Washington D.C. – A new legal challenge is emerging against President Donald Trump’s recently announced 15% global tariff, just days after the Supreme Court limited the executive branch’s power to impose broad trade levies. Indian-origin lawyer Neal Katyal, who successfully argued against Trump’s earlier sweeping tariffs before the nation’s highest court, is raising concerns that the current plan lacks a firm legal foundation. The dispute centers on the utilize of Section 122 of the Trade Act of 1974, a statute Katyal argues is being misapplied by the administration.
Katyal’s challenge focuses on the distinction between “balance-of-payments deficits” and general “trade deficits.” Section 122 allows the President to impose tariffs of up to 15% for 150 days to address balance-of-payments issues, requiring congressional approval for continuation beyond that period. But, Katyal contends that the Department of Justice previously argued Section 122 had “no obvious application” in cases involving trade deficits, a key point in the current legal debate surrounding Trump’s tariffs. This latest move by the President, increasing a previously announced 10% tariff to 15%, is drawing scrutiny as potentially overstepping constitutional boundaries.
Supreme Court Ruling Sets the Stage for Legal Battle
The legal challenge comes on the heels of a landmark 6-3 Supreme Court decision that struck down much of Trump’s earlier tariff regime. The Court ruled that the administration had exceeded its authority by using the International Emergency Economic Powers Act (IEEPA) of 1977 to broadly impose import levies, reinforcing the principle that the power to tax primarily rests with Congress. As reported by Mathrubhumi, Katyal immediately questioned the legality of the new tariffs, pointing to the contradiction in the administration’s legal position.
The Question of Section 122’s Application
Katyal articulated his concerns in a post on X (formerly Twitter), highlighting the Department of Justice’s prior stance on Section 122. He argued that the administration’s current justification for the tariffs is undermined by its previous legal arguments. He emphasized that trade deficits and balance-of-payments deficits are distinct concepts under international economics and trade law, and that Section 122 was specifically designed to address the latter.
Seems hard for the President to rely on the 15 percent statute (sec 122) when his DOJ in our case …
“If he wants sweeping tariffs, he should head to Congress,” Katyal stated, underscoring the constitutional requirement that tax authority resides with the legislative branch. The President, however, maintains that the tariffs are “fully allowed and legally tested,” stating he increased the levy to the maximum allowable 15%.
Congressional Opposition and the Broader Trade Agenda
Tariffs have consistently been a point of contention between the Republican-controlled Congress and President Trump. This latest move is likely to further exacerbate those tensions. The administration announced the initial 10% tariff on Friday, shortly after the Supreme Court’s ruling, and subsequently raised it to 15% on Saturday. Trump has stated his administration will work on issuing new and “legally permissible” tariffs during the 150-day period allowed under Section 122.
The 150-day window provided by Section 122 is intended to allow the President to address immediate balance-of-payments concerns, but ultimately requires congressional approval for any long-term tariff measures. The legal battle over the scope and application of Section 122 is expected to be closely watched by businesses, trade organizations, and lawmakers alike.
What’s Next for Trump’s Trade Policy?
The coming months will be critical as the administration navigates the legal challenges and attempts to secure congressional support for its trade policies. The Supreme Court’s recent decision has significantly constrained the President’s ability to unilaterally impose broad tariffs, shifting the focus to negotiations with Congress. The outcome of this process will have significant implications for the future of U.S. Trade relations and the global economy.
The legal arguments surrounding Section 122 are complex, and the ultimate resolution may depend on how the courts interpret the statute’s intent, and scope. Katyal’s challenge highlights the ongoing tension between presidential authority and congressional power in the realm of trade policy. The next step will be to see how the administration responds to the legal challenge and whether it attempts to seek congressional authorization for its tariff measures.
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