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Trump's new tariffs are just as illegal as his old tariffs
There were a couple of posts/threads that mentioned this, but it seems worth publicising more:
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.
https://popular.info/p/trumps-new-tariffs-are-just-as-illegal
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.
https://popular.info/p/trumps-new-tariffs-are-just-as-illegal
Ironically, the law does mention 'balance-of-trade' once - that the president is allowed to temporarily reduce duties for up to 150 days "to increase imports" "to deal with large and persistent United States balance-of-trade surpluses".
1 replies
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