Have you ever watched a chess grandmaster lose a queen and still checkmate the opponent three moves later? That’s pretty much what just happened in U.S. trade policy.
While everyone was fixated on a Supreme Court case that could strip away the legal justification for many current tariffs, Treasury Secretary Scott Bessent casually dropped a bombshell: it doesn’t actually matter. The administration has multiple backup plans ready to recreate the exact same tariff wall using laws that have been sitting on the books for decades.
In my view, this is one of those moments when the market realizes the game is deeper than it looked.
The Supreme Court Case Everyone Is Watching (But Maybe Shouldn’t Panic About)
Right now there’s a high-stakes challenge working its way through the courts questioning whether the president can use the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs. Critics say it was never meant for trade policy. Supporters say national security gives the executive almost unlimited latitude.
Most analysts have been treating the upcoming ruling like a potential knockout blow to the tariff agenda. Bessent just told the world—on stage, in public, with zero hedging—that a loss wouldn’t be a knockout. It would barely count as a jab.
“We can recreate the exact tariff structure with [sections] 301, with 232, with 122.”
Treasury Secretary Scott Bessent, New York Times DealBook Summit
And when asked if those alternative authorities would be permanent, his answer was a single word: “permanently.”
So How Exactly Do These Backup Plans Work?
–>Let’s break it down piece by piece, because the details matter more than the headlines.
Section 301 of the Trade Act of 1974 is the old reliable. It lets the president hit countries with tariffs if they’re engaging in “unfair trade practices.” That phrase is deliberately broad—intellectual property theft, forced technology transfer, currency manipulation, you name it. The Trump administration already used 301 extensively against China in the first term, and the Biden administration kept most of those tariffs in place. No time limit. No emergency required.
Section 232 is the national security card. Steel and aluminum tariffs were justified this way, as well as threats against imported autos that never fully materialized. If imports “threaten to impair the national security,” the president can act. Again, the definition of “threaten” and “national security” is left almost entirely to the executive branch.
Section 122 is the lesser-known wildcard. It allows temporary tariffs (up to 150 days) for balance-of-payments reasons or to prevent “serious injury” to domestic industry. Bessent mentioned it alongside the others, probably as a short-term bridge while longer-term measures under 301 and 232 are finalized.
- Section 301 → unfair practices → permanent possible
- Section 232 → national security → permanent possible
- Section 122 → temporary emergency → max 150 days
- IEEPA (current method) → national emergency → under Supreme Court review
In practice the administration could layer these authorities like armor. Lose IEEPA? Shift everything to 301 and 232. Need an immediate reaction? Drop a 122 action while the paperwork on the permanent ones is processed.
Real-World Proof It’s Already Working
Bessent pointed to a surprisingly concrete example: fentanyl.
The administration recently threatened (and partially imposed) tariffs explicitly tied to China’s role in the fentanyl precursor supply chain. According to Bessent, Beijing has now made what he called its “first real step forward” and a “robust effort” to crack down. Whether you love or hate the tactic, it’s hard to argue with movement on an issue that has frustrated Washington for years.
That single example shows the leverage tariffs create—even the threat of them.
What This Means for Markets and Investors
If you’ve been shorting companies with heavy China exposure because you thought tariffs might magically disappear after a court ruling, you might want to reconsider.
The policy continuity risk just went way up. Importers, manufacturers, retailers—anyone with complex global supply chains—should probably assume higher tariff levels are the new normal, regardless of how the justices vote.
On the flip side, domestic producers in steel, aluminum, semiconductors, and other “strategic” industries can sleep a little easier. Political cover for protectionist measures isn’t going away.
A Quick Aside on the Fed Chair Drama
Bessent was also asked about the next Federal Reserve chair. He gave the diplomatic answer you’d expect from a sitting cabinet member, reminding everyone that the chair is just one vote on a board with strong regional bank presidents.
Translation: don’t over-index on personalities. The institutionally the Fed moves slowly and deliberately, no matter who sits in the big office.
The Bigger Picture Nobody Wants to Say Out Loud
Here’s the part that makes some free-trade purists uncomfortable: the United States has decided—across both parties at this point—that strategic decoupling from certain supply chains is worth paying for.
Whether the tool is IEEPA today, Section 301 tomorrow, or something else the day after, the underlying policy goal isn’t changing. Call it protectionism, call it industrial policy, call it economic nationalism—labels don’t matter. The direction of travel does.
And as Bessent just removed one of the biggest remaining sources of uncertainty.
So maybe the real takeaway isn’t about any particular court case or statutory citation.
It’s that the era of assuming U.S. trade policy will automatically snap back to 1990s-style globalization is over. The chessboard has changed, and the administration just showed it has plenty of extra queens hidden up its sleeve.
In investing, as in chess, the players who adjust fastest to the new board position tend to come out ahead.
