TrendMacro conversation with Phillip Magness on the new tariffs imposed under Section 122 of the Trade Act of 1974

The Trade Act of 1974 was enacted when the post-war Bretton Woods system of gold payments and fixed exchange rates was collapsing. Dollar gold convertibility had ended in 1971, and fixed dollar exchange rates were abandoned in 1976. Thereafter there could not be a balance of payments problem, because there were no payments. Yet a half century later Trump has imposed tariffs under Section 122 to solve a balance of payments problem. Several states and the Liberty Justice Center are suing in the Court of International Trade, and while 122 only allows the tariffs to stay in place for 150 days, the refunds that could be claimed by tariff-payers will run in the tens of billions of dollars. Section 122 does not use the word "emergency," so courts will potentially show less deference to presidential claims. And after Trump's stinging defeat on IEEPA tariffs in the Supreme Court, they might rule quickly. Were a staple of federal revenue generation throughout the 19th century. But with the Constitutional amendment allowing the income tax in 1916, they have degenerated into pure protectionism. Trump's claims that tariffs are for revenue-generation at this point on not supported by history.