What is the story about?
In a significant ruling, the Supreme Court has restricted President Donald Trump's ability to unilaterally impose new tariffs, stating he can no longer
create import taxes at will. This decision follows a year marked by volatility and confusion surrounding Trump's trade policies. Despite the ruling, experts predict that uncertainty regarding trade policy will persist, affecting businesses and international relations. Trade lawyer Ryan Majerus noted, “It’s only gotten more complicated for everybody.” Questions remain about how the president may leverage alternative laws to reconstruct tariffs previously struck down by the court.
Future Tariff Strategies
The Supreme Court's decision effectively ends Trump's sweeping tariffs imposed under the International Emergency Economic Powers Act (IEEPA), which were intended to address trade deficits. However, the president may still utilize other legal frameworks to maintain tariff levels.Treasury Secretary Scott Bessent indicated that tariff revenues would remain stable this year. Following the court's ruling, Trump has indicated plans to impose 10% levies on imports, which he later increased to 15%.
Section 122 of the Trade Act of 1974 allows the president to impose temporary tariffs for up to 150 days, but any extensions would require Congressional approval, which may be challenging given the upcoming midterm elections.
Critics argue that Section 122 is not an appropriate substitute for IEEPA tariffs, as it was designed to address fundamental international payments issues, not trade deficits. Bryan Riley from the National Taxpayers Union highlighted that the provision is now largely outdated.
Dave Townsend, a trade lawyer, warned of potential legal challenges regarding Section 122, as businesses may seek refunds for duties collected under this section.
Another option for the Trump administration is Section 301 of the same trade act, which empowers the U.S. to impose tariffs on countries engaging in unfair trade practices. Following the Supreme Court's ruling, U.S. Trade Representative Jamieson Greer announced the initiation of several Section 301 investigations.
Impact on Trade Agreements
The Supreme Court's ruling raises concerns regarding trade agreements negotiated by Trump, which were secured under the threat of IEEPA tariffs. The European Union's trade deal with the U.S. is currently on hold due to confusion following the ruling and Trump's new tariff announcements.European lawmakers have delayed ratification of the trade pact to seek clarification, fearing that new tariffs could exceed previously agreed levels. Olof Gill, a spokesman for the European Commission, stated, “A deal is a deal,” emphasizing the need for the U.S. to clarify its commitments.
The United Kingdom, which had negotiated a 10% tariff on its exports to the U.S., is also uncertain about the implications of the new tariffs. Analysts expect that U.S. trading partners will likely adhere to their agreements to avoid facing significant penalties under Section 301.
U.S. Trade Representative Greer expressed confidence that all trade agreements negotiated by Trump will remain intact, emphasizing the administration's commitment to upholding these agreements.
Refund Process for Tariff Collections
The Supreme Court did not address the fate of the funds collected from IEEPA tariffs, which amount to approximately $133 billion. The issue of refunds for importers has been left to lower courts and the Customs and Border Protection agency.Experts predict a complicated refund process, with many companies already seeking reimbursement. Trade lawyer Majerus commented, “The whole thing’s going to be a mess.”
There is potential for Congress to streamline the refund process, but analysts warn that the Trump administration could complicate matters, requiring extensive documentation from importers seeking refunds.
