US President Donald Trump’s sweeping tariff strategy, built on the 1977 International Emergency Economic Powers Act (IEEPA), is now in legal jeopardy after a federal appeals court ruled the law was misapplied. While the administration has appealed to the Supreme Court, Treasury Secretary Scott Bessent insists Washington has fallback options to keep tariffs intact.
From rarely used Depression-era provisions to modern trade laws tied to national security and unfair practices, the White House is preparing multiple legal pathways. The question now is which of these “other authorities” can sustain Trump’s tariff programme.
Last week, the US Court of Appeals for the Federal Circuit ruled in a 7-4 decision that the administration went beyond its authority by using the 1977 International Emergency Economic Powers Act (IEEPA) to impose broad tariffs on a wide range of trading partners. The judges said the law, which has usually been used for national security or foreign policy threats, did not give the president unlimited power to set tariffs.
The decision covers two sets of duties: the “reciprocal” tariff regime introduced in April this year, and the February tariffs on China, Canada, and Mexico that the administration linked to the fight against fentanyl. Other tariffs introduced under different legal bases, such as steel and aluminium duties from 2018, were not affected.
For now, the tariffs remain in place until October 14 while the administration appeals to the US Supreme Court. If the high court upholds the ruling, much of Trump’s tariff structure could unravel.
Bessent’s defence of tariffs
Bessent has been firm in defending the use of IEEPA. He told Reuters that the law was necessary to deal with long-ignored economic and security threats.
“I’m confident the Supreme Court will uphold it – will uphold the president’s authority to use IEEPA. And there are lots of other authorities that can be used – not as efficient, not as powerful,” he said during an interview at a diner near Washington.
Bessent argued that years of trade deficits have put the US economy in a risky position, and that the fentanyl crisis represents an extraordinary emergency. “We’ve had these trade deficits for years, but they keep getting bigger and bigger,” he explained. “We are approaching a tipping point … so preventing a calamity is an emergency.”
He also drew a comparison to the 2008 financial crisis, suggesting that earlier action might have softened the damage back then.
What are the “other authorities” Bessent mentioned?
Bessent made it clear that the White House is not relying only on IEEPA. He pointed to a list of other US trade laws that could be used if the Supreme Court rejects the IEEPA approach. These are the main options:
1. Section 338 of the Smoot-Hawley Tariff Act of 1930
This law allows the president to impose tariffs of up to 50 per cent for five months on imports from countries that discriminate against US goods. It has never been used in practice. The Smoot-Hawley Act is infamous for worsening the Great Depression, and the Senate itself has described it as “among the most catastrophic acts in congressional history.” Still, it provides a legal pathway that could be revived.
2. Section 232 of the Trade Expansion Act of 1962
This lets the president impose tariffs if imports threaten national security. The Commerce Department must first investigate and report within 270 days. Trump has already used this section for steel, aluminium, automobiles, and copper. New investigations are ongoing into sectors like timber, semiconductors, pharmaceuticals, critical minerals, and wind turbines.
3. Section 201 of the Trade Act of 1974
This section allows tariffs when imports cause or threaten “serious injury” to US producers. The US International Trade Commission handles investigations and must hold hearings before making recommendations. Tariffs under Section 201 can last up to eight years, but they must gradually decline after the first year. Trump used this in 2018 for solar panels and washing machines.
4. Section 301 of the Trade Act of 1974
This gives the US Trade Representative power to recommend tariffs if foreign countries use unfair trade practices or violate agreements. It was a major tool in Trump’s first trade war with China, covering hundreds of billions in imports. Unlike Section 201, there is no cap on tariff levels. Recently, a new Section 301 investigation targeted Brazil, leading to tariffs introduced under IEEPA in August.
5. Section 122 of the Trade Act of 1974
This allows temporary tariffs of up to 15 per cent for 150 days to address balance-of-payments deficits or protect the dollar. Congress must approve extensions. It has never been used but is more directly connected to trade deficits than IEEPA.
Together, these tools form what Bessent called a “Plan B” for maintaining tariffs even if the IEEPA option fails.
Market and global reactions
Markets have so far reacted calmly. Futures tied to US stock indexes barely moved after the court decision, showing that investors are used to uncertainty around Trump’s tariffs.
But businesses are worried about a Supreme Court ruling against the administration. Many have already reshaped supply chains and pricing to adapt to the current tariff system.
Critics say Trump’s approach could isolate the US and push rivals closer together. China recently hosted 20 countries at the Shanghai Cooperation Organisation summit, highlighting non-Western coordination.
Bessent dismissed this, saying, “It happens every year for the Shanghai Cooperation Organisation. It’s more of the same. And look, these are bad actors … India is fuelling the Russian war machine, China is fuelling the Russian war machine … I think at a point we and the allies are going to step up.”
He added that the US is already working with European partners to penalise India for buying Russian oil, pointing to the 25 per cent tariff imposed on those imports. On China, he said Beijing cannot easily move away from Western markets. “They don’t have a high enough per capita income in these other countries,” he argued, suggesting that China’s export reliance on the US and Europe will remain.
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