Key facts
- The Trump administration is racing to replace expiring tariffs that are set to end on July 24.
- The Supreme Court previously invalidated tariffs imposed under the International Emergency Economic Powers Act (IEEPA).
- Tariff revenue has shifted from a surplus to a significant deficit for the U.S. Treasury.
- The administration is leveraging Section 301 of the Trade Act of 1974, which allows tariffs in response to unfair trade practices.
- Two major Section 301 investigations are ongoing, focusing on forced labor and alleged overproduction by trading partners.
The Trump administration is actively working to replace import tariffs that are set to expire on July 24, following a significant setback from the Supreme Court. Last year, the U.S. Treasury saw substantial revenue from broad import taxes, but this income diminished after the Supreme Court ruled in February that the administration could not use the International Emergency Economic Powers Act (IEEPA) to impose such tariffs. This ruling necessitated refunds to importers, turning the tariff revenue stream into a deficit.
Currently, tariffs imposed under Section 122 of the Trade Act of 1974, which allow for a 10% global levy for 150 days, are nearing their expiration. The administration is turning to Section 301 of the same act, which permits tariffs against countries engaging in unfair trade practices. This section was previously used to impose significant tariffs on China and is now being employed again, as evidenced by recent tariffs on Brazilian imports.
Trade attorneys and analysts are confident that the administration will successfully implement new tariffs under Section 301 before the July 24 deadline. Two key Section 301 investigations are underway: one targeting imports made with forced labor and another examining alleged overproduction by 16 trading partners. While Section 301 tariffs are more durable and can be renewed, they require procedural steps like public comment and hearings, unlike the more flexible IEEPA tariffs. The uncertainty surrounding Trump's tariff policies has previously concerned businesses, but a shift to the more structured Section 301 approach is expected to reduce some of that ambiguity.