US President Donald Trump has raised the possibility of new “national security tariffs” after the US Supreme Court last week struck down several of his previous tariffs.
According to sources close to the White House, the administration is working on new tariffs that could cover 5 to 6 sectors.
The new tariffs being considered could cover large-scale batteries, cast iron and iron fittings, plastic piping systems, industrial chemicals as well as power grid and telecommunications equipment. These tariffs are expected to be implemented under Section 232 of the Trade Expansion Act of 1962, which grants the president broad powers for national security reasons.
The ruling comes just days after the Supreme Court, by a 6-3 vote, struck down most of Trump’s “reciprocal tariffs” — issues he based on the International Emergency Economic Powers Act. The court ruled that Trump exceeded his authority by imposing these tariffs on almost all of the United States’ trading partners. The canceled tariffs accounted for more than half of the increase in tariff revenue generated during his second term. To make up for the loss, Trump announced a new global tariff of 15% last week that will remain in effect for five months.
The new Section 232 tariffs will be implemented separately from the previously announced 15% overall tariff and other planned Section 301 tariffs. Section 232 products have thus far been exempt from other tariffs announced during Trump’s second term. Trump had also imposed tariffs under this section on steel, aluminum, copper, automobiles, trucks and auto parts during his second term. These rates were not affected by the Supreme Court’s decision.
However, it is not yet clear when the new Section 232 taxes will be officially investigated and when they will ultimately take effect. This section requires a thorough review process before implementing the tax; However, once tariffs are in effect, they can be changed unilaterally by the president.
White House spokesman Kush Desai said in a statement: “Protecting America’s national and economic security remains President Trump’s top priority. The administration is committed to using every legal authority to achieve this.”
On the other hand, the Trump administration is reportedly considering imposing tariffs under existing Chapter 232 investigations in nine different sectors, including semiconductors, pharmaceuticals, drones, industrial robots and polysilicon used in solar panels. Some of these investigations were launched about a year ago and it appears that the process could be accelerated following the Supreme Court’s decision.
The administration is also preparing to change existing tariffs on steel and aluminum. The planned adjustments could reduce nominal tax rates; However, the goal is to apply taxes on the total value of the product, not just the value of the steel or aluminum it contains. This could mean an increase in the final tax burden for many businesses.
*This does not constitute investment advice.
