U.S. Global Tariffs: What About Plan B?

In the wake of the Supreme Court's February 20, 2026, decision in Learning Resources, Inc. v. Trump, which invalidated the use of the International Emergency Economic Powers Act (“IEEPA”) as a basis for global tariffs the U.S. established in April 2025 (see prior Lewis Brisbois Alert), President Trump quickly pivoted, issuing a Proclamation that same day titled “Imposing a Temporary Import Surcharge to Address Fundamental International Payments Problems” (“Proclamation”) under the authority of Section 122 of the Trade Act of 1974.

The new tariff, which went into effect February 24, 2026, expires after 150 days unless it is extended by Congress. It imposes a 10% surcharge on all imports into the U.S. with the exception of 13 enumerated limitations that run to multiple pages, such as certain critical minerals, specified energy-related, electronic, agricultural, and aerospace products, and pharmaceuticals, among others. The President has stated his intention to raise the Section 122 tariff rate to its statutory maximum of 15% but so far has not done so. The Section 122 surcharge does not supersede existing tariffs established under Section 232 of the Trade Expansion Act of 1962, which currently include aluminum, buses, cars and car parts, certain copper products, furniture, lumber, steel, timber, and trucks.

Reliance on Section 122 to authorize global tariffs is not, however, without its own risks. The language of that statute makes clear that it is intended to apply when necessary “to deal with large and serious United States balance-of-payments deficits.” 19 U.S.C. § 2132 (a)(1). While the February 20, 2026, Proclamation seeks to portray the U.S. trade deficit with other countries as “contribut[ing] to the fundamental international payments problems facing the United States,” it is by no means clear that trade deficits can be conflated with balance-of-payment deficits. In fact, the July 18, 2025, reply brief of the United States (“U.S. Reply Brief”) in the Court of Appeals for the Federal Circuit case (V.O.S. Selections, Inc. v. Trump, No. 2025-1812, Dkt. No. 147) that was jointly reviewed in the Supreme Court's decision in Learning Resources, explicitly distinguished the two concepts, citing legislative history in support of the distinction.

Opponents of the Section 122 tariff have already moved to block it in court based on these types of arguments: on March 5, a coalition of 24 states challenged the tariff in the Court of International Trade as an ultra vires assertion of Presidential power, a violation of Constitutional separation-of-powers principles, and agency action beyond the authority of the U.S. Customs and Border Protection and therefore contrary to the Administrative Procedure Act (“APA”). However, practical considerations may effectively moot those efforts. The likelihood that litigation could be resolved, including an inevitable request for appeal to the Supreme Court, within the 150-day time period in which Section 122 tariffs apply is remote.

In the meantime, the President's team will conduct investigations under Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974, which are established trade laws that allow for imposition of tariffs, but with very different processes and scope from both IEEPA and Section 122. In particular, those statutory provisions require lengthy and complicated investigations and specific procedural steps, a very different proposition from the sweeping reach and flexible applicability the U.S. asserted under IEEPA or the intended global consistency of Section 122 (up to a 15% tariff for all countries and products, with supposedly only narrow exceptions). Key features of Sections 232 and 301 actions are as follows.

Section 232 of the Trade Expansion Act of 1962 requires the Department of Commerce to investigate and establish that the “quantity or other circumstance of [specified] imports ‘threaten to impair' U.S. national security,” either in terms of defense or the economy. The investigation may last up to nine months. After the investigation, the President will have 90 days to, among other things, issue tariffs, which typically range from 25 to 50 percent. Courts would likely defer to the President's discretion if this process is properly carried out.

Section 301 of the Trade Act of 1974, on the other hand, can be used after the United States Trade Representative (“USTR”) carries out an investigation (which can take up to 12 months) to respond to unfair foreign trade practices or enforce U.S. rights under an existing trade agreement. Section 301 tariffs are typically between 10 and 25 percent and terminate within four years unless USTR receives a request for continuation. The only major legal challenge under Section 301 that has provided much guidance is the 2025 Federal Circuit decision in HMTX Industries, LLC v. United States, wherein the court reiterated the need for USTR's compliance with the procedural requirements of Section 301 as well as the importance of tailoring remedies that are appropriate to eliminate or reverse the unfair foreign trade practices in question. Blanket tariffs on all or large numbers of nations would be difficult, if not impossible, to justify.

In sum, the alternatives now under consideration in lieu of the invalidated IEEPA tariffs are not simple drop-in replacements, but come with serious procedural and other requirements. These requirements will create challenges for their nimble use in accomplishing the Administration's goals of using tariffs as leverage to re-order global trade. Further, while until recently, legal challenges have been rare to these somewhat esoteric statutory authorities, their newly increased use and the Supreme Court's precedential recent ruling in striking down the IEEPA tariffs can be expected to spur interest in questioning their legality in new applications.

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