Institute, and Stan Veuger of the American Enterprise Institute estimated that the Trump administration could immediately but painstakingly replicate most of his tariff structure under IEEPA. By their estimate, the administration could recover about 75% of IEEPA-era tariffs. Countries facing tariffs above 15% would see some reduction, but all other countries may anticipate a similar impact to the original tariff announcements. More importantly, Section 122 does not call for lengthy investigations as mandated by other trade statutes, meaning Trump could continue unfurling tariff announcements in rapid succession. However, these sweeping announcements would run into a Congressional wall after 150 days, by which time they would likely face yet another court challenge. The original context of the law could be held to scrutiny, given that it was enacted for a monetary system that ceased to exist over 50 years ago. A Congressional Research Service report from April 2025 noted that the “balance-of-payments deficits” as under Section 122 did not specifically refer to trade deficits, but focused on more inclusive measures of international payments, which include trade in invisibles (services) and capital flows. While Congress tracked all three overall measures, the US government stopped publishing them in 1976, as they became obsolete with the collapse of the Bretton Woods fixed exchange rate system in 1973. With the introduction of the floating exchange rate system, it could be argued that the balance-of-payments crisis, as originally envisioned by Section 122 entirely disappeared as a concept. If Congress does not vote on an extension, Packard and Veuger say, the administration could theoretically allow the current set of tariffs to lapse, declare a new balance-of-payments emergency and start all over. Other options in the arsenal The Trump administration also plans to expand its use of Section 301 of the Trade Act of 1974 to open investigations into unfair trade practices by other countries and introduce additional tariffs. Additionally, expanding tariff coverage under Section 232 of the Trade Expansion Act of 1962 for national security remains an option. However, both these sections offer the administration limited flexibility. Section 301 would be invoked individually against each country, as in the Trump administration’s first term against Chinese imports, several of which remain in place now. Section 232 on the other hand would apply to specific sectors such as steel and aluminium, pending an investigation by the Commerce Department. There is also the infamous Section 338 of the Tariff Act of 1930, or the Smoot-Hawley Tariff Act, to which comparisons were drawn on April 2. The 1930 Act raised duties on roughly 25% of US imports to protect American farmers and businesses, but triggered a devastating retaliatory trade war that helped shrink world trade by 66% between 1929 and 1934, at the peak of the Depression. This vaguely worded section authorises the president to impose up to 50% in tariffs on any country that “discriminates” against the US compared to other nations. It authorises the US International Trade Commission (USITC) to “ascertain and at all times to be informed” of purported discrimination and to “bring the matter to the attention of the President, together with recommendations.” This section also authorises the president to impose tariffs “whenever he shall find as a fact” that discrimination exists. However, it does not specify if the president can act unilaterally or must abide by USITC findings. This section too has not been tested by any administration, or thus faced a challenge in court.