What To Know About Trump’s Latest Tariffs Being Struck Down

A federal trade court has struck down President Donald Trump’s latest Section 122 tariffs, halting the 10% levy on most imports and opening the door to another round of refund claims for U.S. companies. The ruling comes just weeks after the Supreme Court invalidated Trump’s earlier use of the International Emergency Economic Powers Act of 1977 to impose sweeping global tariffs.

Following that decision, Trump turned to the seldom-used Section 122 to issue a new 10% tariff on most imported goods. But with this latest setback, uncertainty has grown over what future tariffs may look like and how far the administration can go in imposing them without congressional approval. Despite the legal defeats, Trump has remained steadfast in seeking new avenues to apply tariffs on goods entering the U.S.

Trump’s Tariff Strategy, Revisited

Early in his second term as President, Trump invoked the IEEPA to impose sweeping tariffs on Canada, Mexico and China. A couple of months later, on “Liberation Day,” Trump used the same law to impose a 10% tariff on most goods imported globally, as well as tariffs on specific countries labeled as reciprocal tariffs.

However, one key issue with these tariffs kept surfacing — the U.S. Constitution assigns tariff authority to Congress, not the president. Approximately one year after these tariffs were imposed, a significant number of them were struck down, according to The New York Times. In particular, the tariffs aimed at Canada, Mexico and China, and the reciprocal global tariffs (all implemented under the IEEPA) were deemed illegal. As a result, the tariffs were immediately nullified, and those who paid them became entitled to refunds.

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Not all tariffs were overturned. Those invoked under Section 232 (aimed at applying a tariff on steel and aluminum products) and Section 301 (China tariffs) remain in effect. However, the vast majority of tariffs Trump imposed were no longer in effect after the Supreme Court decision.

Trumps Section 122 Pivot Falls Short

Trump did not concede and instead used Section 122 to impose a new 10% global tariff. Section 122 provides the president with emergency powers to respond to a significant trade imbalance that puts the strength of the U.S. dollar at risk or leads to greater international instability. These tariffs are designed to be short-term, with a maximum duration of 150 days. They are also capped at a maximum rate of 15%, and they must be designed to address the specific deficits and pressures outlined in the law.

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Despite these tariffs being imposed, a panel of federal judges in the Court of International Trade ruled in a split decision that the tariffs imposed under Section 122 will not be permitted, according to The New York Times. Furthermore, any tariffs collected under this recent round may be eligible for refund.

What This Latest Ruling Means For Trump’s Tariff Plans

The most recent decision marks a new era for Trump’s tariffs. Now facing a second straight federal court defeat, the administration appears to have significant limits on its ability to impose tariffs without congressional authorization. Instead, the courts appear to have shifted this decision-making authority back to Congress.

This defeat appears has upended Trump’s broader plans to maintain a continuous tariff policy. Section 122 tariffs were always temporary (with a maximum duration of 150 days), and the administration had already been working on more permanent tariffs under Section 301 to take effect once these temporary measures expired, according to the The New York Times. However, with this defeat, goods will now enter the U.S. without a tariff being imposed.

Potentially more critical for this discontinuous tariff policy is the fact that those who paid the tariffs when imposed are likely entitled to refunds. The refund process is already underway for the IEEPA tariffs, and now that these Section 122 tariffs have been struck down, precedent suggests that those, too, can be refunded.

Despite the legal losses the Trump administration has faced over these tariffs, it appears to remain steadfast in its goal of imposing tariffs on goods entering the U.S. The process for implementing the aforementioned Section 301 investigations is already underway and could be implemented as early as July. Assuming no snags arise during this process, the U.S. may soon see a wave of new types of tariffs. This resiliency, while costly, reflects the administration’s continued commitment to imposing tariffs on goods coming into the U.S.