According to international legal experts, a limited legal option limits global tariffs after Donald Trump voided his “liberation day” duties on Wednesday.
The U.S. Court of International Trade Judgment ruled that Trump abused emergency power legislation when he announced blanket tariffs last month that were designed to narrow trade deficits with countries around the world.
Legal experts say the court has determined that the International Emergency Economic Powers Act (IEPA) is explicitly designed to address the balance of payments, so Trump will have to back down on alternative legal avenues.
Lorand Bartels, professor of international trade law at Cambridge University, said the ruling presented a strong historical case of legislation passed in the Cold War to deal with national security matters - which could not be used to address the balance of trade issues.
Instead, the court pointed out other legislation - Section 122 of the Trade Act of 1974, which aims to impose temporary tariffs on the president to address the "large and severe U.S. payment deficit."
But, Bartels added that Section 122 provides only very limited powers that allow the president to impose tariffs of up to 15% within 150 days before seeking further authorization from the U.S. Congress.
"The ruling is very clear that the way to resolve the balance of trade issues is Article 122, but Trump's challenge is that these powers are limited. So, legally speaking, his best option is to change the law to remove restrictions on S122."
The court's ruling did not invalidate the so-called Section 232 tariffs, currently covering steel, aluminum and automobiles, with both the Trump and Biden administrations successfully protecting strategically important sectors on the grounds of national security.
The Trump administration is conducting a Section 232 investigation into other departments, including medicines and aerospace. These could lead to higher tariffs, but not to lead to widespread impositions imposed by Trump in all countries last April, with a benchmark of 10%.
Other avenues of this approach may include Article 338 of the Tariff Act of 1930, said Mona Paulsen, assistant professor of international economic law at the London School of Economics.
If U.S. businesses suffer unfair discrimination (defined as “any unreasonable allegation, stand out, regulate or restrict”), the law has never been used, authorizing the president to impose tariffs.
The tariffs are capped at 50%, with Trump briefly threatening to impose figures on the EU last Friday and then agreeing to delay the performance of his duties in two days.
Paulson said Trump's choice of 50% of the choice has potential significance. "For me and other trade law monitors, when Trump imposes 50% tariffs on the EU, we want to know if he is in the scope of Section 338," Paulson said. "Is the president stretching out his hand there?"
The third option is to make more use of Articles 301 and Article 338 of the Trade Act of 1974. This allows the U.S. Trade Representative to impose tariffs on countries that violate existing international trade agreements in a "discriminatory" manner.
This was used by Trump's first administration in 2018, with China using forced technology transfers and other violations of intellectual property rules on China, imposing tariffs on a range of U.S. imports.
The court's ruling prompted calls for Trump to return to Congress to impose tariffs as part of his display tax bill. Last week, the U.S. House of Representatives passed this with a vote, but it should still be voted by the Senate.
Charles Benoit, a trade adviser to the Prosper American League, is a bipartisan trading group representing U.S. domestic producers and workers, who believe Trump's tariffs will benefit from a safer legal foothold.
"We plan to raise the tariffs on 3TR over the next decade and you will rely on the IEPA bill? Will Congress legislate for this? It's a terrible idea," he said in a video posted on X.