INVESTIGATION: Section 122, Trump's tariff weapon the Supreme Court hasn't killed yet

INVESTIGATION: Section 122, Trump's tariff weapon the Supreme Court hasn't killed yet

Introduction: February 20, 2026 and the birth of a second tariff authority

From IEEPA to Section 122: The institutional survival of Trump's tariffs

The story begins with a judicial defeat for the Trump administration. In early 2026, the United States Supreme Court invalidated the legal foundation on which Trump had based the bulk of his aggressive commercial tariffs since his return to power in 2025: the International Emergency Economic Powers Act (IEEPA) of 1977. The justices ruled that using the IEEPA to impose broad universal tariffs exceeded the powers Congress had granted the president under that law.

In a remarkably short timeframe — two days — the Trump administration already had its response. On February 20, 2026, the president invoked Section 122 of the Trade Act of 1974 to impose a blanket 10% tax on all imports into the United States, effective February 24, 2026 at 12:01 AM EST. A piece of legislation more than 50 years old, practically never used on such a scale, became the new legal foundation for America's trade war.

What Section 122 of the Trade Act of 1974 is

Section 122 of the Trade Act of 1974 authorizes the American president to impose additional import duties on a wide range of imported goods to address serious balance-of-payments imbalances. The law allows a surcharge of up to 15% for a period of 150 days — at the end of which the measure must either be approved by Congress or expires automatically. The Trump administration chose a 10% tax — below the legal ceiling — to maximize the duration of application without exceeding it.

The 150 days from February 24, 2026 expire on July 24, 2026 — less than one month away at the time this article was written. The central question is: what happens on July 24th? And does the Trump administration have a strategy to maintain its tariffs beyond that deadline?

Anatomy of Section 122: The law and its exploitable limits

The statutory text and its conditions of application

Section 122 of the Trade Act of 1974 stipulates that the president may impose tariff surcharges of up to 15% to address significant balance-of-payments imbalances. The triggering condition — a balance-of-payments imbalance — is broad and difficult to contest legally, since the United States has maintained a structural trade deficit for decades, which always provides a defensible justification for invoking the law.

The automatic expiration after 150 days is the most significant constraint. Neither Trump nor any of his predecessors had used this provision for tariffs on this scale — its historical use was limited to very specific and time-limited situations. Invoking it for a universal 10% tax on all imports is an expansive interpretation of its original purpose, but not necessarily a violation of its literal text.

The provided exceptions and their implications

The Section 122 tax does not apply to all imports. Exempted are: goods already subject to Section 232 duties (steel, aluminum, automobiles — which have their own national tariffs), goods compliant with USMCA rules (the trade agreement with Canada and Mexico), certain textiles and garments covered by the DR-CAFTA agreement (Central America and the Caribbean), gifts, and informational materials. These exceptions reduce the tariff base but represent a fraction of total American imports.

The specialized law firm Sandler, Travis & Rosenberg notes that legal proceedings were immediately filed to challenge Section 122, and that the United States Court of Appeals for the Federal Circuit had granted a temporary injunction suspending certain applications — demonstrating that the legal basis of these tariffs remains contested in the courts.

The trade war: Context and escalation

The complex architecture of Trump's tariffs in 2026

The Section 122 tariffs are part of a much more complex tariff architecture. Alongside this blanket 10% tax, the Trump administration maintains specific tariffs under Section 301 (retaliation against China's unfair trade practices), Section 232 duties on steel and aluminum, and country-specific tariffs negotiated bilaterally in the context of trade agreements being renegotiated.

China faces the most severe combination: existing Section 301 tariffs (up to 25% on many categories), plus the Section 122 tax of 10% on categories not already hit by Section 301, plus Section 232 duties on steel and aluminum. The total can exceed 50% on some Chinese products — levels that have historically led to significant redirections of trade flows.

The threat of 100% tariffs on countries imposing digital taxes

On June 26, 2026, the Washington Times reported that Trump was threatening to impose 100% tariffs on European countries that impose digital services taxes — primarily targeting the American Big Tech platforms. This threat is part of a growing tension between Washington and Brussels over the taxation of digital platforms: Europe considers that American tech giants pay too little tax in countries where they generate their profits, while Trump considers any tax on American companies abroad as a commercial aggression.

Tariffs of 100% on European exports to the United States — in retaliation for a digital tax — would represent a major transatlantic trade escalation, potentially catastrophic for both economies. It is Trumpian rhetoric at its maximum: using the threat of mutual harm to force a concession. It sometimes works. And sometimes, both parties refuse to yield and the trade war spirals out of control.

July 24, 2026: The approaching date

What expires, what remains, what could come next

On July 24, 2026, the 150 days of the blanket 10% tax imposed under Section 122 expire. The Trump administration has several options. First option: Congress votes an extension — but the Republican Congress, concerned about the midterms and the inflationary effects of tariffs on voters, may not pass such an extension. Second option: the administration does not renew Section 122 but invokes another legal basis to maintain tariffs.

Rumors circulated that a bump to 15% was under consideration, but no formal proclamation had been published according to Sandler, Travis & Rosenberg at the time of writing. The third option — letting Section 122 expire without a credible alternative — seems unlikely given the administration's overall trade posture. What is likely is a new legal maneuver to maintain tariff policy beyond July 24th.

The IEEPA and other available legislative arsenals

After the Supreme Court's invalidation of the IEEPA for broad universal tariffs, variants of IEEPA application could still be used for country-by-country targeted tariffs — if the justification is sufficiently specific for each targeted country. Section 232 of the Trade Expansion Act of 1962 can be invoked for new categories of goods deemed essential to national security. Section 301 of the Trade Act of 1974 can target new trade practices deemed unfair.

The administration has a genuine commercial legislative arsenal drawn from decades of laws dating back to the 1960s and 1970s, an era when Congress had granted the president broad discretionary powers over trade policy. These laws were drafted for very different geopolitical contexts — the Cold War, the oil shocks, the Bretton Woods imbalances — and their drafters had not anticipated their use in a planet-wide trade war in the 21st century.

The economic consequences: What the numbers say

The impact on inflation and American consumers

Tariffs are taxes ultimately paid by American importers — businesses and consumers. The 10% tax from Section 122, combined with other existing tariffs, has contributed to keeping American inflation at higher levels than what was projected before their imposition. The Federal Reserve Board has had to maintain higher interest rates for longer partly because of this inflationary effect — which paradoxically has affected the American housing market that Trump claims to want to fix with the ROAD to Housing Act.

The most affected sectors are those that depend on global supply chains: electronics, automobiles, industrial equipment, apparel. American companies have absorbed part of these costs in their margins, passed others on to their customers, and some have relocated suppliers to countries less affected by tariffs — a result that partially satisfies the objective of American reindustrialization.

The retaliation and its effects on American exporters

China, the European Union, Canada, Mexico, and other trading partners responded to American tariffs with their own retaliatory measures targeting politically sensitive American exports: agricultural soybeans (targeting states like Iowa and Indiana), bourbon whiskey (targeting Kentucky, Senator McConnell's state), Harley-Davidson motorcycles (Wisconsin), dairy products. These reprisals are designed to inflict maximum electoral pain on Republican constituencies.

American farmers — who export massively to China and other Asian markets — have suffered disproportionately from these reprisals. Ironically, the rural agricultural states that form an important part of the Republican Party's electoral base are among the most exposed to the negative effects of the trade war initiated by Trump.

The international dimension: Toward a dismantling of the WTO?

WTO rules and their systematic circumvention

The Section 122 tariffs almost certainly violate the United States' commitments to the World Trade Organization (WTO), which requires members to keep their tariffs below the consolidated levels agreed upon in trade negotiations. Dispute settlement procedures have been filed against the United States by the EU, China, and other partners — but WTO timelines are long, and American trade policy is often determined before institutional arbitrations are rendered.

The Trump administration has in practice marginalized the WTO by blocking appointments to the appellate body of the dispute settlement mechanism — rendering the system for resolving international trade conflicts practically dysfunctional. It is a deliberate strategy: if multilateral rules cannot be enforced, great powers revert to bilateral law of the strongest — where the United States has structural leverage.

The European response: The Anti-Coercion Instrument and reciprocal acts

The European Union developed an Anti-Coercion Instrument (ACI) precisely to respond to unilateral trade pressures like those exerted by Washington. This tool allows the EU to take rapid and targeted retaliatory measures against trading partners that use tariffs as political weapons. It has not yet been fully activated against the United States — Europe preferring negotiation over escalation — but its existence in the European arsenal constitutes a signal that Brussels has the tools to respond if necessary.

The tension over digital taxes is the next probable confrontation terrain. If Europe maintains its taxes on the digital services of the Big Tech platforms — and countries like France and Spain have clearly indicated they will — and if Trump carries out his threat of 100% tariffs, we would enter a level of transatlantic trade escalation without precedent since the 1930s.

Allies in the crosshairs: Europe and Japan under tariff pressure

Europe facing digital tariffs: The Big Tech tax battle

The threat of 100% tariffs against European countries that impose digital services taxes on American tech giants places the European Union in a delicate position. On one hand, several member states — France, Italy, Spain, Austria — have adopted digital services taxes (DST) that specifically target American platforms whose profits realized in Europe are not taxed at their fair value under traditional tax systems. These taxes are fiscally legitimate and morally justified: why should companies generating billions in Europe pay less tax than European SMEs that do not have access to the same tax optimization structures?

On the other hand, Trump considers these taxes discriminatory against American companies — an argument his trade advisors have argued forcefully since 2019. The threat of 100% tariffs on European exports in retaliation creates asymmetric pressure: Europe exports physical goods to the United States (cars, machinery, agricultural products) that can be easily taxed at American customs, while American digital services toward Europe transit through channels less easily taxed. This asymmetry gives the United States real commercial leverage.

Japan and South Korea: Strategic allies, commercial victims

Japan and South Korea find themselves in a particularly uncomfortable position: they are American military allies on whom they depend for their security against North Korean and Chinese threats, but they are simultaneously in the crosshairs of American tariffs on steel, aluminum, and automobiles. This tension between security alliance and commercial rivalry characterizes American-Asian relations under Trump.

Tokyo has responded with patient diplomacy — bilateral negotiations, concessions on American agricultural imports, investments in factories on American soil to create visible jobs. Seoul has adopted a similar approach. These strategies have attenuated frictions without resolving them. The fundamental question remains: can one be a reliable military ally of a country that treats its trading partners as adversaries? The answer will determine the cohesion of the Indo-Pacific security architecture for a generation.

The WTO and the multilateral trade order: A system in agony

The World Trade Organization under existential pressure

The World Trade Organization (WTO) was founded in 1995 on the principle that trade disputes between nations should be resolved by a multilateral arbitration mechanism rather than unilateral reprisals. This principle enabled unprecedented global trade expansion for two decades. It is today in a state of partial clinical death: the Trump administration has blocked appointments to the WTO Appellate Body since his first term, making it impossible to definitively resolve trade disputes through multilateral means.

The use of Section 122 of the Trade Act of 1974 deliberately bypasses the WTO: it allows unilateral tariffs on a national security justification that the WTO cannot easily challenge. When the United States invokes national security as a tariff justification, the WTO finds itself in an impossible position — challenging a sovereign nation's assessment of its own national security is beyond its institutional mandate. Trump has found the perfect loophole to wage a trade war while nominally remaining within international law.

Europe as a paradoxical defender of multilateralism

The European Union finds itself in the paradoxical position of being the main defender of a multilateral trade order that its principal strategic ally is actively undermining. Brussels has maintained its commitment to the WTO, developed targeted commercial retaliation instruments, and worked to strengthen bilateral agreements with Asia, South America, and Africa as partial alternatives to the weakened multilateral system. This diversification strategy is prudent — but it cannot replace the systemic value of a functional multilateral trade order.

The long-term question no one poses frankly: if the United States continues to undermine multilateral trade institutions, who will benefit from this institutional vacuum? The answer is clear: China, which is developing its own alternative institutions — the Asian Infrastructure Investment Bank, RCEP trade agreements, the Belt and Road Initiative — with growing effectiveness. The erosion of the WTO does not only weaken the West — it accelerates the shift of the global economic order toward architectures that China can more easily influence.

Conclusion: Legal armament as commercial doctrine

What Section 122 reveals about Trump's strategy

The use of Section 122 of the Trade Act of 1974 reveals a trade strategy not guided by coherent economic principles but by a permanent search for legal levers to maintain a maximum-pressure policy regardless of institutional constraints. When the Supreme Court invalidates the IEEPA, find Section 122. When Section 122 expires, find something else.

This approach has real effects on global trade — uncertainty for companies planning investments, fragmentation of global supply chains, weakening of multilateral institutions built precisely to prevent trade wars. These costs are diffuse and distributed across the global economy, making their political attribution difficult. That is what makes them politically sustainable in the short term despite their negative economic effects.

What comes after July 24, 2026

July 24, 2026 will be a test date. If the Trump administration succeeds in maintaining substantial tariffs beyond that date — whether through a Congressional extension, a new legal instrument, or a combination of remaining powers — it will confirm that tariffs have become a permanent feature of American trade policy rather than a temporary negotiating measure. If, conversely, Section 122 expires without a credible replacement, that would represent a notable setback showing that American institutional constraints can still limit executive ambitions.

The commercial world is watching. And while it watches, contracts are not being signed, factories are not being built, supply chains remain in a permanent uncertainty that is perhaps the most invisible but most real economic cost of this chronic trade war.

By Maxime Marquette, columnist

Columnist's transparency note

My position on trade policy

I defend free trade as a general principle, while acknowledging that certain forms of strategic industrial protection can be justified in sectors critical to national security — semiconductors, defense, energy. I am critical of the use of tariffs as a generalized political pressure weapon because it creates harmful economic uncertainty without producing the structural reindustrialization gains that would justify it over time.

Limits of my information

The legal situation of American tariffs is evolving rapidly, with court rulings, presidential proclamations, and bilateral negotiations that can change the data within days. This article is based on information available as of June 26, 2026. The situation around July 24, 2026 was not yet resolved at the time of writing.

Sources

Primary sources

Washington Times — Trump threatens European nations with 100% tariffs over digital taxes — June 26, 2026

Sandler, Travis & Rosenberg — Section 122 tariff resources — 2026

Secondary sources

Axios — Context of trade policy within Trump governance — June 24, 2026

NPR — Context of Trump's legislative and trade strategy — June 25, 2026

The Conversation — Context of global trade policy in 2026 — January 2026

Bloomberg — The American trade war and the Chinese response — February 14, 2026