Trump's Tariff Authority Constrained Ahead of Critical Trade Agreement Review
WASHINGTON, D.C. — President Donald Trump's aggressive tariff strategy has encountered significant legal limitations just months before the scheduled review of the Canada-U.S.-Mexico Agreement (CUSMA), creating uncertainty in North American trade relations.
Supreme Court Intervention and Rapid Response
The U.S. Supreme Court delivered a substantial blow to Trump's trade agenda last Friday, halting his year-long imposition of tariffs under the International Emergency Economic Powers Act (IEEPA). This decision delighted importers worldwide while frustrating the president, who has consistently championed tariffs as a primary tool of economic policy.
Within hours of the ruling, Trump expressed his displeasure publicly, declaring himself "ashamed" of the high court's decision. He quickly pivoted to alternative legal authority, announcing a 10 percent global tariff under Section 122 of the Trade Act of 1974. This statute permits the White House to address significant balance-of-payments deficits through temporary tariffs lasting up to 150 days.
Escalation and Subsequent Retreat
The president's initial announcement proved merely the opening salvo in what became a weekend of tariff-related developments. On Saturday, Trump—who has frequently described himself as a "tariff man"—declared that 10 percent was insufficient and vowed to increase the levy to the statutory maximum of 15 percent.
"I, as President of the United States of America, will be, effective immediately, raising the 10% Worldwide Tariff on Countries, many of which have been 'ripping' the U.S. off for decades, without retribution (until I came along!), to the fully allowed, and legally tested, 15% level," Trump posted on social media.
However, this proposed escalation faced practical and legal obstacles. When the official rate was published by U.S. Customs and Border Protection late Monday, it remained at 10 percent, suggesting internal recognition that justifying a five-percentage-point increase would present significant legal challenges.
CUSMA Exemptions Provide Relief
Critical for North American trade partners, the new Section 122 tariffs mirror the exemption structure of the previous IEEPA tariffs. This means goods compliant with the Canada-U.S.-Mexico Agreement will escape the new duties entirely, providing important protection for cross-border trade within North America.
Inu Manak, senior fellow for international trade at the Council on Foreign Relations, characterized the weekend's developments as typical of "Weekend Trump!" rhetoric that often gives way to more measured policy implementation. "The flip-flop demonstrates how cooler heads eventually prevailed within the administration," Manak observed.
Legal Challenges Loom Large
The Section 122 tariffs face potential court challenges similar to those that doomed the IEEPA tariffs. Trade experts question the administration's justification, noting that the White House is claiming balance-of-payments issues with much of the world despite economic indicators that contradict this assertion.
Phillip W. Magness, an economic historian and senior fellow at the Independent Institute, identified significant legal vulnerabilities in the administration's position. "There is a high likelihood of lawsuits being filed because there is no current balance-of-payments deficit," Magness explained. "The U.S. lacks the reserve depletion issue from the Bretton Woods era that this statute was specifically created to address."
Magness further cautioned that Trump's equation of the obsolete Nixon-era "balance of payments" concept with modern trade deficits invites substantial legal jeopardy. Courts may grow increasingly impatient with what some observers describe as presidential "statute shopping"—the practice of moving from one legal authority to another when previous justifications fail.
Implications for CUSMA Review
These developments occur against the backdrop of the upcoming CUSMA review scheduled for this summer. The temporary nature of Section 122 tariffs—limited to 150 days—may influence both litigation strategies and diplomatic negotiations.
Timothy Brightbill, an international trade law and policy attorney at Wiley, a Washington-based law firm, noted that the temporary duration could affect legal challenges. "The limited timeframe of Section 122 authority may influence decisions about whether and how to pursue litigation," Brightbill stated.
As Trump's tariff options narrow following judicial intervention, the administration faces mounting pressure to develop more sustainable trade policies ahead of critical negotiations with Canada and Mexico. The exemption of CUSMA-compliant goods provides temporary stability, but broader questions about U.S. trade strategy remain unresolved as all three nations prepare for the agreement's formal review process.
