What’s at stake for U.S. trade policy & exporters if IEEPA-based tariffs are struck down?
The Court is currently reviewing whether the sweeping “reciprocal tariffs” imposed under IEEPA are lawful. If the Court holds they are not, it doesn’t end the story. There are two alternative tariff authorities that the administration could pivot to, and those have important implications for U.S. exporters and trade-service providers.
Alternative Rule #1: Trade Act of 1974 Section 122
- Under this statute, the President can impose tariffs to address “serious” balance-of-payments problems or when another country imposes unjustified trade restrictions. https://www.brookings.edu/articles/legal-and-economic-aspects-of-the-supreme-courts-upcoming-tariff-decisions/?utm_source=chatgpt.com
- The key limitations: rates are capped (typically around 15 %) and time-limited (150 days unless extended).
- For exporters, this means that if IEEPA authority falls away, we may see a softer but still meaningful tariff regime via Section 122. Companies would need to monitor which countries are targeted and whether goods they import face these specific tariffs.
Alternative Rule #2: Trade Expansion Act of 1962 Section232 / Trade Act of 1974 Section 301
- Section 232 lets the Secretary of Commerce investigate products threatening national security; tariffs/remedies can follow.
- Section 301 allows the U.S. Trade Representative to act on unfair or discriminatory foreign trade practices, with consultation and remedy steps.
- These statutes highlight that tariff risk isn’t eliminated if IEEPA falls. It just shifts to different legal tools, potentially with different targets and processes.
What this means for WTC Denver members & Colorado companies?
- Prepare for change: If the Court rules IEEPA tariffs unlawful, expect the administration to shift to Section 122, 232 or 301 authorities. Monitor which countries, products, and sectors get targeted.
- Review contracts & supply chains: Tariff regimes via Section 122/232/301 may differ in duration, scope, and country-coverage; contracts that assumed the IEEPA tariffs may need updating.
- Engage in strategic planning: With the possibility of a transition in how U.S. tariffs are implemented, exporters should align their risk mitigation, sourcing diversification, and pricing strategies accordingly.
- Stay informed: We’ll continue to track how the Supreme Court decision unfolds and how the administration activates Plan B tariff authorities.
At WTC Denver, we’re here to help Colorado manufacturers and exporters navigate this evolving environment — from tracking legal developments, shaping tariff mitigation strategies, to identifying where opportunities or risks may lie as the U.S. trade policy toolbox shifts.
Feel free to reach out if you’d like a deeper dive into Section 122/232/301 implications for your sector. We’re happy to support.
