What Happened
- Following the US Supreme Court's February 20, 2026 ruling striking down IEEPA-based tariffs, President Trump immediately invoked Section 122 of the Trade Act of 1974 to impose a 10% global import surcharge, later raised to 15%
- The US Trade Representative (USTR) announced initiation of new Section 301 investigations against major trading partners — including India — for unfair trade practices
- Section 232 tariffs (on steel and aluminium, based on national security) remain in force as they were not challenged in the SCOTUS case
- This creates a multi-layered tariff architecture where different legal authorities apply different rates and cover different product categories simultaneously
- The shift from IEEPA to Section 122 effectively benefits India temporarily (15% vs. the previously negotiated 18%), but new Section 301 investigations signal potential sector-specific escalation
Static Topic Bridges
Section 122 — Trade Act of 1974 (Balance of Payments Tariff)
Section 122 of the Trade Act of 1974 grants the US President authority to impose a tariff of up to 15% on all imports for up to 150 days when there is a "large and serious United States balance-of-payments deficit." It is the President's fastest unilateral tariff tool — requiring only a presidential determination with no formal investigation, no interagency process, and no sector-specific findings.
- Statutory basis: Section 122, Trade Act of 1974 (19 U.S.C. § 2132)
- Maximum tariff: 15%; Maximum duration: 150 days without Congressional extension
- No cap on number of uses; can be renewed with congressional action
- Does not require findings of unfair trade practices — applies to all countries simultaneously
- Invoked February 20, 2026 at 10%; raised to 15% February 21, 2026
- Historical use: rarely used; one prior invocation by Nixon in 1971 (import surcharge as part of the "Nixon Shock")
Connection to this news: Section 122 became Trump's immediate fallback after IEEPA was struck down, imposing a uniform 15% on all countries including India — replacing the more complex bilateral rate structure that existed under IEEPA authority.
Section 301 — Trade Act of 1974 (Unfair Trade Practices)
Section 301 authorises the USTR to investigate foreign countries' acts, policies, or practices that are "unreasonable or discriminatory" and burden US commerce, and to respond with retaliatory tariffs or trade restrictions. Unlike Section 122, it requires a formal investigation with public comment periods and specific findings of unfair practices before action can be taken. It does not cap tariff levels and can be targeted at specific products or sectors.
- Administered by: Office of the US Trade Representative (USTR), an Executive Office of the President
- Process: Initiation → Investigation → Findings → Proposed Action → Comment Period → Final Action
- Most prominent use: China Section 301 tariffs (2018-present) following investigation into IP theft and technology transfer — tariffs ranging from 7.5% to 25% on hundreds of billions of dollars in goods
- India-specific vulnerability: India has been investigated under Section 301 for trade barriers in pharmaceuticals, e-commerce (data localisation, FDI restrictions), agricultural products, and digital services
- No tariff cap under Section 301 — rates can exceed 100% in extreme cases
- Distinguishable from: Section 201 (safeguard tariffs — WTO-authorised, time-limited, requires injury finding by USITC)
Connection to this news: New Section 301 investigations against India signal that even with IEEPA struck down, the US retains tools to impose targeted high tariffs on Indian goods if "unfair practices" are found — posing longer-term risk to Indian exports in pharmaceuticals, IT, textiles.
Section 232 — Trade Expansion Act of 1962 (National Security Tariffs)
Section 232 of the Trade Expansion Act of 1962 authorises the President to impose tariffs or quotas on imports that threaten "national security." The investigation is conducted by the Department of Commerce, which submits findings to the President, who then has broad discretion to act. Section 232 tariffs are not time-limited and do not cap the tariff level, making them among the most powerful unilateral trade tools.
- Statutory basis: Section 232, Trade Expansion Act of 1962 (19 U.S.C. § 1862)
- Department of Commerce conducts investigation; President has 90 days to act on findings
- Current active tariffs: Steel (25%) and Aluminium (10-25%), imposed in 2018; expanded in 2025
- India was affected: India's steel and aluminium exports to the US fell after 2018; India sought WTO dispute settlement
- "National security" definition is extremely broad under Section 232 — has been interpreted to include domestic manufacturing capacity, employment, supply chain resilience
- Not affected by the February 2026 SCOTUS ruling — challenge to Section 232 was separate (and upheld by courts as constitutional)
Connection to this news: Section 232 tariffs continue to apply to Indian steel and aluminium regardless of the IEEPA ruling, illustrating how the US maintains multiple overlapping tariff regimes with different legal bases and policy rationales.
WTO Framework and the Legality of Unilateral Tariffs
The World Trade Organization's foundational principle is Most Favoured Nation (MFN) treatment under GATT Article I — a member must give all WTO members the same tariff rates it gives to any other member. Unilateral tariff hikes outside agreed schedules require WTO justification (usually Article XX general exceptions or Article XXI national security exception). The US has relied heavily on Article XXI (GATT) for defending Section 232 tariffs, but a WTO panel has ruled these inconsistent with WTO law (findings largely ignored by the US).
- GATT Article I: MFN obligation (tariff equality among all trading partners)
- GATT Article II: Binds tariff rates to agreed schedules (bound rates) — US bound rate on most goods is below the new tariff levels
- GATT Article XXI: National security exception — self-judging in US interpretation; WTO panels have begun scrutinising these claims
- India's WTO disputes against US: India filed WTO complaints against Section 232 steel/aluminium tariffs; retaliated with counter-tariffs on US goods (almonds, apples, chemical products)
- Dispute Settlement Body (DSB): WTO dispute panels are currently dysfunctional as the Appellate Body has no quorum (US blocked judge appointments since 2017)
Connection to this news: The shift from IEEPA to Section 122/301 authorities creates new WTO compatibility questions — Section 122 may be defended under GATT's balance-of-payments exceptions (Articles XII/XVIII), but new Section 301 investigations must produce credible unfair trade findings to withstand WTO scrutiny.
Key Facts & Data
- Section 122 cap: 15% tariff for 150 days; invoked February 20, 2026 (initially 10%, raised to 15%)
- Section 232 tariffs: Steel 25%, Aluminium 10-25% (2018, expanded 2025) — remain in force
- Section 301 China tariffs (2018): 7.5% to 25% on goods worth hundreds of billions of dollars
- New Section 301 investigations: USTR announced February 21, 2026, covering major partners including India
- IEEPA (1977): struck down for tariff use by SCOTUS in 6-3 ruling, February 20, 2026
- WTO Appellate Body: non-functional since 2019 (US blocked judge appointments)
- India-US goods trade deficit (US perspective): approximately $45 billion annually
- India's WTO case against US Section 232 tariffs: filed 2018, pending