Kamal Ghorui
Will Donald Trump administration’s high reciprocal tariffs come back to haunt global economies? Treasury Secretary Scott Bessent on Tuesday indicated that Trump’s tariff measures could be reinstated by July, potentially returning to the levels that existed before the Supreme Court of the United States deemed many of the tariffs illegal.Trump is attempting to rebuild his tariff regime using alternative legal avenues after the court ruled that his earlier reliance on emergency powers to impose duties was unconstitutional.
Trump’s New Tariff Tool: Section 301
Speaking at an event hosted by the Wall Street Journal in Washington, Bessent reportedly said that although the Trump administration faced a setback following the court’s ruling, it plans to rely on Section 301 investigations. Through this route, tariffs could be reinstated at earlier levels by early July.He noted that since the Section 301 framework has already been tested in courts, companies have greater clarity and can begin making decisions related to investments and capital spending.Soon after the US Supreme Court verdict, Trump announced a 10% universal tariff. Trump had said that the court had not rejected tariffs as a policy tool, but had only struck down his use of emergency powers under IEEPA. The president said he intends to rely on Section 122 of the Trade Act of 1974, which allows him to impose tariffs unilaterally. However, this provision, which has not been widely tested, limits such measures to a maximum duration of 150 days and caps the rate at 15%.Meanwhile, commenting on the broader economic outlook, Bessent said it remains uncertain when the effects of the conflict involving Iran might fully impact the US economy, but he maintained that economic conditions are currently robust.He added that growth could still surpass 3 to 3.5 per cent this year.Bessent also pointed to a continued decline in core inflation, which excludes volatile components such as food and energy, as a positive sign. He said the Federal Reserve has misjudged inflation trends, arguing that interest rates should be reduced further, even if policymakers prefer to wait for more conclusive data.However, while data for March showed a moderation in core inflation, it also indicated a sharp increase in the headline consumer price index, driven in part by higher gasoline costs.
