A tariff law is hiding in plain sight: Why it matters for the Constitution

If the Trump administration wants to use tariffs to fight “persistent” goods trade imbalances, the right statute is Section 122 of the Trade Act, not the International Emergency Economic Powers Act. 

Section 122 of the 1974 Trade Act lets the president impose a temporary import surcharge “in the form of duties” to “restrict imports” — explicitly, narrowly and with guardrails: no more than 15 percent and no longer than 150 days. 

Congress created Section 122 in direct response to the 1971 balance of payments crisis, when President Nixon slapped a 10 percent tariff to confront the first U.S. trade deficit in nearly a century. 

Lawmakers agreed that presidents sometimes need a fast, short-term tariff to stabilize the balance of payments — the accountant’s ledger for what America buys, sells and borrows from the world. So, they codified that power and fenced it in.

Which brings us to today. President Trump has sought to rewire U.S. tariff policy under the International Emergency Economic Powers Act. But that’s the wrong law for the job, and the Supreme Court should say so.

Some defenders of the administration — and a dissent at the Court of Appeals for the Federal Circuit — argue that Section 122 applies only when there’s a “fundamental international payments problem,” not a trade deficit. That’s a distinction without a difference. 

An import is an international payment. More imports mean a bigger payment outflow. For the U.S., the trade balance drives the balance of payments. That was true in 1971, when trade was, per our calculations, 97 percent of the U.S. balance of payments. Congress knew it, said it, and legislated accordingly.

Today, we estimate that it is only 76 percent. Over the last 30 years, we calculate that the ratio of the two deficits has averaged 1.02, the takeaway being that, empirically, the balance-of-payments deficit and the trade deficit walk in lockstep.

The text, legislative history, and economic reality line up: Section 122 was designed to temporarily restrict imports to correct a payments deficit — i.e., a trade deficit. If Trump’s policy goal is to curb imports because the goods deficit is “persistent,” then Section 122 is the statute that governs. 

The International Emergency Economic Powers Act came three years later, in 1977, as part of the same reform wave as the National Emergencies Act. The purpose was to cabin non-war emergency powers, not to hand presidents an open-ended tariff wand. That’s why it authorizes the president to investigate, regulate or prohibit certain financial transactions and conspicuously says nothing about imposing duties. 

The omission is not an accident. In the committee reports leading to the International Emergency Economic Powers Act, Congress cited Nixon’s tariff episode as an example of emergency powers run amok and insisted on reining them in.

If lawmakers thought presidents also needed a permanent emergency tariff lever, they would have written it. They didn’t because they already had Section 122, with firm limits, which is what they wanted.

The post-enactment record seals the point: In nearly 50 years and dozens of emergency declarations, no president has used the International Emergency Economic Powers Act to impose tariffs — until now.

It has been used to freeze assets and block transactions, not rewrite tariff schedules. Treating it as a catch-all tariff statute would invert the law’s purpose and trample the Constitution’s assignment of taxing power to Congress.

The government now argues that Section 122 and the act “overlap,” so a president can pick either. But that’s not correct. In a trade-deficit emergency, is the president bound by the 15 percent and 150-day guardrails of Section 122, or isn't he? You can’t answer “both.” 

When a specific statute targets a specific problem with specific limits, it controls over the general statute. That’s black-letter law. 

Allowing the executive to bypass Section 122 by citing the International Emergency Economic Powers Act amounts to a repeal by implication, exactly what the Supreme Court warns against. And it would nullify Section 122 in the very circumstance Congress wrote it for — a payments (trade) imbalance serious enough to warrant temporary surcharges. 

Congress saw the danger plainly in 1974. It wanted to give presidents a real tool — but not an open-ended license. Section 122 respects it, the International Emergency Economic Powers Act blows past it. 

This isn’t inside baseball. It’s about whether tariff policy in America is law-bound or proclamation-driven. If the International Emergency Economic Powers Act can stand in for Section 122, then tariffs become a permanent instrument of presidential will — no caps, no clocks, no congressional vote. That’s not what Congress enacted in 1974.

The act has a legitimate role in real emergencies — asset freezes, sanctions, targeted financial controls. It’s not a substitute tariff code. The Supreme Court should say so, and Congress should insist on it.

Marc L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at the Walsh School of Foreign Service, Georgetown University. Erica Hashimoto is the Scott K. Ginsburg Professor of Law and Appellate Advocacy, Georgetown University Law Center.