Since taking office over a year ago, President Donald J. Trump has used tariffs as a primary tool to implement foreign and trade policy, using them to force countries to negotiate new, preferential trade agreements with the United States. Last month, in a 6-3 ruling, the Supreme Court struck down President Trump’s use of tariffs under the authority of the Emergency Economic Powers Act (IEPPA). President Trump had used IEPPA to impose tariffs on China, Canada, and Mexico for their failure to stem the flow of fentanyl into the United States and on imports from all other countries, referred to as “reciprocal tariffs.” It is estimated that the government has collected at least $166 billion from importers under IEPPA tariffs.
Tariffs imposed under other authorities, namely Section 232 of the Trade Expansion Act and Section 301 of the Trade Act of 1974, are not affected by the Supreme Court's recent ruling and will remain in effect. We expect the administration to use other authorities to keep tariffs in place so that they can continue to use tariff action and threats as a primary lever in economic, trade, and foreign policy negotiations.
The Supreme Court’s ruling underlined Congress’ authority to impose taxes, including tariffs, instead of the executive branch. Many businesses also celebrated the Court’s ruling and are positioning themselves for tariff refunds. In this brief, we examine the other authorities the administration could use to replace the IEPPA tariffs and what recourse businesses may have to collect refunds.
Other Tariff Authorities: Within hours of the Supreme Court’s decision against the IEPPA tariffs, President Trump issued an executive order imposing a 10% tariff on goods imported into the United States under Section 122 of the Trade Act of 1974. This authority allows the president to impose a tariff for a period of 150 days to address a balance-of-payments issue. Several products received an exemption because the U.S. does not sufficiently produce those products, or because they are compliant under the U.S.-Mexico-Canada Agreement or the Dominican Republic-Central America Trade Agreement.
Under President Trump’s new executive order, these tariffs under Section 122 will be in place until July 24, 2026. The administration is likely to try to extend past that date, which is sure to be legally challenged. President Trump and Treasury Secretary Scott Bessent have both threatened to increase the tariff rate from 10% to 15% under Section 122.
The administration may also seek to add additional products subject to tariffs under different authorities, such as Section 232 and Section 301. Section 232 allows the Department of Commerce to increase duties on goods that are of national security interest to the United States. Section 301 allows the U.S. Trade Representative to impose tariffs on goods because of other countries’ unfair trade practices against the United States after an investigation conducted by USTR. In the first year of President Trump’s second term, his administration frequently used Section 232 to levy tariffs on goods, including steel, aluminum, auto parts, wood products, pharmaceuticals, and Section 301 to impose tariffs on certain goods coming from China.
Earlier this week, in an effort to replace the IEPPA tariffs, USTR Representative Jamison Greer announced that the administration was beginning new investigations under Section 301 into unfair trade practices that could lead to new tariffs added to dozens of countries. The investigations will target counties that have already negotiated trade agreements with the administration, including the EU, its 27 member states, China, and several other countries. It will also include an investigation into forced labor practices of 60 countries.
Refunds for Businesses: The Supreme Court did not weigh in on the process to issue refunds for IEPPA tariffs, leaving the issue to lower courts to resolve. The Trump administration has attempted to delay issuing refunds, and several businesses have filed cases seeking to expedite the process and recover duties collected under IEPPA.
Late last week, Customs and Border Patrol told the U.S. Court of International Trade (CIT) that it is unable to halt tariff processing and begin issuing refunds due to the overwhelming number of cases. However, the agency told the court that it will seek to have a system in place within 45 days to process tariff refund requests. In response, the judge reversed his previous order to remove IEPPA tariffs from imports that are still being processed, but directed the government to submit a report describing the “process to issue refunds of IEPPA duties paid with interest.”
CBP told the CIT that it was building a new digital system to allow companies to submit refund claims for duties collected under IEPPA. The system, called the Consolidated Administration and Processing of Entries (CAPE), will allow importers and customs brokers to upload lists of import transactions where the tariffs were paid. The system will be rolled out in phases, with basic functionality allowing importers to process most import entries. More complicated refund claims may have to wait until the system is more completely built out.
This report may provide businesses with the desired clarity on the government’s process for issuing refunds and on the administrative burden it may entail, including whether new information is required of importers.
While the legal case for tariff refunds for businesses seems to be accepted, there is yet to be a clearly defined path forward by the administration. Businesses and industry groups will likely be in an extended time of uncertainty as the refund process may be a drawn-out, complicated process, and the White House threatens additional tariffs under other trade authorities.
President Trump’s entire economic and trade policy, including tariffs and their impact on businesses and affordability, will be a primary focus the rest of this year leading up to the congressional midterms in November.
Congressional Republicans, though privately wary of the tariffs, seem to be willing to give the Trump administration broad discretion on employing tariffs and show little interest in interfering with the President’s trade agenda.
The Bridge Team will be following additional tariff action, including the refund process closely, as well as the political impact in the run-up to the midterms. If you have any questions or if you would like to connect to discuss how this policy issue impacts your specific business, please reach out to us.
Sincerely,
Bridge Public Affairs
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