Last week, the United States Supreme Court issued a 6-3 decision striking down emergency tariffs President Trump implemented under the authority of the International Emergency Economic Powers Act (IEEPA). Chief Justice John Roberts authored the opinion and was joined by three liberal justices and two fellow conservatives, Justices Neil Gorsuch and Amy Coney Barrett, in the majority. Justices Clarence Thomas, Brett Kavanaugh, and Samuel Alito dissented.
In the 170-page decision, the majority essentially argues that IEEPA does not authorize the president to impose tariffs and points out that no president has used the authority to do so in the law’s nearly 50-year history.
It is important to note that the decision does not affect all of President Trump’s tariffs. It affects only those invoked under IEEPA authority, which includes two categories of tariffs – 1) country-by-country or “reciprocal” tariffs, which range from 34% for China to a 10% baseline for the rest of the world invoked in response to a national trade deficit seen as undermining the American manufacturing base and critical supply chains, and 2) a 25% tariff imposed on some goods from Canada, China, and Mexico for what the administration viewed as a failure to curb the flow of fentanyl into the United States.
The ruling leaves untouched tariffs imposed under separate authorities, namely Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974, and invoked as a result of federal investigations. Section 232 tariffs are sector-specific and apply to steel and aluminum, timber and softwood lumber, copper, semiconductors, automobiles and parts, medium and heavy trucks, and critical minerals. Section 301 tariffs are country-specific and currently apply to China and Nicaragua.
The ruling was silent as to the prospect of refunds for payments associated with IEEPA tariffs. Lower courts are expected to rule on possible refund mechanisms.
Additionally, the Administration has been preparing for this possibility and is expected to pivot to other trade authorities as a replacement for IEEPA tariffs. Other options could include Section 338 of the Tariff Act of 1930; Section 232 of the Trade Expansion Act of 1962; and Sections 122, 201, and 301 of the Trade Act of 1974. The Supreme Court Ruling does not indicate that President Trump’s unilateral tariff policies are over. However, invoking tariffs under other authorities will take some time.
In response, President Trump immediately announced a global ten percent tariff under Section 122. Notably, Section 122 tariffs may statutorily be in place for no more than 150 days. That time will likely be used to initiate new investigations under Sections 232 and 301. A forthcoming executive order on tariffs is expected. ICCFA will continue to monitor and report on the issue.
