Trump’s reciprocal tariff announcements sent global markets into a tizzy, although Wall Street has recovered all of its losses made during that Liberation Day week, and also turned positive on a year-to-date basis.
A US trade court has struck down the imposition of reciprocal tariffs by the Donald Trump administration on more than 60 countries starting April 2, calling them illegal.
Goldman Sachs has mentioned in its note on Thursday that the Trump Administration could have four other ways by which it could offset this court verdict, even before it heads to the Supreme Court for the next leg of the courtroom battle.
Here are some avenues highlighted by the global investment bank:
One such option is the use of “Section 122” of the Trade Act, 1974, which permits the President to impose tariffs of up to 15% to address a balance of payments deficit or to prevent an imminent and significant depreciation of the US dollar. Unlike other trade laws, Section 122 does not require a formal investigation, making it one of the swiftest tools at the administration’s disposal.
However, any tariffs enacted under this section can only last up to 150 days without further Congressional approval, the Goldman Sachs note said. Additionally, there is also no clarity on what happens next after the 150-day period ends.
Secondly, Goldman Sachs said that the Trump Administration could initiate fresh investigations against major trading partners using Section 301 of the US Trade Act, 1974.
Section 301 allows for retaliatory tariffs in response to unfair trade practices, and while it involves more procedural steps than Section 122, it provides broader and more enduring authority. There is no cap on the size or duration of tariffs under Section 301, although the investigations typically take weeks or months to conclude.
The third option, according to Goldman Sachs, includes an expansion of Section 232, under which tariffs on steel and aluminium are already in place under the rationale of national security.
While sector-specific tariffs have not been a recent focal point of the administration, officials may revisit them due to legal uncertainties surrounding broader, country-focused tariffs. Potential sectors under consideration for new tariffs include pharmaceuticals, semiconductors and electronics, for which, investigations are already ongoing.
Lastly, the Administration could also examine using Section 338 of the Trade Act of 1930. This rarely used provision permits the President to impose tariffs of up to 50% on imports from countries that engage in discriminatory practices against the US.
Unlike Section 301, Section 338 does not require a formal investigation, although it limits the magnitude of tariffs that can be imposed, Goldman Sachs said.
Trump’s reciprocal tariff announcements sent global markets into a tizzy, although Wall Street has recovered all of its losses made during that Liberation Day week, and also turned positive on a year-to-date basis.
The judicial ruling against tariffs is another attempt at many by the leftist judges to take over and run the government since Trump began his presidency. These rulings are clearly political. These attempts will render the USA government ineffective and inept as there is too much thwarting and countermoves.
The USA experiment is clearly failing because democracy does not work with a government that has too many different ethnic and racial groups with contrary and disparate interests that refuse to compromise. There are only two ways to deal with this:
a) Split up the country into jurisdictions with similar people.
b) Dictatorship where the disparate groups are forced to comply .
This is why African nations have dictatorships because the different tribes in the country cannot agree and work together.
It’s not just the Africans who sometimes end up in dictatorships to mush together disparate groups. The old Yugoslavia comes to mind. After Tito died – boom – balkanization along religious lines and we ended up with 5 or 6 new (actually old) countries.
The blacks however cannot plan their way out of a paper bag which is why their modern countries look the way they do. The countries of old Yugoslavia have made or are in the process of making a good go of it. Croatia and Slovenia are but two examples and Bosnia and Herzegovina are likely going to do well in the near future. I went there on a day tour out of Dubrovnik and saw lots of arable land, water and supposedly they have lots of minerals. As to the ethnic hatreds….exceeded only by the jews and the arabs.
M2 keeps chugging along. Moving higher with asset prices. I do notice that M2 velocity has turned lower, which reflects a fading inflation growth rate.