Report: The Trump administration will announce the launch of a trade investigation to pave the way for new tariffs

On Wednesday, the 11th, at the beginning of the U.S. stock market's midday session, media reports citing informed sources indicated that the Trump administration is preparing to announce a series of trade investigations, paving the way for new tariffs on imported goods after the U.S. Supreme Court rejected its tariff agenda.

According to reports, the aforementioned trade investigations will be conducted under Section 301 of the U.S. Trade Act of 1974 and will be executed by the Office of the U.S. Trade Representative. The investigations will cover issues such as digital services taxes and alleged currency manipulation. Reports suggest that these investigations will mark an important step for the Trump administration in rebuilding the president's "tariff wall."

Following the reports, the two major U.S. stock indices, the S&P 500 and the Dow Jones Industrial Average, continued to decline. The Nasdaq, supported by a rise in chip stocks, briefly turned positive during the midday session and managed to regain momentum in the closing hours, narrowly preserving its rebound for the week.

According to CCTV News, on February 20 local time, the U.S. Supreme Court ruled that the large-scale tariff measures implemented by the Trump administration under the International Emergency Economic Powers Act (IEEPA) lacked clear legal authorization. The Supreme Court justices upheld the lower court's ruling by a vote of 6 to 3, determining that Trump's invocation of the IEEPA to implement tariff policies exceeded his statutory authority as president.

CCTV pointed out that the Supreme Court reached this conclusion in lawsuits filed by businesses and 12 U.S. states. These businesses and states argued that Trump's unilateral imposition of import taxes based on the IEEPA was unprecedented. This ruling only restricts the president's ability to impose tariffs under the IEEPA and does not completely strip him of the power to levy tariffs. Trump had previously imposed tariffs on products such as copper, steel, and aluminum under other trade laws.

On the same day the U.S. Supreme Court's ruling was announced on February 20, according to CCTV News, Trump announced a 10% import tariff on global goods for 150 days under Section 122 of the U.S. Trade Act of 1974, to replace the tariffs deemed illegal by the Supreme Court. The next day, on February 21, Trump posted on social media that he would raise the rate of the "global import tariff" on goods imported into the U.S. from 10% to 15%.

The White House announced on February 20 that the aforementioned 10% tariff would take effect on February 24 at Eastern Time. The Trump administration has yet to fully implement the higher 15% tariff rate.

Additionally, according to CCTV, the U.S. Customs and Border Protection (CBP) stated on February 22 that it would stop collecting tariffs imposed under the IEEPA starting February 24 at Eastern Time.

Wall Street Insights previously mentioned that although Trump became the first U.S. president to impose tariffs under Section 122 of the Trade Act of 1974, the tariffs imposed under this provision are limited in rate and duration, making it difficult to support the long-term large-scale tariff system Trump seeks.

Section 122 allows the president to impose tariffs of up to 15% for a maximum of 150 days in the event of a "large and serious" international balance of payments deficit. The main advantage of this tool is that it can be implemented without prior investigation. The U.S. International Trade Court pointed out last May when ruling that reciprocal tariffs were illegal that if the president intends to address trade deficit issues through tariffs, he should use Section 122 rather than the IEEPA However, this clause has a fatal flaw. The 15% tax rate cap and the 150-day deadline mean that the relevant tariffs can only be considered a short-term option. The key issue is that extending the tariff's validity requires approval from the U.S. Congress, and the Democrats have previously stated they will block any extension.

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