"For the first time ever, the U.S. is invoking Section 122 of the 1974 Trade Act, which allows tariffs of up to 15% for as long as 150 days to quickly address international payments problems. On Saturday, Trump hiked his new tariffs to 15%, less than 24 hours after setting them at 10% in an executive order. That's after the Supreme Court ruled the president has no authority to apply tariffs under the International Emergency Economic Powers Act."
"But the actual language of the Trade Act lists requirements that don't exist today, including a "large and serious" balance-of-payments deficit. While the U.S. has run a trade deficit for decades, it's been offset by capital inflows as foreign investors pour billions into financial markets, resulting in a net balance of zero. "Section 122 of the 1974 Trade Act, on which Trump's 10% tariff is based, does not apply in the current macro environment,""
The Supreme Court blocked the president's use of IEEPA to impose global tariffs. The administration then invoked Section 122 of the 1974 Trade Act to impose short-term tariffs up to 15%. The new levies were raised from 10% to 15% within a day. Section 122 requires a "large and serious" balance-of-payments deficit that does not exist because capital inflows offset the long-running trade deficit, producing a net balance near zero. Economists and trade experts contend that Section 122 therefore lacks applicability in the current macroeconomic environment.
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