TARIFFS: Goldman Sachs On Tariff Ban, Possible Avenues For Trump Admin

Goldman Sachs outline a few avenues the Trump administration can take following the Court of International Trade judgement overnight, as they see it unlikely the administration’s appeal will be resolved in the next 10 days.

• They note the ruling “blocks 6.7pp of tariff increase since the start of the year: the 10% baseline tariff (worth 3.6pp on the effective tariff rate), the 20pp additional tariff on imports from China (2.7pp), and 25% tariff on non-USMCA compliant imports from Canada and Mexico (0.4pp)”. However, it should have “no impact on tariffs imposed under Sec. 232, which includes the tariffs on steel, aluminum, and auto imports (2.7pp) nor should it have implications for the Trump administration’s ability to impose other sectoral tariffs”.
• Given this, Goldman note the administration could:

1. “Quickly replace the 10% across-the-board tariff with a similar tariff of up to 15% under Sec. 122. Those tariffs would last for only up to 150 days, after which the law requires Congressional action to extend”.
2. “Quickly launch Sec. 301 investigations on key trading partners, laying the procedural groundwork for tariffs after the investigation is complete. This would take longer, likely several weeks at a minimum and probably a few months to complete several investigations”.
3. Broaden Sec 232 tariffs to cover other sectors. “President Trump has not emphasized sectoral tariffs as frequently lately as he did earlier this year, but if the White House finds it has less flexibility on country-focused tariffs, sectoral tariffs might receive more attention again”.
4. “Sec. 338 of the Trade Act of 1930 allows the President to impose tariffs of up to 50% on imports from countries that discriminate against the US. This authority, which has never been used, is similar to the authority under Sec. 301, except that it limits the amount of the tariffs but does not require a formal investigation”.