Trump Administration Seeks Legal Loophole? “Plan B” Reveals Determination to Maintain Tariffs

TradingKey - U.S. Treasury Secretary Scott Bessent said Monday he believes the Supreme Court will uphold the legality of the Trump administration’s broad use of the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs. This comes after an appeals court ruled most of Trump’s tariff measures illegal, but allowed them to remain in effect until October 14, giving the government time to appeal.

Bessent stressed that the administration has prepared detailed legal briefs arguing that the longstanding U.S. trade deficit and the deadly influx of fentanyl—which causes roughly 70,000 deaths annually—constitute a “national emergency” justifying the invocation of IEEPA.

While expressing confidence in a favorable Supreme Court ruling, Bessent made clear the administration has a backup plan in case it loses. He pointed to Section 338 of the Tariff Act of 1930, which allows the President to impose tariffs of up to 50% for up to five months on countries that discriminate against U.S. commerce. This provision is being positioned as the administration’s “Plan B” — an alternative legal pathway should IEEPA be invalidated.

The legal challenge stems from Trump’s “reciprocal tariffs” policy introduced in April. Although the appeals court rejected its legal foundation in a 7–4 decision, the tariffs remain temporarily in force during the appeal process.

Bessent argued that years of accumulated trade deficits have reached a “tipping point” that risks severe economic consequences, justifying the use of emergency powers. “We’ve been on a path of unsustainable imbalances for too long,” he said.

He also downplayed concerns that the tariffs are pushing countries like Russia and India closer together, describing India and others as “not exactly saints.” He added that the U.S. is actively working to secure joint countermeasures from European allies against India’s purchases of Russian oil.

The revelation of a “Plan B” underscores the administration’s firm commitment to maintaining high tariffs, regardless of judicial outcomes — signaling that trade protectionism will remain a cornerstone of its economic strategy.