Supreme Court Strikes Down Some Trump Administration Tariffs So President Imposes New Ones

The Supreme Court of the United States (SCOTUS) issued a 6-3 ruling on Feb. 20 that invalidated two key pillars of President Donald Trump’s trade agenda: reciprocal tariffs on most U.S. trading partners, and penalties that had been imposed on North American trading partners and China due to concerns about unlawful migration and cross-border drug trade. (The ruling did not affect the steel and aluminum tariffs the Trump administration implemented under Section 232 of the Trade Expansion Act of 1962. It also did not affect Section 301 tariffs on a wide range of Chinese goods.)

President Trump had relied on International Emergency Economic Powers Act (IEEPA) to impose both sets of tariffs and the SCOTUS majority ruled that law does not grant the commander in chief broad authority to levy and collect “taxes, duties, imposts and excises.” The decision has several implications, including that:

• As The New York Times explained, it throws into doubt the future of several trade deals the Trump administration had agreed to with global partners, including China and the European Union, that sought to limit the impact of the reciprocal tariffs. Without the reciprocal tariffs it is unclear whether these countries would have agreed to Trump administration demands.
• The U.S. government now may have to reimburse importers for an estimated $175 billion in tariffs paid. The SCOTUS decision did not give guidance on how or when those refunds should be made, and the Trump administration has suggested it could take years to issue reimbursements. The U.S. Chamber of Commerce, which hailed the decision, offered guidance on potential refunds.

Within hours of the SCOTUS announcement, President Trump imposed new tariffs on U.S. trading partners. Initially, he set the rates at 10 percent, but by the next morning, Feb. 21, he had raised the levies to 15 percent. (Read the initial proclamation setting the levies at 10 percent at this link.) As Investing.com reported, products from Canada and Mexico are to be exempt from these new penalties. The order also exempted “certain critical minerals, metals used in currency and bullion, energy, and energy products.”

President Trump cited Section 122 of the 1974 Trade Act to issue these penalties. That section of federal law allows the U.S. president to impose tariffs for 150 days without congressional action in order to address “large and serious trade deficits.”

On top of the Section 122 penalties, U.S. Trade Representative Jamieson Greer said he expects the Trump administration to launch several trade investigations and actions under its Section 301 authority following the SCOTUS decision. Those investigations could lead to additional tariffs.