Trump Considers New National Security Tariffs After Supreme Court Ruling

Dow Jones
02/24

The Trump administration is considering new national security tariffs on a half-dozen industries in the wake of a Supreme Court decision last week that invalidated many of the president’s second-term levies.

The new tariffs being considered could cover industries such as large-scale batteries, cast iron and iron fittings, plastic piping, industrial chemicals and power grid and telecom equipment, according to people familiar with the plans. They would be issued under Section 232 of the Trade Expansion Act of 1962, which gives the president broad powers to impose tariffs based on national security risks.

The new Section 232 tariffs would be issued separately from other levies that President Trump has already announced since the Supreme Court threw out many of his tariffs on Friday morning. Those announced include a new 15% tariff that Trump can keep in place for five months, and a number of levies planned for after that period, which would be issued under another legal authority, Section 301 of the Trade Act.

Products tariffed under Section 232 have so far been exempted from Trump’s other second-term levies. Trump has already used Section 232 to issue tariffs on sectors such as steel, aluminum, copper, cars, trucks and auto parts during his second term, and those levies aren’t affected by the Supreme Court decision last week.

It remains unclear when the tariff investigations, run by the Commerce Department, will be announced, and when tariffs would ultimately be imposed. Section 232 requires lengthy investigations before levies can be imposed, but once in place can be altered by the president unilaterally. 

“Safeguarding America’s national and economic security remains a top priority for President Trump, and the Administration remains committed to using every lawful authority to deliver,” White House spokesman Kush Desai said in a statement. 

The plans come after the Supreme Court voted 6-3 on Friday to strike down most of Trump’s second-term tariffs issued under the International Emergency Economic Powers Act, ruling that he overstepped his authority in issuing his so-called reciprocal tariffs on virtually every U.S. trading partner. Those tariffs account for more than half of revenue generated by Trump’s second-term levies so far, and Trump sought to replace that revenue with a global 15% tariff last week.

The Supreme Court case, however, didn’t consider any of Trump’s Section 232 tariffs, which haven’t faced serious legal challenges. In his second term, Trump has dramatically expanded the scope of many of those tariffs, covering not only raw materials such as steel, aluminum and copper, but consumer products made with them as well. And he has largely refused to offer exemptions to the tariffs, outside of limited relief for U.S. automakers.

In addition to the newly planned investigations, Trump’s team was already considering tariffs on nine other industries—including semiconductors, pharmaceuticals, drones, industrial robots and polysilicon used in solar panels—under existing Section 232 probes. Many of those investigations were opened nearly a year ago, and the administration could accelerate work on some in response to the Supreme Court ruling last week.

The administration is also still moving forward on plans to revamp some of the existing national security tariffs on steel and aluminum, the people said. Those changes will likely lower the nominal tariff on many goods, but would also apply tariffs to the product’s full value, rather than only the value of steel or aluminum in the product. That could mean that many companies end up being charged higher tariff payments in the end.

U.S. Trade Representative Jamieson Greer last week said the administration may “adjust the way some of the tariffs are applied for compliance purposes” when asked about the coming changes on CNBC on Tuesday. 

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