Trump's New Tariffs: What Businesses Need to Know

Overview of the U.S. Trade Court Ruling

A recent ruling by a U.S. trade court has significant implications for the Trump administration's ability to impose import levies, according to legal and trade experts. The Court of International Trade (CIT) sided with 24 states and businesses that filed a lawsuit challenging the legality of a 10% global tariff imposed by President Trump in February under Section 122 of the Trade Act of 1974. The three-judge panel ruled that the temporary tariffs were "unlawful" and harmful to businesses.

This decision comes on the heels of a February Supreme Court ruling that struck down U.S. tariffs imposed last year under the International Emergency Economic Powers Act (IEEPA). The U.S. government now owes importers an estimated $175 billion in tariff refunds, plus interest, because of the ruling. U.S. Customs and Border Protection has since launched a portal where importers can submit refund claims.

White House spokesman Kush Desai defended Mr. Trump's use of tariffs, stating, "President Trump has lawfully used the tariff authorities granted to him by Congress to address our balance of payments crisis." Desai added that the Trump administration is reviewing legal options and maintains confidence in ultimately prevailing.

Status of Trump's 10% Global Tariff

The CIT ruling applies to a narrow subset of the plaintiffs — two businesses and the state of Washington — that sued the Trump administration over the Sec. 122 tariffs, as explained by Ernst & Young trade policy expert Blake Harden. The ruling leaves the average effective U.S. tariff rate on imports at 7.2%, according to Capital Economics.

Stephen Brown, chief North America economist at the investment advisory firm, noted in a research note that "given the narrow nature of the CIT's ruling and the fact that Section 122 tariffs are due to expire at the end of July anyway, none of this has any immediate implication for the U.S. tariff rate."

Impact on Businesses

The narrow scope of the court's ruling means most U.S. businesses still owe the 10% tariff on most imported goods. Harden stated, "They have to keep doing what they've been doing. If I am a business today, for practical purposes, nothing changes today compared to yesterday," noting that she expects the Trump administration to appeal the ruling "very swiftly."

Fox Rothschild trade attorney Lizbeth Levinson said that, because the ruling does not universally strike down the Section 122 tariff, more businesses could sue to avoid paying the tariffs and potentially seek refunds. "They could come forward, depending on how much they've paid in duties, if it's economical for them to try to get their money back," she told CBS News.

Harden advised U.S. importers to still track any Section 122 duties they pay in case they are eventually entitled to tariff refunds. "They want to be prepared in case they do wind up with the ability to file for refunds."

Potential Next Steps for Trump

Section 122 of the Trade Act of 1974 only allows the president to impose a temporary 10% duty for 150 days. Harden explained that the trade measure was intended as a stopgap rather than a permanent substitute for the White House's illegal IEEPA duties.

The Trump administration in March announced investigations into foreign nations' trade practices under Section 301 of the Trade Act of 1974, which allows the Office of the U.S. Trade Representative to unilaterally retaliate against countries engaging in unfair trade practices. The law also requires the federal government to first investigate a country's trade practices before it can impose tariffs and other trade restrictions.

"This decision reinforces that 301 is the tool they are most likely to rely upon and have the best chance at a durable tariff regime," Harden said. "I think 301 is the name of the game for them moving forward."

Still, the trade court's latest ruling could open the door to legal challenges to Section 301 tariffs. Brown noted in his report: "The decision once again highlights the judicial pushback that the administration is likely to face when it tries to follow through with tariffs under its more recent Section 301 investigations against 60 countries. ... That raises the risk that the Trump administration will eventually fail in its efforts to fully replace the lost revenue from IEEPA tariffs."