President Donald Trump's administration is prepared to impose a temporary 10pc tax on imports before rolling out more permanent measures in case the US Supreme Court strikes down emergency tariffs imposed in 2025, a senior White House adviser said.
"We can put a 10pc tariff right away to make up most of the room, and then use things like the 301 authorities, the 232 authorities, to backfill the things that we've already achieved," White House national economic council director Kevin Hassett told Fox Business Friday.
The Supreme Court, in a Friday update on its website, said it may issue a decision on one of its pending cases on 20 January at 10am ET. That will mark the court's next chance to decide on the tariff case since holding oral arguments in early November. The opinion could also be for an unrelated case that is also pending before the high court.
Hassett, like other Trump officials, has expressed confidence about the administration's ability to prevail in court while, at the same time, outlining a possible fallback plan in case of legal defeat. The reference to a 10pc tariff is the most explicit confirmation to date of a possible route the administration plans to take if the high court strikes down Trump's tariffs.
Hassett likely is referencing a possible invocation of Section 122 of the 1974 Trade Act, which allows the White House to impose tariffs of up to 15pc for a period of 150 days to address a balance of payment issue.
But subsequent extensions would require explicit authorization from Congress. The administration likely will use the time period to prioritize the countries and industries it will target with tariffs next. Targeting a specific industry would rely on a "Section 232" authority that allows the Commerce Department or US Trade Representative's office to determine whether imports of a product need to be curbed on national security grounds. A Section 301 investigation would target a specific country on the grounds that it is discriminating against US exports. In both cases, the process leading up to the imposition of tariffs can take months, requires public consultation and allows carveouts for the affected US importers.
The future Supreme Court decision will affect Trump's tariffs on Mexico, Canada and China, where he cited an economic emergency created by the three countries' alleged inaction to stop the flow of fentanyl drugs into the US.
The Supreme Court will also address Trump's most extensive action — imposing tariffs of 10pc and higher since 5 April on nearly every US trading partner to address the "economic emergency" of persistent US trade deficits.
In both cases, Trump cited a 1977 law called the International Emergency Economic Powers Act (IEEPA), which previous presidents only used to impose targeted economic sanctions, to impose tariffs on nearly all US trading partners.
The Supreme Court's decision on IEEPA tariffs also would affect the tariffs Trump imposed on imports from Brazil and India, US government lawyers informed the Court of International Trade last week. Trump cited Brazil's alleged suppression of freedom of speech as a reason to impose tariffs. In the case of India, Trump imposed an extra 25pc tariff because of India's purchase of Russian crude.
The Supreme Court's decision will not affect tariffs on US imports of steel, aluminum, cars and auto parts, which Trump imposed by citing well-tested legal trade authorities.
The money issue
One of the issues that prompted even conservative justices to express skepticism about Trump's emergency tariffs during the oral argument in November related to their function in raising government revenue.
Government lawyers countered at the time that tariffs were a foreign and economic policy tool for the White House, rather than a tax, which the Constitution says only Congress can impose.
The US has collected nearly $260bn in customs duties during the first 11 months of Trump's second term, according to data from the US Treasury Department. Hundreds of companies have already filed lawsuits seeking to recover the tariffs, but Trump warned earlier this week that paying them back could take "years" to figure out.
"It would be a complete mess, and almost impossible for our country to pay," Trump said on 12 January via his social media network. "Anybody who says that it can be quickly and easily done would be making a false, inaccurate, or totally misunderstood answer to this very large and complex question."
