Navigating the Tariff Maze: How Legal Workarounds Could Cement Trump's Trade Policy and Create Investment Opportunities

The U.S. Court of International Trade recently struck down a cornerstone of President Trump's tariff regime, ruling that his broad tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful. While this decision initially appeared to spell the end of his trade agenda, Goldman Sachs' analysis reveals a path forward through lesser-known legal provisions. These tools—Sections 122, 301, and 338—could allow the administration to reimpose tariffs, reshaping sectoral dynamics and creating asymmetric opportunities for investors.

The Legal Backstop: A Trio of Tariff Mechanisms

Goldman Sachs identifies three legislative pathways to bypass the court's ruling:

1. Section 122 of the Trade Act of 1974: This allows the president to impose up to 15% tariffs for 150 days to address balance of payments deficits or currency depreciation. While temporary, this provision offers a swift stopgap. If Congress acts within the 150-day window, tariffs could become permanent.

3. U.S. steelmakers like Nucor and United States Steel (X) stand to benefit immediately, as existing Section 232 tariffs remain untouched and could expand under this mechanism.
   

4. Section 301 Investigations: These allow the U.S. Trade Representative to target unfair trade practices, enabling tariffs without congressional approval. While slower than Section 122, this tool provides a long-term framework to penalize specific sectors.

6. EU-based semiconductor firms such as ASML may face heightened scrutiny, but their advanced manufacturing capabilities could also make them critical partners for U.S. companies seeking to circumvent tariffs.

7. Section 338 of the Trade Act of 1930: A rarely used provision permitting up to 50% tariffs on imports from countries discriminating against U.S. firms. This could become a blunt weapon against China, though legal challenges are likely.

Sectoral Implications: Winners and Losers in the Tariff Shuffle

The interplay of these tools will create clear winners and losers across industries:

Semiconductors: A Double-Edged Sword

• Threat: New tariffs on semiconductor manufacturing, effective June 2025, could add $6.4 billion to TSMC's $100 billion U.S. fab project, undermining the CHIPS Act's cost competitiveness.
• Opportunity: The rollback of Biden-era AI chip export restrictions could unleash demand for firms like Nvidia (NVDA) and AMD (AMD), as global sales surge.
• Investors should prioritize companies with agile supply chains and partnerships in tariff-advantaged regions, such as the EU.

Steel: A Protected Bastion

• Existing Section 232 tariffs on steel and aluminum remain intact, shielding U.S. producers. Goldman Sachs anticipates these could expand to sectors like automotive components, benefiting firms like General Motors (GM).

Tech: Growth Amid Regulatory Whiplash

• While sectors like transportation face volatility—Dow Jones Transportation Average down 7.73% YTD—AI-driven software companies are insulated.
• Apple (AAPL) faces pressure to relocate production to avoid tariffs, but this could accelerate its diversification away from China.

The Investment Playbook: Positioning for Structural Shifts

The market's knee-jerk reaction to the court ruling has created a window to reweight portfolios:

1. Aggressively Buy Tariff-Protected Sectors:
2. Steel: U.S. steelmakers (NUE, X) and machinery firms with domestic supply chains.

3. Semiconductors: EU-based firms (ASML) and U.S. AI leaders (NVDA) benefiting from relaxed export rules.

4. Hedge Against Volatility:

5. Use options on tech ETFs (e.g., XLK) to protect against sector-specific dips.

6. Diversify into China-exposed stocks with hedging instruments, as trade tensions ebb and flow.

7. Avoid Overrotation into Short-Term Plays:

9. Companies reliant on China for manufacturing or sales (AAPL, TSM) face prolonged uncertainty until trade policies stabilize.

Final Verdict: Act Now—The Legal Fight is Only Beginning

The court's ruling is a setback, not a defeat. The administration's rapid appeal signals its intent to use every legal tool to preserve tariffs. Investors who recognize this and position for long-term structural shifts—favoring protected industries and agile firms—will outperform those fixated on short-term volatility.

The path forward is clear: reweight toward U.S. steel and tech, EU semiconductors, and AI leaders—while hedging against the inevitable swings of regulatory battles. The tariff maze is complex, but the exits are marked for those who dare to navigate it.