But he could bounce back quickly even if White House plans to appeal the defeat don’t pan out.
That’s because Congress has been handing its tariff powers over to the executive branch for decades, with an array of other authorities at the ready — especially from two laws passed in 1962 and 1974 — if Trump needs to reimplement things like his “Liberation Day” tariffs by different means.
“It’s a setback [but] it doesn’t mean that the president can’t find other means or authorities to try to implement this policies, and it’s also just the first step in litigation,” notes Greta Peisch, a former Biden administration trade general counsel now at law firm Wiley Rein, in a Yahoo Finance Live appearance Thursday morning.
Wednesday’s decision from the United States Court of International Trade even pointed out that other laws essentially give the president the authority to act in a similar manner even as it struck down Trump’s actions so far that it said “exceed any authority granted to the President.”
President Donald Trump speaks at the White House on Wednesday in Washington. (AP Photo/Evan Vucci) ·ASSOCIATED PRESS
What this week’s decision called into question is Trump’s authority under a 1977 law called the International Emergency Economic Powers Act (IEEPA). But two alternatives quickly emerged among trade experts if the court ruling stands, with Trump showing no signs of backing away from his tariff ambitions.
The most prominent quick strike option is so-called balance-of-payments authority derived from section 122 of the Trade Act of 1974. That power could allow Trump to move quickly but with a 150-day limit on how long any tariffs can be in place.
The second route is a possible renewed focus on sectoral duties such as “section 301” or “section 232” tariffs.
These long-established tariff authorities (one derived from that Trade Act of 1974 and another from a separate Trade Expansion Act of 1962) are ones Trump has used in the past but with the downside from his perspective that they can take time to implement.
Perhaps the most intriguing scenario is one that sees the president move on both fronts to try and quickly put in place a short term patch followed by a permanent fix.
Either way, Trump has offered signs in recent days that he is more focused on sector-specific tariffs at the moment, and that he has no intention of backing down from trade threats.
In comments on Sunday, Trump said he cared if tariffs helped the US produce things like military equipment and semiconductors but “we’re not looking to make sneakers and t-shirts.”
Then on Wednesday before the ruling, Trump reacted angrily to the notion that he has “chickened out” on tariff plans, saying even the suggestion he has backed down is “the nastiest question.”
The balance-of-payments authority is a likely immediate term option for Trump if he wants to act quickly.
But the limitations of that choice “are clear,” Henrietta Treyz of Veda Partners said in a note.
That’s because this authority allows the president to have new tariffs in place within days but only up to a 15 percent rate and only for a 150-day span unless Congress extends it.
These types of duties have been discussed in Trump’s circle for years but took a backseat to IEEPA when he came into office this year.
The second options are more legally established and more permanent but slower.
These are tariff authorities — most prominently via the national security focused section 232 of the Trade Expansion Act of 1962 — where Trump can act unilaterally but with the administration required to jump through time-consuming hoops like investigations and soliciting of public comment before the tariffs can go into place.
Then-President John Kennedy at a trade expansion bill signing ceremony in 1962. (Getty Images) ·Bettmann via Getty Images
But the upside for Trump here is that these are well-tested legal authorities that have even been used in recent months on goods like steel, aluminum, and cars.
The White House is currently in the process of conducting additional investigations around goods like pharmaceuticals and semiconductors, with that process likely to give Trump new options by this summer.
A similar tariff authority, but one premised on economic security, is section 301 of the Trade Act of 1974 which also includes the requirement for an investigation before implementation.
Section 301 — it’s worth noting — is the authority that Trump relied on in his first term to implement an array of tariffs on good from China.
It’s a legal landscape that could add up, Goldman Sachs warned in a note, to a situation which sees “increases uncertainty but might not change the final outcome for most major US trading partners.”
That’s in part because one scenario outlined in the note even sees Trump rely on both authorities in sequence.
First the president could invoke that balance-of-payments authority to quickly keep tariffs in place before he then launches sector-specific investigations to eventually make them permanent.
Peisch also sees a good chance of a multi-step process ahead, with the administration pursuing all avenues including litigation but with the quick strike balance-of-payments authority front of mind as an option “in the short term.”
Other options at the president’s disposal are seen as less likely at the moment but remain on the table.
The Trade Act of 1974 also has a section 201 that gives the president other tariff authorities.
Reaching even further back in US history, the Trade Act of 1930 allows the President to impose tariffs, which Goldman notes has never been used and bears similarities to section 301 authority “but does not require a formal investigation.”
The recently advanced ‘big beautiful bill’ could give Trump yet another tool, with changes to section 899 of the IRS code aimed at tightening restrictions on “discriminatory foreign countries” and giving the president the power to levy new taxes to combat these practices.
As for now, Wednesday’s ruling gives the administration 10 days to halt tariff collection, with the administration quickly filing two legal notices to state that it planned to appeal the decision and to ask for a pause the enforcement of the court’s order.
The White House remains focused on keeping tariffs in place no matter what, with spokesman Kush Desai telling Yahoo Finance in a statement “President Trump pledged to put America First, and the Administration is committed to using every lever of executive power to address this crisis and restore American Greatness.”
Ben Werschkul is a Washington correspondent for Yahoo Finance.
