Courts could repeal Trump's emergency tariffs – but he has more than just a Plan B in the drawer

Does the American trade deficit constitute an economic emergency that the federal government is entitled to combat with high tariffs? Donald Trump expressed his firm conviction of this when, at a press conference in front of the White House on April 2, he held up his now-famous display board to the camera and imposed high punitive tariffs on almost all of the United States' major trading partners.

Trump invoked the International Emergency Economic Powers Act (IEEPA) of 1977, when he imposed a uniform tariff of 10 percent and country-specific additional tariffs of up to 50 percent. However, a New York trade court rejected his argument on Wednesday and declared the emergency tariffs invalid. The lower court of appeals provisionally reinstated them on Thursday. It has not yet issued a substantive ruling; it is expected to issue its own ruling in a few weeks.

Ultimately, the Supreme Court will likely have to decide. The majority of the nine justices were appointed by Republicans and generally share Trump's vision of a strong presidency. However, the Supreme Court has already called the Trump administration back in some cases.

The foundation of Trump's aggressive trade policy may soon collapse. His economic advisors, however, were undeterred and told the press that Trump can invoke a whole range of other laws to impose import tariffs.

The New York trade judges themselves already outlined the first option in their ruling on Wednesday : Section 122 of the Trade Act of 1974 explicitly provides that the president may impose tariffs of up to 15 percent to combat a large trade deficit, but only for 150 days. The House's reasoning was clear: The executive branch should be given leeway to conduct negotiations. However, determining the long-term trade strategy remains the responsibility of Congress.

According to American media, the Trump administration had already considered the use of tariffs under Section 122. However, the 150-day time limit may have been one reason why it did not pursue this approach from the outset; trading partners would also be aware of the limits and could, if necessary, adjust their negotiating strategy accordingly.

The Trade Act of 1974, however, gives the president even more power to impose tariffs. Section 301 allows the U.S. Trade Representative—currently Jamieson Greer—to investigate whether other countries are violating trade agreements and, in doing so, unjustifiably restricting or hindering American business interests.

Trump has extensive experience with these "Section 301" tariffs; he already used them during his first term in office to impose punitive tariffs on China. Joe Biden also invoked this provision of the law to impose high import taxes on imports of Chinese batteries, solar panels, and electric cars.

The advantage of this provision is that the tariffs imposed under it are not time-limited. They could therefore help Trump achieve his long-term goals: reducing the US trade deficit and boosting domestic industrial production. However, the Trade Representative's investigations take some time. Section 301 is therefore not suitable for imposing punitive tariffs on countries in the short term if they defy Trump's wishes.

Sector-specific tariffs of 25 percent each on steel, aluminum, cars, and vehicle parts are already in effect. They are based on Section 232 of a 1962 law. This allows the president to impose tariffs when national security is threatened. It is understandable that the US wants to protect and maintain certain production capacities in the country, because these factories and machines could also be used for the defense industry in the event of war.

The government must first conduct an investigation before imposing such tariffs, which takes some time. Furthermore, the national security argument cannot be extended indefinitely to all imports, but is limited to specific sectors. Trump cannot therefore effectively use "Section 232" tariffs for his erratic short-message diplomacy, which he has begun in recent months on his own messaging platform, Truth Social.

Recently, Trump had primarily relied on other legal grounds. Nevertheless, as economists at the investment bank Goldman Sachs recently analyzed, tariffs could soon regain importance to safeguard national security if the judges restrict Trump's use of emergency legislation.

And indeed, the president is already resorting to it again. On Friday evening, during an appearance at a steel factory in Pennsylvania, he announced that he would increase import tariffs on steel and aluminum from 25 to 50 percent on June 4. The EU criticized this move and announced "countermeasures." Critical voices also came from Canada, the most important foreign supplier of these two metals.

A final possibility would be a provision in the Tariff Act of 1930, which was enacted shortly after the outbreak of the Great Depression in 1929: According to Section 338, the President can impose tariffs of up to 50 percent against trading partners who, in turn, engage in discriminatory trade practices.

To date, no president has invoked this law . However, in the 1930s and 1940s, Section 338 was reportedly used as a threat in negotiations on several occasions. When the World Trade Organization (WTO) was founded, the United States agreed not to invoke this law in the future. It would therefore be easy for other countries to brand such tariffs as non-WTO compliant. However, Donald Trump has already ignored WTO rules in the trade dispute on several occasions; he could do so again.

It's still unclear whether the courts will actually strike down Trump's emergency tariffs. If the higher courts follow the New York Trade Court's decision, it would undoubtedly be a bitter defeat for the administration. However, given the many alternatives available to the American president, it's already clear that he can continue the trade dispute in any case.

However, he would have to show more patience and provide more careful justification for his punitive tariffs. Trump's strategy would lose momentum and the potential for surprise. This would benefit his foreign counterparts, especially the EU and China. Their counter-strategy is based on the fact that the Americans will, over time, also feel the damaging effects of the trade dispute and will defend themselves against it.

Without emergency legislation, Trump's timeline could be disrupted. He wanted to push the tariff dispute as early as possible in his term and pressure other countries to grant the US better terms in new trade agreements. The hope was that by the time the midterm elections in fall 2026, the negative effects of the tariffs would be forgotten, while American companies would benefit from the improved export conditions.