When US tariffs were struck down by a 6-3 decision in the Supreme Court, the President announced a 10% global tariff under a different authority immediately.
This was done under Section 122, which has a 150-day limit and a cap of 15%. Initially the rate of 10% rather than 15% was framed as an administrative delay but now Bessent is saying that Trump has ‘chosen’ not to raise it. That’s good news for prices and may reflect that Trump is worried about inflation or is holding it back for leverage later.
Notably, the Treasury is doing broad Section 301 investigations regarding unfair trade practices and forced labor. These investigation are largely window dressing and are scheduled to end at the time that the 150-day limit expires. It will lead to fresh tariffs that are more durable.
But note that both authorities are likely to be challenged and likely to end up back at the Supreme Court, particularly if the Section 301 investigations aren’t seen as proper. The other kink is the midterm elections, which could throw up other road blocks.
Other headlines from Bessent:
- We want to get Warsh confirmed as soon as possible (a report today said the first hearing will be April 21)
- I’m confident that core inflation will go down
- We want to get housing bill passed
- China has been an unreliable partner during the war, they are hoarding oil
The mood in markets continues to improve and this tidbit from Bessent is more good news. The S&P 500 is up 44 points, or 0.65%, to 6930
