Rebuilding tariff barriers becomes difficult for Trump: Democrats will block any attempt to extend tariffs

After the Supreme Court overturned most of the global tariffs imposed last year, U.S. President Trump quickly employed alternative legal tools in an attempt to rebuild a long-standing tariff barrier, but Democrats may not allow him to succeed.

On Monday, the 23rd, Eastern Time, Senate Democratic Leader Schumer announced that Democrats will block any efforts to extend tariffs implemented by Trump under Section 122 of the Trade Act of 1974. This move risks collapsing the tariff system built during Trump’s second term, as tariffs imposed under Section 122 are set to expire and end this summer.

According to Xinhua News Agency, the U.S. Supreme Court recently issued a ruling stating that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs on a large scale. On the day the ruling was announced last Friday, Trump announced he would invoke Section 122 to impose an additional 10% global tariff as a substitute, and on Saturday, he said he would raise the tariff rate to 15%. However, this section has a 150-day limit, and extensions require Congressional approval.

Schumer stated in a release that Trump’s 15% new global tariffs will continue to drive up prices, making life difficult for millions of Americans. “Senate Democrats will continue to oppose Trump’s tariffs and will block any attempts to extend these harmful tariffs when they expire this summer. Democrats will not tolerate Trump’s economic destruction.”

This predictable stance will escalate the confrontation between Trump and Congress and introduce new uncertainties into the global trade landscape. Wall Street Insights previously noted that tariffs imposed under Section 122 have upper limits in both rate and duration, making it difficult for Trump to pursue a long-term, large-scale tariff system.

Section 122: Limitations of Short-term Alternatives

Last Friday, Trump announced a 10% increase in global tariffs, making him the first U.S. President to impose tariffs under Section 122 of the Trade Act of 1974. This section allows the President to impose tariffs up to 15% for a maximum of 150 days when facing a “large and serious” international balance of payments deficit.

The main advantage of this tool is that it can be implemented without prior investigation. In May last year, the U.S. International Trade Commission ruled that retaliatory tariffs were illegal, noting that if the President intends to address trade deficits through tariffs, he should use Section 122 rather than IEEPA.

However, this section has a fatal flaw. The 15% cap and 150-day limit mean tariffs under this section are only suitable as short-term measures.

More critically, extending the duration requires Congressional approval, which Democrats have made clear they will oppose. Trump posted on social media this Monday reaffirming that he has Congressional authorization for tariffs, claiming, “As President, I do not need to seek approval from Congress,” but if he wishes to implement Section 122 tariffs long-term, this statement conflicts with legal provisions.

The 15% Tariff Aims to Maintain Existing Trade Agreements

CCTV News pointed out that Trump’s move to impose a 15% tariff is actually aimed at maintaining the existing tariff level. In trade agreements with the EU, Japan, South Korea, Middle Eastern countries, and others, the tariff level is precisely 15%.

These countries and regions were originally threatened by high tariffs from Trump, which could have led to billions or even trillions of dollars in U.S. investments. If they cannot maintain the 15% tariff level, their commitments and investments could be jeopardized by tariff cancellations.

CCTV mentioned that on the 22nd, last Sunday, U.S. Trade Representative Grier emphasized in an interview with U.S. media that the government has found a way to “rebuild” punitive retaliatory tariffs and stated that agreements with trade partners like the EU, UK, and Japan remain valid. This indicates that the Trump administration is attempting to use new legal tools to uphold previously negotiated trade terms.

CCTV believes that, in the name of “America First” and to preserve what it calls the “trade war political legacy,” Trump will take all possible measures and utilize various legal tools to maintain the high tariff levels. It is also possible that Trump will rely on provisions like the “301” and “232” statutes to continue advancing a tough trade policy.

Limitations of Other Legal Tools

Besides Section 122 of the Trade Act of 1974, Trump has at least four other legal tools as alternatives to IEEPA, all with additional restrictions.

The 1962 Trade Expansion Act’s Section 232 is the most relied-upon tool during Trump’s two terms. It authorizes the President to impose tariffs on imports for national security reasons, with no set limit on rates or duration. However, its limitations include that tariffs cannot be implemented immediately; the Department of Commerce must complete an investigation and submit a report within 270 days. Additionally, this statute targets specific industries rather than the entire economy, making its scope narrower than IEEPA.

Section 301 of the Trade Act of 1974 was the legal basis for Trump’s trade disputes with China during his first term. It authorizes the U.S. Trade Representative to impose tariffs on trade measures deemed discriminatory against U.S. companies, with no upper limit on rates. Its drawbacks include complex procedures requiring investigations, consultations with foreign governments, and public comment, with tariffs automatically expiring after four years.

Section 201 of the same law authorizes the President to impose tariffs when increased imports threaten U.S. manufacturers. However, the tariff cap is 50% of the current rate, with an initial period of four years, and if implemented for more than a year, tariffs must be gradually reduced.

The most controversial is Section 338 of the Smoot-Hawley Tariff Act of 1930, a measure from the Great Depression era that has never been used to impose tariffs. Historians and economists generally agree that this law restricted global trade and worsened the Great Depression. Five Democratic House members proposed a resolution to abolish this section last March.

Long-term Uncertainty in Global Trade

Frequent changes in U.S. tariff policy have caused chaos in the international trade order. CCTV pointed out that after the Supreme Court ruled that Trump’s tariffs under IEEPA were unconstitutional, the foundation collapsed. He immediately reimposed a 10% tariff on all imports under Section 122, then quickly raised it to 15% within 24 hours, leaving many countries at a loss.

CCTV believes that such frequent tariff adjustments have led the U.S. government into an unprecedented diplomatic deadlock and damaged trust among allies. The EU, India, and others have announced freezes or suspensions of trade agreements and negotiations with the U.S. The so-called retaliatory tariffs imposed by the U.S. on other countries ranged from 10% to 50%. Even with rates bouncing within 24 hours, the core objectives remain unachieved.

If Trump continues to push a tough trade policy using more legal provisions, it will raise tariff and non-tariff barriers worldwide, suppress international trade, and dampen corporate investment willingness. The uncertainty surrounding investments causes corporate decision-makers to hesitate on whether to invest, localize, or go international.

U.S. Customs and Border Protection previously stated that starting Tuesday, February 24th, Eastern Time, it will cease collecting tariffs imposed under IEEPA. However, how to handle the over one hundred billion dollars in tariffs already collected remains uncertain.

Last Friday, Trump hinted he would not refund tariffs based on IEEPA, expecting any refunds to be delayed by lawsuits for years. U.S. Treasury Secretary Yellen refused to speculate on the possibility of issuing refunds to companies last Sunday, instead leaving the decision to lower courts.

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