Trump signals new tariffs plan. Here's how Section 122 works

The big picture: Section 122 will allow Trump to reimpose some sweeping tariffs, at least temporarily. It's never before been invoked, representing a historic moment for presidential economic policy.

• Section 122 was designed to address short-term emergencies, not long-term trade policies.

Driving the news: Trump said he would sign an executive order to impose 10% tariffs on all nations, replacing part of the tariffs overturned by the Supreme Court on Friday.

• Trump pointed to other measures to impose tariffs, including Section 232 of the Trade Expansion Act of 1962 — the statute that underpins the administration's levies on aluminum and steel.

Between the lines: Unlike Trump's International Emergency Economic Powers Act — which the president leaned on to impose broad, unlimited tariffs — Section 122 explicitly limits how long tariffs could be imposed and how high those tariffs could be.

• "The Supreme Court did not overrule tariffs. They merely overruled a particular use of IEEPA tariffs," Trump said on Friday, referring to the IEEPA that the Supreme Court said could not be used to impose tariffs.

More about Section 122 and other options Trump has:

What Section 122 allows

Trump said during a White House briefing Friday that his executive order would apply a 10% tariff on all foreign goods.

• The provision is sweeping, but unlike IEEPA, it limits how long tariffs can be imposed (150 days) and how high the tariffs can be.
• After the 150-day period, it requires Congress to extend the measures.

Zoom out: It gives the president authority to impose temporary restrictions, like tariffs or quotas, on goods from other countries based on specific conditions. That temporary surcharge cannot exceed 15%.

• Section 122 also doesn't require any investigations that other trade statutes might demand, per the Cato Institute. Instead, it allows the president to act fast and impose the global tariffs.

Reality check: Despite the duration limit, the president could theoretically allow the tariffs to lapse, declare another emergency of balance of payments and restart the timeline.

Why Section 122 was created

The Trade Act of 1974 was created during a time of economic uncertainty. It was largely meant to protect the U.S. currency and came after a period of large U.S. trade deficits.

• Section 122 was enacted after President Nixon declared a goal of improving the U.S. balance of payments.
• Congress approved the act in order to provide the president with emergency authority to prevent "depreciation of the dollar in foreign exchange markets" and to correct "an international balance-of-payments disequilibrium."

Other trade levers Trump has

Section 301: Country-by-country

• Trump also said that the administration would be initiating "several" section 301 investigations to "protect our country from unfair trading practices and other countries and companies."

• This provision in the Trade Act of 1974 allows the U.S. Trade Representative to investigate whether a country is engaging in unfair trade practices and subsequently impose tariffs.
• Trump used this authority in his first term to impose tariffs on Chinese imports, many of which remain in place. In theory, the administration can go down a list of nations and re-impose tariffs after conducting investigations.

Section 232: Sector-by-sector

• The provision of the U.S. Trade Expansion Act of 1962 that allows the restriction of imports of products or sectors that threaten national security. If a Commerce Department investigation finds that to be the case, Trump could impose tariffs or other trade restrictions.
• The Trump administration imposed tariffs on steel and aluminum under this trade authority.
• In the past year, the Trump administration has launched a dozen such investigations "covering many major import sectors and has expanded those tariffs via the inclusions process," according to global strategy firm Capstone.

Section 338

• The provision of the Tariff Act of 1930 allows the U.S. government to impose tariffs on goods from countries that discriminate "against the commerce of the United States," the text of the law says.

The bottom line: "There's no perfect match," Greta Peisch, former general counsel for USTR under former President Biden.

• "No trade authority is as quick or flexible as IEEPA, though it could be that over time the administration could match the structure," Peisch, a partner at Wiley, adds.