Trump tariffs: what ‘powerful’ trade weapons are at the US president’s disposal?

. UK edition

The US flag flies over a container ship unloading its cargo at the Port of Long Beach, California
Donald Trump’s new 10% global tariff has come into effect. Photograph: Mark Ralston/AFP/Getty Images

A 10% levy has been put in place, but the US leader has other economic ‘bazookas’ he can fire in his trade battle

Donald Trump did not carry through his threat to introduce 15% tariffs overnight.

However, he did impose 10% tariffs on imports into the US on Tuesday, and the threatened 15% may be the least of his trade partners’ worries.

On Monday, the US president threatened to use tariffs in a “much more powerful and obnoxious way”, and he has several trade bazookas he can fire after the supreme court forced him to stop collecting tariffs from more than 90 countries.

Here are the trade weapons at Trump’s disposal:

Section 122 of the 1974 Trade Act

This is the power Trump has used to impose the new 10% levy on imports, which had been expected to come in at 15% (and still might).

It allows for a maximum 15% tariff, but only for 150 days, after which the president will need congressional approval.

There are questions over whether he can create carve-outs to spare those 20 countries with existing tariff deals including the UK, the EU, Japan, Australia, Switzerland, South Korea and Lesotho.

William Bain of the British Chambers of Commerce believes that it would have to come through an “amending proclamation” by Trump.

Section 301 of the 1974 Trade Act

This is possibly the most powerful and most “obnoxious” tool available to Trump. It allows for unlimited tariffs to be imposed for four years against countries with unfair trade practices.

The problem for Trump is that it is not available overnight as it requires a formal investigation and evidence of “unfair practices” first.

Section 201 of the 1974 Trade Act

This is known as the “safeguarding” section of the act, and allows trade barriers to be erected to protect domestic industries from suffering “serious injury”. This could take the form of tariffs or quotas.

The US International Trade Commission must first assess that increased imports of a certain product, for example steel from China, are causing harm. The tariffs can remain in effect for four years after their proclamation.

Section 338 of the 1930 Trade Act

This allows for tariffs of up to 50% or complete import bans, but has not been invoked since 1935.

“This Great Depression-era provision allows tariffs up to 50% based on discrimination against US commerce,” say the ING economists Carsten Brzeski and Julian Geib.

“It’s untested in modern trade law, lacks procedural safeguards, and would invite immediate legal challenges. But it sits in the toolkit if the administration wants to signal maximum aggression.”

Section 232 of the 1962 Trade Expansion Act

Trump is already using this to impose sectoral tariffs including the 50% tariff on EU steel and aluminium and 25% tariff on UK steel and aluminium.

It is also applied to semi-finished copper and copper derivatives, cars and car parts, advanced semiconductors and lumber.

The UK and the EU have both got carve-outs on car tariffs – with a 10%, rather than 27.5%, levy applying to a 100,000 quota of cars from Britain and a 15% blanket tariff on cars from the EU as part of their wider deals.

These were not affected by the supreme court decision, which looked only at the reciprocal tariffs brought in under the International Emergency Economic Powers Act.

What about pharma?

Trump has already busted a World Trade Organization agreement that there should be zero tariffs on pharmaceuticals.

The UK got what Trump claimed were “preferential” terms keeping pharma at zero, while the EU is still paying 15% on exports. He is still threatening to impose additional tariffs under section 232.

New threats under section 232

Currently under active negotiation for sectoral tariffs are: