In a long-awaited decision, last Friday the Supreme Court issued its ruling that President Trump was not authorized under the International Emergency Economic Powers Act of 1977 (IEEPA) to impose tariffs. In the 6-3 decision, written by Chief Justice John G. Roberts Jr., the majority found that tariffs are taxes and only Congress has the power to impose them.
The Court did not address the issue of how and when to refund the tariff money that has been illegally collected. While there had been concerns that the Court might render a complex decision to somehow “split the baby” regarding refunds, it instead kicked the issue back to the lower court, here the Court of International Trade (CIT). So far the CIT has dismissed lawsuits filed to address refunds and to stop liquidation of collected duties pending a ruling from the Supreme Court. Addressing the Court’s lack of discussion regarding refunds, President Trump commented that it could lead to litigation lasting as long as five years.
President Trump responded both at a press conference and on social media, condemning the decision and announcing plans to impose a 10% global tariff under Section 122. The same day the White House issued an Executive Order terminating the IEEPA tariffs and confirming that suspension of the de-minimis exemption remains in force.
The President issued a second Executive Order on Friday imposing a 10% worldwide tariff on all imports under the authority provided by Section 122, and permitting the imposition of tariff up to 15% for up to 150 days. This duty does not seem to apply to products or portions of products that are subject to Section 232 steel, aluminum and copper tariffs. USMCA-compliant products also are exempt.
The President also indicated that additional Section 301 proceedings will be initiated during this period to establish permanent tariffs on a country-by-country basis. It is worth noting that Section 301 investigations of Brazil and China are already underway.
On Saturday in a Truth Social post, the President said he would raise the 10% worldwide tariffs to 15%, “effective immediately,” but there has not yet been an Executive Order confirming this.
On Monday evening, February 23, Customs and Border Protection released guidance that the Section 122 tariffs will go into effect at 12:01am eastern February 24 at the originally announced 10% level.
Still a huge concern are the refunds that logically would flow from the Court’s decision to strike down the IEEPA tariffs. Without clear instruction from the Court, however, the President’s comment predicting years of litigation over the process can be viewed as discouraging. While legislation might be necessary to force a fair and efficient refund process, defensive efforts might also be required. Shortly after the Court published its decision, Senator Bernie Moreno (R-OH) called for Congress to codify President Trump’s tariff authority. Although passing anything in Congress with slim majorities and especially in an election year would prove difficult, there are some Democrats who approve of tariffs. Moreover, despite the recent resolution disapproving tariffs on Canada, separate legislation that would grant the President tariff power relating to Russia is advancing. The lack of support for the Trade Review Act of 2025 from some Democrats and all but two Republican House members that voted in favor of the Canada disapproval resolution indicate that, at least at some level, legislation to codify tariff authority remains a threat.
Looming over all of this is continued economic data that offers no clear picture on the impact of the tariffs. According to U.S. Trade Representative Jameison Greer, tariff on metals have been helpful in expanding domestic steel and aluminum production. At the same time, it was reported that the tariff burden has fallen heavily on U.S. mid-size companies, with their tariff costs tripling during the course of last year. Reports also indicated the U.S. trade deficit dipped in the fourth quarter. The Commerce Department reported that average exports climbed $22.2 billion while average imports declined $10.7 billion compared to the fourth quarter of 2024. However, the Commerce Department also reported that GDP growth slowed considerably in the same period, increasing only 1.4% for the final quarter. Although President Trump attributed this to effects of the prolonged government shutdown, it is not likely to inspire confidence among voters. It also remains to be seen whether his characteristically confrontational response to the Supreme Court decision – and any alternative tariff regime – will find support in either the stock market or the electorate.
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