The U.S. trade court ruling against the Trump Administration's sweeping tariffs still leaves other legal avenues for the White House to impose levies on trading partners, according to Goldman Sachs.
Chief U.S. Political Economist Alec Phillips says there are four ways for the administration to impose tariffs similar to those the court struck down.
1. "The administration could quickly replace the 10% across-the-board tariff with a similar tariff of up to 15% under Sec. 122. Those tariffs would last for only up to 150 days, after which the law requires Congressional action to extend." The law is not clear on whether those tariffs can stop and restart, Phillips says, but it authorizes the president "to address a balance of payments deficit or to prevent an imminent and significant depreciation in the dollar, but it does not require any formal investigation or process, so the administration could theoretically replace the current 10% tariff with a Sec. 122-based tariff within days if deemed necessary."
2. "The US Trade Representative could quickly launch Sec. 301 investigations on key trading partners (for unfair trade practices), laying the procedural groundwork for tariffs after the investigation is complete." There is no level on duration of the tariffs, but investigations would likely take several weeks, he said.
3. "Sec. 232 tariffs (based on national security grounds), which President Trump has already used for steel, aluminum, and autos, could be broadened to cover other sectors. We already expect additional sectoral tariffs (pharmaceuticals, semiconductors/electronics, etc) and uncertainty regarding the IEEPA-based tariffs could lead the White House to put more emphasis on sectoral tariffs, where there is much less legal uncertainty."
4. "Sec. 338 of the Trade Act of 1930 allows the President to impose tariffs of up to 50% on imports from countries that discriminate against the US. This authority, which has never been used, is similar to the authority under Sec. 301, except that it limits the amount of the tariffs but does not require a formal investigation."
The likelihood is that the White House uses Sec. 122 to impose similar across the-board tariffs and then use Sec. 301 for investigations into larger trading partners, Phillips said.
"However, it seems unlikely that the administration could complete Sec. 301 investigations on every US trading partner within the next several months. If the court’s ruling against the IEEPA-based tariffs remains in effect, this could mean that smaller trading partners and/or countries with smaller trade surpluses with the US might not face a baseline tariff when Sec. 122 tariffs roll off after 150 days (assuming the Trump administration cannot find a legal means to extend them)." -- Seeking Alpha
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