• United States

June 3, 2025, 12:18 PM View Comments ()

The next phase of U.S. President Donald Trump’s trade war may come down in large part to a 50-year-old law that was meant to make it easier for presidents to boost trade, not hinder it.

After suffering a pair of judicial setbacks last week that called into question the most expansive of Trump’s tariffs, the administration is likely preparing to use a little-remembered provision from the 1974 Trade Act. The provision, which has never been used before, allows the White House to levy tariffs of up to 15 percent on countries for up to five months before Congress can weigh in. 

The legal setbacks are now on hold due to an appeals court stay while litigation plays out. Yet the Trump administration has reportedly told other countries that talks must continue to negotiate bilateral deals with the United States because “the president intends to continue this tariff program pursuant to other robust legal authorities if necessary.”

Section 122 of the 1974 Trade Act seems to fit the bill, and it was specifically called out as a potentially legal avenue by the trade court that struck down the Trump administration’s more ambitious April tariffs. That provision allows the president to levy limited, short-term tariffs to address balance-of-payment concerns, which is similar to the Trump administration’s yearslong fretting over the goods trade deficit that the United States runs with many countries. Another part of that 1974 bill, the so-called Section 301 provisions, is another Trump favorite and has already been used to levy broad-based tariffs on China in response to its allegedly discriminating trade behavior.

The irony is that the 1974 law, described by one of its chief architects as the “Magna Carta” of U.S. trade legislation, sought to bridge the unhelpful divide between Congress’s then-absolute control over trade policy and the White House’s control of foreign policy otherwise. The law was meant to give presidents a way to lower trade barriers as part of a global foreign-policy outreach, not as bricks in a protectionist wall.

“It was a bill designed to enhance trade, not curtail it,” said Alan Wolff, who drafted a major part of the legislation while at the Office of the U.S. Trade Representative in 1973 and 1974 and is now with the Peterson Institute for International Economics. While that provision has today become the potential pivot point of Trump’s next trade move, “Section 122 was noncontroversial. Nobody spent much time with it.”

Given the limited size of the allowable tariffs and the fact that Congress could shoot them down after a few months, Wolff said that Section 122, while legally permissible, may be the least appealing option for an administration that has several other congressionally delegated authorities to rely on.

“I don’t see 122 as a happy thing for Trump to choose,” he said. “Compared with the other authorities, Sec. 122 seems to be the least happy option from his point of view.”

In the immediate wake of the judicial setbacks, Trump reached back to an established and more defensible presidential trade authority on tariffs, announcing a doubling of tariffs on imported steel and aluminum under the national security provisions of Section 232 of the 1962 Trade Expansion Act. That authority, which would also allow Trump administration tariffs on things like autos, copper, and lumber, is easier to defend in court than the never-before-tried invocation of Carter-era emergency powers legislation that courts took aim at last week.

Countries around the world facing the Trump administration’s deadline of July 9 for talks may have spied a reprieve in last week’s judicial ruling that the April 2 “Liberation Day” tariffs were an excessive and improper use of the International Emergency Economic Powers Act. (They’ve now reportedly been told to submit their best trade offers to the United States this week if they want a deal.) 

But the U.S. Court of International Trade last week said, essentially, that if the administration is worried about trade deficits, which was the basis for its declaration of a “national emergency,” then it has a tailored rule ready at hand.

“Trade deficits are one of the key balance-of-payment deficits and can be directly impacted by mechanisms such as import quotas and tariffs, as authorized by Section 122,” the court ruled.

Even if the Trump administration only uses Section 122 for a short-term tariff to keep pressure up during bilateral talks—and U.S. Commerce Secretary Howard Lutnick recently said that countries seeking a deal should hurry up—it could buy time to roll out more durable tariffs under the tried-and-tested authorities of Section 301. 

Of course, even the use of Section 301 under both Trump administrations has been novel in its reach, including the majority of the sweeping tariffs on nearly all trade with China. The provision was initially included to assuage congressional concerns that the president, while seeking lower tariffs overall, would still have a way to safeguard critical industries normally protected by affected lawmakers.

“If you had told Congress that Sec. 301 would be used against a country just flat out, they would have been surprised, because it was designed to say, ‘[If] you won’t take our beef or semiconductors or whatever, [then] here is a proportional tariff,’” Wolff said.

In any event, after 90 years of steady congressional delegation of trade authority to the White House, the Trump administration is not going to let any of its potential powers go to waste, even those that have never been used before. Trump’s sudden doubling of steel and aluminum tariffs by using a decades-old authority was just, perhaps, the first salvo.

“This president likes tariffs very much. He’ll reach for the nearest tariff club and swat a fly with it or knock out another segment of somebody’s economy, or of ours,” Wolff said.