Why Trump’s Critics Are Wrong About “Balance of Payments” and Tariff Authority

The Trump administration’s use of Section 122 of the Trade Act of 1974 to impose temporary tariffs has drawn sharp criticism from a gaggle of anti-Trump economists and self-styled trade experts. Former IMF chief economist Gita Gopinath argued on X that the United States doesn’t have a “balance of payments problem.” Others contend that balance-of-payments deficits are “impossible” under floating exchange rates, making the statute legally inoperative.

But the critics are wrong. The authority exists, it’s solid, and the administration knows it.

This isn’t a hasty improvisation. The administration has been preparing the Section 122 framework for months, building the case that the statute provides clear authority for temporary tariffs in response to America’s deteriorating external position. A close examination of the statute’s text and legislative history shows Section 122 does what the administration says it does: it authorizes temporary import surcharges when the United States faces fundamental international payments problems.