US President Donald Trump is always known for his tough and sudden decisions. Especially when it comes to imposing taxes (tariffs) on other countries, his approach has always been very aggressive. But, a recent decision of the US Supreme Court has blunted the edge of this biggest and ‘dangerous’ weapon of theirs. Now Trump will not be able to threaten any country economically by imposing heavy tariffs overnight. The Supreme Court of the country has banned the arbitrary powers given under the International Emergency Economic Powers Act (IEEPA). Trump still has the ‘Brahmastra’ to impose tariffs, but now his path will pass through legal complications and lengthy paperwork. Let us understand what is Trump’s new business strategy after this big change and what effect it will have on the world.
The sharpest ‘political weapon’ was snatched away
Trump has always used IEEPA as an infallible weapon. Under this, he used to impose heavy tax of 10 to 50 percent on any country without any lengthy process. Its objective was not only economic, but many times it was purely political. Be it threatening European countries on the Greenland issue, putting pressure on the Brazilian government in support of former Brazilian President Jair Bolsonaro, or punishing Canada for importing electric vehicles from China… Trump used this law everywhere.
The decision of the Supreme Court has closed this path of ‘political blackmailing’ to a great extent. Council on Foreign Relations President Michael Froman has made it clear that now the US President will not be able to use tariffs as per his wish for revenge or diplomatic bullying.
‘Section 122’… a new jugaad of 150 days
After receiving the setback from the court, the Trump administration immediately started working on ‘Plan B’. As immediate relief, he has taken recourse to ‘Section 122’ of the Trade Act of 1974. Under this, Trump has signed an executive order, due to which a global duty of 10 percent has been imposed on imports coming from all over the world. This is a rule under which the President can impose a maximum tariff of up to 15 percent for 150 days without any lengthy investigation.
US Treasury Secretary Scott Besant says that despite the new rules, the revenue from tariffs in the year 2026 will remain the same as before, only the method of implementing it will be a bit circuitous. However, this 150 day rule is only acting like a bridge, so that the pressure on the trading partners remains until the government finds a sure and legally sound way.
Now tax will not be imposed overnight
Now there are mainly two laws at the center of Trump’s new business strategy, the first is ‘Section 232’ and the second is ‘Section 301’. Section 232 of the Trade Expansion Act 1962 gives permission to impose tax on a particular sector in the name of national security. Under this, import duty is being imposed on cars, car parts, heavy trucks, copper, and wood products (like furniture). But its biggest drawback is that this rule applies to the entire world simultaneously, through this Trump cannot target any one country.
In such a situation, ‘Section 301’ has emerged as Trump’s new Brahmastra. Under this rule, the President can punish a particular country for its ‘unfair trade practices’. Under this law, Trump had imposed heavy tariffs on China in his first term, which the Biden administration also continued. US Trade Representative (USTR) Jameson Greer has made it clear that his team is going to start a new investigation against many of the world’s major trading partners. These investigations will include many serious issues like drug prices of pharmaceutical companies, production beyond industrial capacity, forced labor, discrimination against American tech companies, and marine pollution. Investigation is already going on against China and Brazil and soon Vietnam and Canada may also come on this radar.
‘Section 301’ will become Trump’s Brahmastra
The biggest problem with this new strategy is that it is not easy to take action under ‘Section 301’. This requires going through a long, formal investigation process. Evidence has to be gathered, legal basis has to be decided and opinion of the general public has to be taken. This entire process may take up to a year.
Now Trump will not be able to suddenly impose tariffs overnight on Mexico or Canada for fentanyl (a type of drug) smuggling, or on Brazil for any political reason. It will be necessary to have a solid legal business basis behind every decision.
This change has brought some relief for international companies and businessmen. Instead of sudden ‘shock’ in business, there will now be a fixed process, which will bring transparency and stability in the market. That is, the Supreme Court has not completely removed Trump’s power to impose tariffs, but has limited it within legal limits. Trump now has the weapons, but to use them he will need more time, evidence and legal discipline than ever before.