Trump's plan B to impose new tariffs is also illegal because a balance-of-payments deficit doesn't exist, trade experts

[LetMyPeopleVote]

Section 122 tariffs can only be used when there is a balance of payments deficit which does NOT exist. Someone did not read the statute before letting trump try this executive order

Trump’s plan B to impose new tariffs is also illegal because a balance-of-payments deficit doesn’t exist, trade experts say fortune.com/2026/02/21/t...

#tariffs #economics #economy #law #SCOTUS

— Ian Kremer (@leadcoalition.bsky.social) 2026-02-22T19:12:07.516Z

https://fortune.com/2026/02/21/trump-tariffs-section-122-trade-law-trade-deficit-capital-account-surplus-balance-of-payments/

Just hours after the Supreme Court struck down President Donald Trump’s global tariffs on Friday, he signed an order to impose another package of levies under a different law that wasn’t affected by the court’s decision......

But the actual language of the Trade Act lists requirements that don’t exist today, including a “large and serious” balance-of-payments deficit.

While the U.S. has run a trade deficit for decades, it’s been offset by capital inflows as foreign investors pour billions into financial markets, resulting in a net balance of zero.

“Section 122 of the 1974 Trade Act, on which Trump’s 10% tariff is based, does not apply in the current macro environment,” said Peter Berezin, chief global strategist at BCA Research, in post on X on Friday. “A balance of payments deficit is not the same thing as a trade deficit. You cannot have a balance of payments [deficit] if you have a flexible exchange rate, as the US currently does.”

Similarly, economist Alan Reynolds, a senior fellow at the Cato Institute, pointed out that the trade deficit is fully funded by the capital account surplus, adding that there is no overall balance-of-payments deficit to justify Trump’s newest tax on imports.....

“Section 122 only authorizes tariffs in the presence of a fundamental international payments problem,” he added. “Because the United States does not face such a problem, Section 122 cannot legally be used by President Trump to impose new tariffs.”

[unblock]

1. Missing the point. They don't care. The supreme joke will give them another year before they stop him

[LetMyPeopleVote]

3. There was an arguable case for the prior tariffs in that there was no case law

In the next round of litigation, there is no arguable case for the use of this statute and the courts are going to act faster in that the trump DOJ has lost the presumption of regularity. See https://www.democraticunderground.com/100221015053

This will be some fun litigation to watch

[unblock]

5. Yeah, faster. By judicial standards, anyway.

So maybe 6 months? I don't think it's yet at the point where courts issue injunctions ordering that donnie tariff edicts be flat out ignored.

Point is he can do damage and exert power and the courts only stop him "eventually". In the meanwhile, he establishes his power: do as I say or I will f with your business or your industry or your country. We've seen the media cave and pay him off even with solid legal cases because the hassle of litigation and the threat of Donnie doing other (possibly illegal) crap is enough for him to get his way.

The fact that a court will eventually stop him doesn't keep him from abusing power to gain power, grift, and wreck stuff.

[LetMyPeopleVote]

6. I originated and worked on a case that we took to the Texas Supreme Court

I actually had to argue a couple of summary judgement motions in that case including one against the then top trial lawyer in Houston. That case lasted a very long time.

[Norrrm]

2. Trump charges/changes tariffs capriciously, most often with revenge/coercion, not based on economics.

Trump charges/changes tariffs capriciously, most often with revenge/coercion, not based on economics.

He calls these ever-increasing taxes on Americans - "revenue".

[dutch777]

4. If the GOP congress was smart...and brave...this would be their break point with Trump. Paint it as for lower prices...

....for Joe Citizen and they may actually help themselves for the mid terms. Luckily they are not smart, brave or still supported by a spine so we can use this for building the 2026 blue wave.

[LetMyPeopleVote]

7. The Court of Appeals in this case has ruled that Section 122 does not apply

This is the type of ruling by the court of appeals that will be used in the upcoming challenges of trump's use of Section 122

Link to tweet

This section will show up very early in a summary judgement attacking these tariffs.