When the Supreme Court struck down his earlier tariff framework, the president didn’t back away from his trade agenda. Instead, he turned to a little-known provision of U.S. law: Section 122 of the Trade Act of 1974.
Within days, the administration imposed a new global tariff—first 10 percent, then 15 percent—on most imports. The 15 percent figure isn’t random. It’s the maximum allowed under Section 122.
So what is Section 122? Why has it never been used before? And how durable are these new tariffs?
Here’s what the law says, and why it matters.
What Is Section 122 of the Trade Act of 1974?
Section 122 is part of the broader, sweeping trade statute passed during a period of economic turbulence in the 1970s.
Unlike other trade laws that require lengthy investigations or findings of wrongdoing by foreign governments, Section 122 gives the president temporary authority to impose tariffs—quickly and unilaterally—if the U.S. faces a serious balance-of-payments problem.
What the law allows
Under Section 122, the president may:
- Impose a temporary import surcharge of up to 15 percent
- Apply it broadly, including globally
- Act without a formal multi-agency investigation
- Keep the tariffs in place for up to 150 days
After 150 days, Congress must approve an extension. Otherwise, the tariffs expire automatically.
The statute was designed as an emergency valve, not a long-term trade weapon.
Primary purpose: To address a “large and serious balance-of-payments deficit,” meaning a situation where the U.S. is importing significantly more than it exports in a way that destabilizes its international financial position.
For readers unfamiliar with the term, a balance-of-payments deficit reflects financial flows between the U.S. and the rest of the world. It goes beyond just the trade deficit and includes investment flows and currency pressures.
Why Did Trump Invoke Section 122?
After the Supreme Court ruled that his previous tariff framework lacked proper congressional authority, the administration needed a new legal basis.
Section 122 offered three advantages:
- Speed – No long investigation required
- Broad reach – Can apply globally
- Clear statutory authority: Written into trade law
By invoking Section 122, the White House argued that it could maintain broad tariffs while it works on more permanent measures under other statutes.
In effect, Section 122 acts as a bridge, buying time for a longer-term strategy.
How Is Section 122 Different From Other Tariff Laws?
To understand the significance of Section 122, it helps to compare it to other tools presidents have used.
Section 301: Targeting Unfair Trade Practices
Section 301 of the Trade Act allows tariffs after investigating unfair trade practices by a specific country.
Key differences:
- Requires investigation
- Case-by-case approach
- Focuses on misconduct
Trump previously relied heavily on Section 301 during disputes with China.
Section 232: National Security Justification
Section 232 allows tariffs if imports threaten national security.
Trump used Section 232 to impose steel and aluminum tariffs in his earlier term.
Unlike Section 122:
- Requires a Commerce Department investigation
- Must tie tariffs to national security risks
Section 122: Emergency Economic Tool
Section 122 stands apart because:
- It does not require proof of unfair trade
- It does not require a national security finding
- It does not require a lengthy investigation
But it comes with strict time limits.
In short, Section 122 is broad—but temporary.
Has Section 122 Ever Been Used Before?
No president has ever used Section 122 before.
That alone makes its current use notable.
The provision was enacted during the economic upheaval of the 1970s, when the U.S. abandoned the gold standard and faced serious currency pressures. It was designed as a safeguard during extraordinary financial stress.
But until now, presidents have relied on other trade laws instead.
Because Section 122 has never been tested in court, its modern application, especially as a global tariff tool, could face legal scrutiny.
What Are the Legal Risks?
The biggest vulnerabilities of Section 122 tariffs fall into three areas:
1. Temporary Authority
The law caps tariffs at 150 days unless Congress extends them.
If lawmakers decline to act, the tariffs automatically expire.
This creates a built-in countdown clock.
2. Narrow Economic Justification
The statute references “large and serious balance-of-payments deficits.”
Critics may argue that:
- The current U.S. trade imbalance does not meet that threshold
- The provision was not intended for across-the-board global tariffs
- The justification stretches beyond the statute’s original intent
3. Untested in Court
Because Section 122 has never been used, courts have never interpreted:
- What qualifies as a “serious” deficit
- How broadly tariffs may be applied
- Whether global tariffs fit the statute’s intent
Legal challenges are likely, especially from industries or trade groups affected by the 15 percent surcharge.
Why Raise Tariffs to 15 Percent?
The 15 percent rate is not arbitrary. It is the statutory maximum under Section 122.
The administration initially imposed a 10 percent tariff, then increased it to 15 percent—the ceiling allowed by law.
That ceiling serves as both a legal boundary and a political signal: the White House is using every tool available under the statute.
From a policy standpoint, a 15 percent tariff functions as
- A revenue-raising measure
- A negotiating lever in trade talks
- A signal of economic nationalism
But it also raises costs for importers and, potentially, consumers.
What Happens After 150 Days?
This is the central question.
At the 150-day mark:
- Congress can approve an extension
- Congress can reject the continuation
- The tariffs can expire automatically
Alternatively, the administration could transition to:
- Section 301 investigations
- Section 232 national security actions
- New legislation
The 150-day window effectively forces a political decision.
Why Section 122 Matters Beyond This Moment
Even if the tariffs are temporary, Section 122’s use could reshape how presidents approach trade authority.
It demonstrates:
- How statutory language written decades ago can gain new relevance
- How presidents adapt after court rulings
- How trade policy increasingly intersects with constitutional separation-of-powers questions
This episode also underscores the tension between executive power and congressional authority over trade—a theme that has shaped U.S. trade debates for decades.
TL;DR: What to Know About Section 122
- Section 122 is part of the Trade Act of 1974
- It allows temporary tariffs of up to 15 percent
- Tariffs can last 150 days without congressional approval
- It was designed for balance-of-payments crises
- No president had used it before
- It may face legal challenges
In practical terms, Section 122 gives the president short-term leverage, but not permanent authority.
Whether it becomes a durable trade strategy depends on Congress, the courts, and the global economic response.
