Trump’s 15% Section 122 Tariff Retry Headed for a Supreme Court Loss Too

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Authored by Mike Shedlock via mishtalk,

There are huge flaws in the Section 122 tariff idea.

An appeals court has already invalidated Section 122 tariffs now imposed by Trump.

Two New Issues

  • Balance of Payments (discussed in detail below)
  • Unusual and Extraordinary Threat (obviously nonexistent)

The statutory requirement for Section 122 is “Large and Serious Balance-of-Payments Deficits.”

They don’t exist. Trade deficits are not the same thing.

Court Case History Mentioning Balance of Payments

Please consider Case 2025-1812 Trump vs State of Arizona, Colorado, Illinois, Minnesota, Nevada, etc. Emphasis Mine

Plaintiffs’ attempts to defend the CIT’s actual reasoning—that “regulate … importation” authorizes only some tariffs—likewise fail. Plaintiffs rely on Section 122 of the Trade Act of 1974, but that statute cannot be read to narrow the President’s IEEPA authority. The statutes “coexist harmoniously.” Department of Agric. Rural Dev. Rural Hous. Serv. v. Kirtz, 601 U.S. 42, 63 (2024). Section 122 authorizes measures to address non-emergency balance-of-payments concerns. And IEEPA supplies a distinct, complementary authority to address balance-of-payments concerns and other issues when they constitute emergencies. Congress commonly provides overlapping authorities, especially in this context, and it is particularly clear that Congress intended these two statutes to buttress each other given that Congress enacted IEEPA after Section 122.

Even if Section 122 had been enacted after IEEPA, reading it as “‘displac[ing]’” part of the President’s authority under IEEPA would be improper unless plaintiffs could overcome the “‘strong presumption’” that the statutes “can coexist harmoniously.” Department of Agric. Rural Dev. Rural Hous. Serv. v. Kirtz, 601 U.S. 42, 63 (2024). Plaintiffs cannot carry that “‘heavy burden,’” id. Indeed, Yoshida articulates how the two statutes coexist: Congress “said what may be done with respect to foreseeable events” in various statutes, including Section 122, and “what may be done with respect to unforeseeable events in the TWEA,” 526 F.2d at 578 (emphases added), and now in IEEPA. That is, while Section 122 empowers the President to address non-emergency balance-of-payments concerns, IEEPA supplies a distinct, complementary authority to address emergencies, including but not limited to balance-of-payments concerns.

[The Killer Phrase]

Nor does it 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. See, e.g., S. Rep. No. 93-1298, at 89 (1974) (Senate report on Section 122, recognizing the possibility of “a large payments surplus” at the same time as “a large trade deficit”).

[Killer Phrase II]

Section 122 fully applies to balance-of-payments tariffs when the President has not declared an emergency and identified an “unusual and extraordinary threat,” 50 U.S.C. § 1701; IEEPA supplies additional power to address balance-of-payments concerns when those preconditions are met, and to address other concerns

TWEA authority had impliedly been limited by the later enactment of Section 122, that is now irrelevant because Congress enacted IEEPA after Section 122 (and Yoshida). As discussed above (at 5-6), it defies credulity to suggest that when Congress enacted IEEPA, using the same language that had been construed to authorize a balance-of-payments surcharge in TWEA, Congress meant to exclude such authority.

Finally, Section 122’s legislative history—which the private plaintiffs invoke, Br. 31—does not help them. Plaintiffs inaccurately paraphrase the Senate committee report on the statute containing Section 122 as saying Congress passed that provision “to provide ‘explicit statutory authority’ to deal with the type of emergency President Nixon declared in 1971.” V.O.S. Br. 31. In fact, the report says that Congress wanted the President “to have explicit statutory authority to impose certain restrictions on imports for balance of payments reasons,” S. Rep. No. 93-1298, at 88—not that Congress meant for the provision to cover “emergenc[ies]” (V.O.S. Br. 31).

DOJ Already Admitted Section 122 Invalid

Balance of Payment Deficit

Meanwhile, back in the logical world …

Gorsuch on Trump’s Nonsense

Section 122 Is illegal as Implemented

I expect a quick challenge and for Trump to lose in the International Court of Trade.

Given the recent Supreme Court ruling, this case should progress much faster, perhaps with an immediate stay on grounds of likely success.

This will be fun.