US President Donald Trump has raised import tariffs to 15 per cent using a rarely used provision called Section 122 of the Trade Act of 1974. This comes after the US Supreme Court struck down his earlier tariff programme, stating it did not have proper approval from Congress.
To maintain tariffs while his administration works on permanent trade measures, Trump used Section 122 as a temporary legal solution.
What Is Section 122?
Section 122 gives the US President authority to impose temporary tariffs without lengthy investigations.
- Maximum tariff allowed: 15%
- Purpose: Address serious balance-of-payments deficit
- No detailed investigation required
- Valid for 150 days only unless extended
This allows the government to act quickly during economic stress.
How Trump Used Section 122
After the Supreme Court blocked his earlier plan, Trump imposed:
- First: 10% tariff
- Later increased to: 15%
This is the first time Section 122 has ever been used.
Limitations And Risks
- Tariffs expire after 150 days
- Congress approval needed to continue
- May face legal challenges
- Not meant for general trade disputes
How Indian Stock Market May React
Indian markets may open weak due to global uncertainty.
Key Indices to Watch:
- BSE Sensex
- Nifty 50
Expected Reaction:
- Sensex may fall 300–800 points
- Nifty may fall 100–250 points
- IT stocks may decline
- Metal stocks may fall
- FMCG stocks may remain stable
Sectors Likely Affected
Negative Impact:
- IT Sector
- Metal Sector
- Export Companies
Stable or Positive:
- FMCG
- Pharma
- Domestic companies
Foreign Investor Impact
Foreign investors may sell Indian stocks, which can increase volatility.
Long-Term Impact On India
Negative:
- Global trade slowdown
- Export pressure
Positive:
- Manufacturing may shift to India
- India may benefit from supply chain shift
Conclusion
Trump’s use of Section 122 has allowed quick tariff increases. Indian markets may open weak, but long-term opportunities may emerge depending on global trade developments.