Trump’s new tariffs are just as illegal as his old tariffs
Numerous media outlets are spreading false information about the law — and Trump is benefiting.
On Friday, the Supreme Court struck down sweeping tariffs that President Trump had imposed globally. Trump had claimed authority under a 1977 law, the International Emergency Economic Powers Act (IEEPA). But the IEEPA did not mention tariffs and, in a 6-3 decision, the Supreme Court ruled that Trump exceeded his authority.
Trump, in a fit of pique, immediately announced that he was imposing a new 10% global tariff, citing Section 122 of the Trade Act of 1974. The next day, Trump raised the tariff to 15%.
Several prominent outlets falsely reported that the Trade Act gives Trump the legal authority to impose temporary tariffs of up to 15% in response to trade deficits:
Axios: “The text of the law says the president can impose a tariff of up to 15% for 150 days to address trade deficits.”
Business Insider: “This weekend, he announced plans to impose a 15% ‘worldwide’ tariff. That’s thanks to Section 122, which allows him to briefly implement tariffs broadly. However, they can only remain in place for up to 150 days.”
The Hill: “The president is enacting the policy under Section 122 of the 1974 Trade Act, a provision that allows for tariffs of up to 15 percent for 150 days to address ‘large and serious’ trade deficits.”
Forbes: “Trump announced Friday he would sign a global 10% tariff into effect under Section 122 of the Trade Act of 1974—which he raised to 15% on Saturday—which allows presidents to impose tariffs of up to 15% for up to 150 days to resolve trade imbalances.”
Similar claims were made on television news, including CNBC and NewsNation:
These outlets are spreading misinformation about the law.
Section 122 of the Trade Act gives the president the authority to temporarily impose tariffs in response to “large and serious United States balance-of-payments deficits,” not trade deficits. The United States does not have a balance-of-payments deficit, much less a large and serious one.
Balance-of-trade and balance-of-payments are two distinct concepts. Balance-of-trade looks at the goods and services sold to other countries and subtracts the goods and services imported. If a country imports more goods and services than it exports, it has a trade deficit. In 2025, the United States imported $4.3 trillion in goods and services and exported $3.4 trillion, resulting in a trade deficit of about $900 billion.
Balance-of-payments goes beyond trade in goods and services and covers all the money flows between countries. There are large inflows of foreign capital into U.S. Treasury bonds, stocks, and other financial instruments. That is why, despite a large trade deficit, the balance-of-payments deficit is zero.
For technical economic reasons, it is effectively impossible for the United States to have a balance-of-payments deficit today.1 As a result, the Senate Finance Committee noted at the time of passage that the authority to temporarily increase tariffs in response to a balance-of-payments deficit “is not likely to be utilized.” Trump, in fact, is the only president ever to invoke Section 122.
The Trade Act of 1974 mentions balance-of-trade but only authorizes tariff reductions in response.
Trump Solicitor General John Sauer emphasized the distinction between a trade deficit and a balance-of-payments deficit in an August 2025 legal filing in the tariff case that ultimately reached the Supreme Court.
[T]he President’s actions here do not identify or focus on balance-of-payments concerns of the type addressed by Section 122. Instead, the concerns the President identified in declaring an emergency arise from trade deficits, which are conceptually distinct from balance-of-payments deficits.
In contrast, Trump’s presidential proclamation imposing the new 15% tariff seeks to conflate the two issues. It cites the “goods trade deficit” and other economic data, and then concludes that “imposing an import surcharge would deal with the large and serious United States balance-of-payments deficit.” But the proclamation does not establish that the United States has a balance-of-payments deficit, because it does not.
Other media outlets suggested that the Trade Act gives Trump broad authority to impose global tariffs of up to 15% for 150 days, without mentioning the limitations:
The New York Times: The law “allows [Trump] to impose an across-the-board tariff for 150 days.”
CNBC: Trump “increased the global tariff rate to 15% — the legal maximum which can be in place for 150 days.”
CNN: “Presidents can impose up to 15% in tariffs using Section 122, but those duties are temporary and require congressional approval after 150 days.”
Wall Street Journal: “The new tariffs will be imposed under Section 122 of the Trade Act of 1974, Trump said, which allows the president to impose tariffs for up to 150 days.”
LA Times: “The president late Friday signed an executive order imposing a new 10% tariff, citing a 1974 law. Under that law, the tariffs can last for only 150 days.”
Washington Post: “Trump’s new strategy consists of a one-two punch of replacement tariffs. First, the 15 percent global import tax, which legally is valid for just 150 days.”
This kind of coverage bled into television reporting, like this CBS News segment:
This reporting has created the false impression that the temporary 15% measure is on firmer legal footing than the tariffs that were just struck down by the Supreme Court. In reality, the new tariffs are just as illegal as the ones they replaced.
The reason why the balance-of-payments in the modern economy is zero is that the exchange rate for the U.S. dollar floats. If too little money is coming into the country, the value of the dollar will decrease. This will make U.S. assets cheaper for foreigners and bring the payments back into balance.
Good to know our major media outlets are doing their due diligence on these tariffs. 🫠
Thank you for the clarification. Sadly, you are the first to report this information which seems to be beyond the understanding of the rest of the media not to mention the President and his Administration of dopes.