Stan Veuger and other American Enterprise Institute scholars offer a legal argument against Trump administration tariffs.
For the President to invoke authority under Section 122 in the way that he has, two separate conditions must be met. First, per the cited statutory standard, the tariffs must be required to deal with “large and serious United States balance-of-payments deficits.” V.O.S. Selections, Inc. v. Trump, 149 F.4th 1312, 1372 (Fed. Cir. 2025) (Taranto, J., dissenting), aff’d sub nom. Learning Res., Inc. v. Trump, 607 U.S. 229 (2026). Second, the statute imposes “the necessary threshold condition” of the existence of “fundamental international payments problems.” Id. (quoting 19 U.S.C. § 2132(a)).
Neither required condition was met here. Section 122 was enacted in the early 1970s, when the United States was operating under the Bretton Woods system of fixed exchange rates. The term “large and serious United States balance-of-payments deficits” takes specific meaning from that time. 19 U.S.C. § 2132(a)(1). Under that fixed exchange rate system, a balance-of-payments deficit reflected an acute drain on U.S. gold and currency reserves that threatened the country’s ability to meet its international obligations. But now, under the floating exchange rate system the United States has maintained for more than fifty years, exchange rates adjust automatically to correct payment imbalances, making the reserve-drain emergency Section 122 was designed to address structurally impossible — and therefore legally impossible. Moreover, the United States does not face fundamental international payments problems, as it is able to pay for its imports and meet its debt obligations. As such, the Proclamation fails to satisfy either statutory condition: the United States cannot run a “large and serious United States balance-of-payments deficit” because, in today’s system of floating exchange rates, they are no longer possible; and the United States does not have a “fundamental international payments problem[]” because the United States has consistently been able to meet its payment obligations.
