News summary produced by Claude AI
The Trump administration faces a fast-approaching deadline to restore tariff revenue after the Supreme Court invalidated the president’s use of emergency powers to impose broad import taxes earlier this year.
In February, the Supreme Court rejected the administration’s invocation of the International Emergency Economic Powers Act to impose tariffs, ruling the president lacked authority to declare trade deficits a national emergency justifying such levies. The decision required the administration to issue refunds to importers. Tariff revenue, which peaked above $31.4 billion in October of last year, has since declined sharply, with the government posting a $25.6 billion loss in June as refunds exceeded incoming revenue.
The administration initially turned to Section 122 of the Trade Act of 1974 to impose 10 percent global tariffs, but that authority expires on July 24. Congress is unlikely to extend these tariffs given midterm elections approaching on November 3 and widespread voter concerns about the cost of living. Trade analysts and attorneys say the administration will likely meet the deadline by shifting to Section 301 of the same statute, which permits tariffs against countries engaging in unfair trade practices and lacks the time constraints of Section 122.
The administration has launched two major Section 301 investigations. One targets 60 countries for inadequate enforcement against forced-labor imports, with proposed tariffs ranging from 10 to 12.5 percent already submitted for public comment. The second investigation focuses on alleged overproduction by 16 trading partners, including China, the European Union, and Japan. Trade officials expect the forced-labor tariffs to take effect before the Section 122 authority expires, while the overproduction investigation may yield additional tariffs timed after the midterm elections.
Some trade experts suggest the Section 301 approach, while more legally durable than emergency powers, could face court challenges if used to implement broad, universal tariffs rather than targeted responses to specific trade violations. The shift to Section 301 would also introduce more procedural requirements but less day-to-day flexibility than the president previously enjoyed.