Are Donald Trump's tariff policies "in a IEEPA trouble," as Andrew Stuttaford quipped at The Corner, after last night's ruling by the Court of International Trade (CIT)? Perhaps not, even if the appellate courts refuse them relief on the Liberation Day and trafficking tariffs. Will we see the Tariffinator in T2: Liberation Day Redux? 

Politico reports this morning that the White House is already promising a Plan B:

At the end of last week, administration officials had three deals that were “basically ready for the President’s decision,” Hassett said. “There are many, many deals coming, and there were three that basically look like they’re done.”

If the administration does lose on appeal, there are other statutes the White House could use to pursue Trump’s tariff agenda, Hassett continued.

He did not identify any by name, but Trump used Section 301 of the 1974 Trade Act to impose tariffs on hundreds of billions of tariffs from China during his first term and Section 232 of the 1962 Trade Expansion Act to impose impose or threaten duties on various industrial sectors, such as steel, aluminum and autos.

While the administration considered IEEPA the best option, “there are three or four other ways to do it,” Hassett said.

True, but the International Emergency Economic Powers Act of 1977 (IEEPA) was the easiest path to unlimited tariffs, or so the White House hoped. Congress intended the use of the IEEPA for true emergencies, and its predicate (as the CIT explained) was a wartime-powers act that Congress softened later, but only in a limited fashion. In those extraordinary circumstances, Congress envisioned a need for maximum flexibility, which perhaps they should revisit soon.

Trump could be on stronger ground with the two laws mentioned, but those also come with significant limitations. First off, the tariff potential is capped at much lower rates than Trump attempted to impose on trading partners in his Liberation Day rollout under the IEEPA. Second, any tariffs imposed will have time limitations unless Congress votes to adopt them:

“The administration could quickly replace the 10% across-the-board tariff with a similar tariff of up to 15% under Sec. 122 [of the 1974 Trade Act],” analysts at Goldman said. They noted, however, that such a move would only last for up to 150 days after which law requires congressional action.

There is more flexibility on rates under other sections of the 1974 Trade Act, but the White House would have to conduct investigations to justify the punitive measures and pinpoint the behaviors that have to change in order to reverse the tariff actions. The first Trump administration used that approach with China and got what it wanted, but it takes time and preparation to implement such actions. It took nearly three years for Trump to finally escalate tariffs on China in the first term under these other statutes:

“We have had section 301 tariffs on Chinese goods even under the previous administration, which were pretty harsh. So I can imagine that the administration will look at these provisions again and see if they can use 232, or 301, or some other mechanism where, whereby they can enforce the tariffs,” she told CNBC’s “Squawk Box Europe” on Thursday.

Schulz also pointed to the fact that such tariffs require investigations.

“I think that’s the difference here. All of the tariffs that we’re talking about today with IEEPA were issued under executive order and pretty much just by the executive branch,” she said. “When you look at these other sections, you’re going to have the involvement of the Commerce Department and other agencies investigating whether there really has been damage” to justify tariff action.

The other limitation that comes with these statutes is that the application of tariffs need to be more targeted. As I mentioned in the previous post, Trump has used Sections 301 and 232 to apply tariffs on autos, steel, and aluminum already, but not for the kind of sweeping universal tariffs that Trump prefers. Trump could try another path, however, in Section 338 of the Tariff Act of 1930 ... better known as the Smoot-Hawley Tariff Act, which Ben Stein taught to an entire generation of movie-goers:

 Let's just say that this may not have as much appeal to the electorate as Trump hopes. However, it's still law, and Section 338 addresses what may be Trump's real point in Liberation Day anyway:

Section 338 of the Tariff Act of 1930 empowers the President to impose additional duties on imports from countries that discriminate against U.S. commerce. Section 338 directs the President to impose tariffs when a foreign country either: 1) imposes unreasonable charges or regulations on U.S. products; or (2) disadvantages and discriminates against U.S. commerce “by or in respect to any customs, tonnage, or port duty, fee, charge, exaction, classification, regulation, condition, restriction, or prohibition.” Tariffs imposed under Section 338 may not exceed 50% of the value of the goods

A U.S. president has never imposed tariffs under Section 338. However, President Trump may invoke 338 in implementing new tariffs on countries that are identified under his February 21st memo on Defending American Companies and Innovators From Overseas Extortion and Unfair Fines and Penalties, or his February 13th memo on Reciprocal Trade and Tariffs.

Take special note of the fact that presidents have never used this law in the 95 years of its existence. That actually makes it a little more attractive for Trump in that there are no court precedents that might stand in his way. However, this law also carries a maximum tariff rate of 50%, according to Goldman Sachs and noted above, and only if Trump can prove discriminatory conduct. Even stacking the tariffs in these provisions gets Trump to just 65%, well below some of the threatened rates, and at least some of that would expire in 150 days whether Trump cuts a trade deal or not. 

This might still be a good path with China, where access to the American market is critical to the stability of the regime and the discriminatory conduct is easily demonstrated. It will not be as easy to apply Section 338 to other trading partners, but perhaps the threat of it will be enough to keep them at the negotiating table. Trump now has a very discrete window of time to get these deals on paper before losing the leverage these tariffs would allow, which means that our other trading partners have the option of waiting Trump out if necessary -- but they will more likely just increase their demands for more favorable terms. It doesn't really do anyone much good to keep the conflict rolling, and Trump will need our other trading partners for a longer fight with China.

So indeed ... they'll be back. But they may only get one sequel out of it.