Déjà Vu – Section 122 Tariff Case Mirrors IEEPA Tariff Challenge

Appeals Court Stays Ruling Against Trump’s 10% Tariff

Last week, the U.S. Court of International Trade ruled against the Trump Administration’s usage of Section 122 of the Trade Act of 1974 to implement a broad 10% tariff on imports to the U.S. This week, a federal appeals court put a hold on that ruling.

In Universal Cargo’s shipper alert last week about the ruling against President Trump’s 10% tariff, I wrote that an appeal should be expected, with a good chance of it going to the Supreme Court.

So far, this is playing out like déjà vu of President Trump’s International Emergency Economic Powers Act (IEEPA) authorized tariffs.

Supposedly, Section 122 tariffs would be more legally resilient than the IEEPA-related ones, but so far they’re not holding up against legal challenge for the president’s tariff agenda. The Section 122 tariff could hold up with successful appeal, but I thought the IEEPA tariffs would be upheld by the Supreme Court and was proven wrong. If things play out with this tariff case like the one its mirroring, importers could be looking at more refunds.

Section 122 tariffs are not permanent ones to begin with. President Trump’s broad 10% Section 122 tariff is a bridge from the lost IEEPA tariffs to the expected Section 301 tariffs the administration has been conducting investigations in order to put in place.

Section 301 tariffs actually are more legally tested and, thus, resilient to the legal challenges they’ll likely also face.

In a 2023 case, in which thousands of shippers pooled together to challenge the legality of large Section 301 tariffs on Chinese goods, the Court of International Trade firmly upheld the executive authority for them.

Unlike with Section 122, Section 301 does not cap tariffs by size or duration. If President Trump imposed his previous large-scale tariffs through Section 301 instead of IEEPA, they likely would have been upheld. However, the required investigations of Section 301 may have slowed down the administration’s timeline in putting the tarifs in place.

In the meantime, refunds for IEEPA tariffs are going out and Section 122 tariffs look to be in trouble.

The federal appeals court has not made a ruling on the merits of the appeal; it has only put an administrative stay on the lower court’s ruling until the appeals have been considered.

First Tariff Refunds Received This Week

Tariff refund payments are arriving.

As widely reported, shippers began receiving IEEPA tariff refunds this week.

Heavy-truck maker Oshkosh Corporation and toymaker Basic Fun are reported among the first recipients of the refunds by Ben Werschkul in a Yahoo! Finance article:

Jay Foreman, CEO of Basic Fun, said their refunds so far represented just 5% of the company’s total claims.

“So far, the funds are trickling out, but they have started,” Foreman said.

If you’re an importer seeking help through the refund process, Universal Cargo is here to assist with that and all of your international shipping needs.

The tariff landscape will certainly continue to shift. Regular readers of Universal Cargo’s blog know we keep a close eye on it for shippers and often blog about the latest happenings with tariffs as well as other impactful international shipping news. It’s all part of Universal Cargo’s mission to enrich the lives of those within our company and those we do business with as a friend to your business.