AS Applies Section 280 to Address Persistent Trade Deficit

In late February, Article 280 of the 1974 Trade Act was activated by the United States as an emergency policy mechanism. This move reflects the U.S. government’s effort to utilize existing legal tools that are rarely applied in addressing structural challenges in their international trade sector.

Article 280: Emergency Tariff Mechanism with Minimal Usage History

Article 280 is a trade instrument that distinguishes itself from conventional tariff policies. It is specifically designed for crisis situations when a country’s international balance of payments is under extreme pressure. Unlike standard tariff mechanisms that focus solely on trade deficits of goods, Article 280 considers a broader picture—covering not only trade flows of goods and services but also overall international capital flows.

The use of Article 280 has been rare in recent decades, indicating that the U.S. has only now taken such an aggressive step to address its complex international balance of payments issues.

Balance of Payments and Trade Deficit: In-Depth Analysis

Imposing tariffs through Article 280 explicitly refers to the overall U.S. balance of payments position, not just bilateral or multilateral trade deficit data. This comprehensive assessment recognizes that fundamental problems include capital market dynamics, foreign direct investment, and financial services—elements that are less visible but crucial in maintaining macroeconomic stability.

Applying Article 280 in this context is likely to face strict legal scrutiny, given the complexity of the claims underlying it and the precedent set by previous similar cases challenging the legitimacy of such regulatory interpretations.

Diplomatic Response Calculations and Potential Escalation

According to international trade experts like Cui Fan, China’s response dynamics will depend entirely on the evolution of U.S. policies moving forward. If Washington opts for phased removal or reduction of tariffs, Beijing may respond with a comprehensive review and proportional strategic adjustments.

Meanwhile, if the U.S. continues expanding tariff applications using alternative legal bases—whether other provisions within Article 280 or other trade instruments—China will carefully consider whether and how to take appropriate actions in response to such escalation. This indicates that both parties’ decisions are interdependent, shaping an increasingly complex global trade dynamic.