Due to the obstruction of reciprocal tariffs, the Trump team is considering a "Plan B"

Trump's tariff strategy faces setbacks, can the "B plan" turn the tide?

According to a report by Xinhua News Agency on the 29th, the U.S. Court of Appeals has reinstated the tariff policy, providing the Trump administration with some breathing room.

However, this temporary victory has not alleviated the concerns of Trump's team. Reports indicate that the White House is considering launching an unprecedented two-step strategy to ensure its tariff policy can continue to be implemented despite any legal obstacles.

"B Plan" may proceed in two steps

According to insiders, the "B plan" being considered by Trump's team involves two steps:

First, the government may utilize Section 122 of the Trade Act of 1974—a provision that has never been activated—as a temporary measure. This provision allows for tariffs of up to 15% on global economies for a period of 150 days to address trade imbalances with other countries;

Second, during this 150-day period, the Trump administration will tailor individual tariffs for each major trading partner based on another provision of the same law (Section 301), which is used to counter what the U.S. deems "unfair" foreign trade practices.

Peter Navarro, senior advisor for trade and manufacturing, seemed to hint at this plan in an interview, stating that the team is considering a dual-track approach involving Sections 122 and 301, and even suggested that the government might use the Smoot-Hawley Tariff Act of 1930, which allows for tariffs against countries that discriminate against the U.S., or expand the scope of tariffs imposed for national security reasons.

Currently, neither the White House nor the U.S. Trade Representative's Office has commented, but White House Press Secretary Karoline Leavitt clearly stated on Thursday that the government is preparing for other tariff options beyond the appeal.

New plan still carries legal risks

Although the new plan appears to be well-prepared, legal challenges remain a constant threat.

Peter Harrell, former senior director for international economics at the National Security Council under the Biden administration, pointed out that while Sections 122 and 301 have more legal grounding than the IEEPA, the latter requires proof of unfair trade practices by the target country, or it may still lead to litigation.

He stated:

"The new plan is undoubtedly more defensible than IEEPA tariffs, but the premise is that Trump's team must provide solid evidence."

Legal experts also noted that if the government shifts to using different laws during the appeal of the IEEPA case, the court may view this as an acknowledgment of losing the current case.

Global tariff war adds new variables

The court's ruling on Trump's overreach in tariffs has repercussions that extend beyond the legal realm.

In an emergency application to halt the ruling, the White House admitted that the decision "severely limits the president's negotiating leverage and undermines the foundation of ongoing negotiations with dozens of countries."

This statement contrasts with the optimistic tone of Kevin Hassett, director of the National Economic Council, who insisted on Thursday that trade negotiations would not be affected and that three agreements are close to being finalized.

Notably, Trump recently threatened to impose a 50% tariff on the European Union, only to quickly backtrack and set July 9 as a deadline. Now, the uncertainty of the ruling casts a shadow over this deadline. **

Spanish Minister of Economy Carlos Cuerpo responded on Thursday to the rise in global stock markets, stating that tariffs are not beneficial for any party, and the European Union is seeking an agreement with a "constructive attitude," even hoping to reduce trade barriers to pre-dispute levels.

Former EU trade official Ignacio García Bercero also stated that if the U.S. removes the 10% tariff on European imports and the comprehensive tariff threat, both sides may be able to focus on tariffs in industries based on national security, such as steel and automobiles, to reach a more balanced agreement.

Some analysts believe that if this ruling remains effective after Trump's appeal, it could pave the way for a trade agreement between the U.S. and the EU, as it removes a key obstacle in the negotiations.