Last Friday, the Supreme Court ruled against President Donald Trump’s use of the International Emergency Economic Powers Act (IEEPA) of 1977 to impose sweeping tariffs, invalidating the "Liberation Day" reciprocal tariffs and other IEEPA-based duties on US imports. Tariffs imposed under Section 232 of the Trade Expansion Act and Section 301 of the Trade Act of 1974 remain intact.
After the ruling, President Trump responded by signing an executive order imposing a 10% global tariff by invoking Section 122 of the Trade Act of 1974. However, the President is floating the idea of raising the tariff to 15%. The statue allows the 10% tariff to be in place for 150 days, with extensions requiring congressional approval.
Notably, the Supreme Court did not rule on the topic of issuing refunds on tariffs it has collected back to importers, leaving it to lower courts to sort out the issue. The government has collected an estimated $170 billion under IEEPA, so the process of issuing refunds may be long.
The ruling hopes to bring some financial relief to American households and businesses. Research from the Federal Reserve Bank of New York found that almost 90% of tariff costs were being paid by US importers and consumers. With IEEPA tariffs being ruled illegal, US households may see savings of $600 per year, according to the Tax Foundation.
Sources: CNBC, Bloomberg, Tax Foundation, Federal Reserve Bank of New York
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