On Thursday, the U.S. Court of International Trade ruled that Trump illegally imposed a 10 percent blanket tariff on most imports using Section 122 of the Trade Act of 1974, concluding the administration exceeded powers granted by Congress.
The ruling represents the latest collapse in a rapidly evolving tariff strategy that has repeatedly shifted legal foundations as earlier measures were invalidated by courts.
The newly invalidated tariffs had themselves been introduced only hours after the U.S. Supreme Court struck down Trump’s earlier sweeping “reciprocal tariffs” in February.
Those previous tariffs were imposed under emergency executive powers through the International Emergency Economic Powers Act (IEEPA), with Trump arguing that chronic trade deficits and supply-chain vulnerabilities constituted a national emergency.
The administration used that authority to impose broad double-digit tariffs affecting nearly every major U.S. trading partner, including South Korea, the European Union, Japan and Canada.
But courts increasingly rejected the legal rationale.
The tariff regime was first challenged at the U.S. Court of International Trade, then blocked by a federal district court and later rejected again at the Federal Circuit Court of Appeals. The Supreme Court ultimately delivered the decisive blow earlier this year, ruling that Trump had exceeded presidential authority by using emergency powers to impose sweeping trade tariffs without congressional approval.
Rather than retreat, the White House moved immediately to preserve the tariffs through a new legal pathway.
Within hours of the Supreme Court ruling, Trump unveiled a replacement system using Section 122 of the Trade Act of 1974 — a little-used Cold War-era provision allowing temporary tariffs of up to 15 percent for a maximum of 150 days in response to “large and serious” balance-of-payments deficits or “fundamental international payments problems.”
The law was originally written during the Bretton Woods monetary era, when the U.S. dollar remained tied to gold and policymakers feared destabilizing international payment imbalances.
The move was largely met with scorns. A coalition of states and small businesses sued, arguing the United States does not face the type of balance-of-payments crisis envisioned by Congress in the 1970s. Economists also noted that modern U.S. trade deficits differ fundamentally from the monetary instability Section 122 was designed to address.
The trade court agreed. In a split ruling Thursday, judges found the administration failed to demonstrate the specific economic conditions required under Section 122 and declared the tariffs “invalid” and “unauthorized by law.”
The administration is expected to appeal again, potentially setting up another Supreme Court confrontation. But the latest defeat further exposes the increasingly unstable legal architecture behind Trump’s tariff offensive.
The repeated setbacks, analysts agree, won't likely humble Trump’s trade agenda. The administration has been migrating toward a more legally durable mechanism: Section 301 of the Trade Act of 1974.
Section 301 — the same authority Trump used during the original U.S.-China trade war — allows the U.S. Trade Representative to investigate unfair foreign trade practices and impose retaliatory tariffs following formal reviews and hearings.
Unlike emergency powers or Section 122, Section 301 requires a lengthier procedural process. But once tariffs are implemented, they become substantially harder to overturn in court because they rest on clearer statutory authority delegated by Congress.
The White House has already signaled that future Section 301 investigations will increasingly target strategic industries tied to economic security and industrial competition, including semiconductors, electric vehicles, batteries, pharmaceuticals and advanced manufacturing supply chains.
The U.S. Trade Representative (USTR) in March announced it was launching investigations into Korea and 15 other major manufacturing economies under Section 301, accusing them of "structural excess capacity."
The Korean trade minister has been in Washington for an USTR hearing to defend the industry anchored on "market economy principles" and explain how the two countries are in a complementary relationship that is expected to expand based on the Korea-U.S. strategic investment memorandum of understanding where Korea has pledged a combined investment of $350 billion.
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