President Donald Trump imposed a 10% "global tariff" on all countries starting 12:01 a.m. on the 24th (local time), throwing global trade and financial markets into turmoil after the Supreme Court ruled his reciprocal tariffs unconstitutional. Trump announced the rate would rise to 15% the following day, while Democrats vowed to block any extension after 150 days.
Washington observers suggest the administration may invoke Section 338 of the Smoot-Hawley Tariff Act from the Great Depression era, which allows presidents to impose punitive tariffs of up to 50% on countries that unfairly treat American products.
Several major corporations in the U.S. and abroad have already filed lawsuits seeking tax refunds following the court's ruling invalidating reciprocal tariffs. Adding to the chaos, legal experts argue that even the global tariff based on Section 122 of the Trade Act may face constitutional challenges.
15% Temporary Tariff as Bridge to Section 301 Investigations
Following the Supreme Court's June 20 ruling against tariffs under the International Emergency Economic Powers Act (IEEPA), Trump ordered the 10% global tariff within three hours. The measure, based on Trade Act Section 122, allows tariffs up to 15% for a maximum of 150 days without congressional approval.
Trump also announced investigations under Trade Act Section 301, which authorizes tariffs against unfair or discriminatory practices by foreign governments.
Treasury Secretary Scott Bessent told CNN on the 22nd that Section 122 serves as "a kind of bridge" rather than a permanent measure. "Once the Section 232 and Section 301 tariff investigations are complete, Section 122 may no longer be necessary after five months," he said.
U.S. Trade Representative Jamieson Greer told CBS that Section 301 investigations would examine "unfair trade practices and foreign rice markets that are killing American farmers with massive subsidies."
Depression-Era Tariff Law Under Consideration
If current legal tools prove insufficient, the administration may turn to Section 338 of the Tariff Act. Bessent and National Economic Council Director Kevin Hassett previously indicated this option was under consideration if courts ruled against reciprocal tariffs.
Section 338, enacted June 17, 1930, allows presidents to impose punitive tariffs up to 50% on imports from countries that discriminate against American goods—without congressional approval. The law, sponsored by Senator Reed Smoot and Representative Willis Hawley, raised tariffs on over 20,000 imported goods and contributed to global trade volume falling by two-thirds during the Great Depression.
No president has invoked the law since, and it became largely obsolete after GATT (1947) and the WTO (1995) established free trade norms.
Multiple Uncertainties Remain
Legal experts warn the 15% tariff under Section 122 could face litigation, as it remains unclear whether U.S. trade deficits and dollar devaluation risks meet the law's threshold of "large and serious" harm.
Safe-haven assets including bonds, gold, and silver, along with risk assets such as stocks and cryptocurrencies, are expected to remain volatile amid the uncertainty. Countries including South Korea are carefully weighing their responses as the EU and India delay agreements while Korea and Japan signal compliance with existing commitments.