Factbox-What else can Trump do on global tariffs after US court ruling?

A U.S. trade court blocked tariffs imposed by former President Trump under the International Emergency Economic Powers Act (IEEPA), ruling he overstepped his authority. Analysts suggest Trump could pursue tariffs through Section 122 of the Trade Act (allowing duties up to 15% for six months), Section 301 (investigating unfair trade practices), Section 232 (national security grounds), or Section 338 of the Trade Act of 1930 (duties up to 50% on discriminatory countries), though each has varying implementation timelines and limitations.

Analysis

A U.S. Court of International Trade ruling has invalidated President Trump's tariffs implemented since January under the International Emergency Economic Powers Act (IEEPA), citing that the president overstepped his authority as Congress holds exclusive power to regulate international commerce. This decision has immediate effect. However, financial analysts from Goldman Sachs, Deutsche Bank, and Panmure Liberum indicate that the administration possesses several alternative legal avenues to pursue its trade policy objectives. Section 122 of the Trade Act could be rapidly deployed, allowing for tariffs up to 15% for a maximum of six months without Congressional approval, justifiable by balance of payments deficits or imminent dollar depreciation. Alternatively, Section 301 of the 1974 Trade Act could be utilized, initiating investigations into unfair trade practices by key partners, which could lead to tariffs later, as seen with duties up to 25% on approximately $370 billion of Chinese imports in 2018-2019; this process, however, requires months for probes and public comment. Section 232, previously invoked for national security-based tariffs on autos, steel, and aluminum, and with ongoing probes into pharmaceuticals and semiconductors, could be expanded to other sectors, though it also entails a multi-month process. Lastly, Section 338 of the Trade Act of 1930, a largely dormant law, permits duties up to 50% on countries discriminating against U.S. commerce without a formal investigation, though it has never been used to impose tariffs. The existence of these alternatives, despite the court's current restriction, contributes to a mixed sentiment and moderate market impact, suggesting continued uncertainty in U.S. trade policy.

Key Decisions for Investors

• Investors should anticipate potential shifts in U.S. trade policy strategy, as the administration may pivot to alternative legal mechanisms such as Sections 122, 301, 232, or 338 to implement tariffs, each with varying timelines and scope.
• Monitor closely any announcements from the White House or the U.S. Trade Representative regarding investigations or intentions to use these alternative trade laws, as this will clarify the direction and specific impact on sectors like autos, steel, aluminum, pharmaceuticals, semiconductors, and key trading partners.
• Given the continued potential for protectionist measures despite the court ruling, re-evaluate portfolio exposure to industries highly sensitive to international trade and tariffs, and consider the implications for supply chains and import costs.