Goldman Sachs says most of this year’s tariff increases hinge on legal authority that could yet be overturned in the courts, but it expects the Trump administration would quickly pivot to other tools to sustain its protectionist push.
Analysts note that tariffs introduced under the International Emergency Economic Powers Act (IEEPA) account for around 8 percentage points of the 11pp rise in the effective U.S. tariff rate so far this year. Should the courts ultimately rule against the measure, Goldman expects the administration to fall back on alternative legal authorities.
One option would be Section 122, which permits tariffs of up to 15% for a period of seven months. Another would be Section 301, the mechanism previously used against China in 2018–2019, which could allow Washington to replace country-specific levies now imposed under IEEPA. However, Goldman cautions that launching 301 investigations across all trading partners would be cumbersome and might leave smaller economies untouched if the Supreme Court invalidates the IEEPA-based tariffs.
In such a scenario, the administration could lean more heavily on sectoral tariffs instead. Goldman estimates these will form the bulk of further tariff hikes expected over the next 18 months, ultimately lifting the effective tariff rate by about 17pp compared with the start of the year.
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