With his move to impose new global tariffs, U.S. President Donald Trump isn¡¯t just trying to repair a trade policy dismantled by a Supreme Court rebuke. He¡¯s also declaring that the world¡¯s largest economy is facing a profound balance-of-payments crisis.
The potential problem for Trump and his administration with that argument: Many economists ¡ª and financial markets so far ¡ª don¡¯t see the U.S. teetering on any such precipice. That means his latest import taxes seem likely to lead to yet another legal challenge and more uncertainty for trading partners, companies, consumers and investors.
To roll out a tariff of 10% ¡ª which Trump later raised to 15% ¡ª to replace those the court invalidated in its landmark ruling on Friday, Trump invoked Section 122 of the Trade Act of 1974. The statute allows U.S. presidents to impose duties for up to 150 days ¡°in situations of fundamental international payments problems.¡± Those include ¡°large and serious United States balance-of-payments deficits¡± and an ¡°imminent and significant depreciation of the dollar.¡±
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