Trump Invokes 1974 Trade Act for 15 Percent Global Tariffs Amid Legal Challenges

President Trump pivots to the 1974 Trade Act for global tariffs as 134 billion dollars in refunds remains in limbo. EU trade relations face a potential freeze.

By: AXL Media

Published: Feb 24, 2026, 3:46 AM EST

Source: Information for this report was sourced from Politico

The Shift to Section 122 and the Balance of Payments Standard

President Donald Trump moved over the weekend to establish a 15 percent global tariff rate. This move utilizes Section 122 of the Trade Act of 1974, a rarely used statute that allows for short term import surcharges. This pivot comes immediately after the Supreme Court rejected previous tariffs established under emergency powers. Legal experts are now questioning if the current economic climate meets the specific legal criteria of Section 122. The law requires a president to determine that such actions are necessary to address a serious balance of payments deficit or to prevent a significant depreciation of the dollar. While courts historically grant the executive branch leeway in trade matters, the lack of a current currency crisis could make this mandate vulnerable to a strict legal reading.

Refund Uncertainty and the 134 Billion Dollar Revenue Question

As the administration attempts to reconstruct its trade barriers, a massive financial question remains regarding previous collections. The Supreme Court ruling has put more than 134 billion dollars in revenue into a state of legal limbo. This sum is roughly equivalent to the combined annual budgets of the Department of Transportation and the Department of Housing and Urban Development. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer have both indicated that the decision on repayments will be left to lower courts. The U.S. Court of International Trade is expected to provide the final guidance on whether these funds must be returned to importers, a process that could take several months.

Strategic Pivot to Investigations and Sector Specific Duties

The administration is not relying solely on Section 122 to achieve its trade objectives. Officials have signaled a shift toward more durable tools such as Section 301 and Section 232 investigations. Section 301, which was used extensively during Trump's first term for Chinese imports, requires a formal investigation and public comment period. The U.S. Trade Representative announced that new investigations would soon cover most major trading partners. Additionally, sector specific investigations into national security concerns could justify higher duties on specific goods. This multifaceted approach is designed to create a more resilient trade barrier system that can wi...