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International trade

Trump Administration Faces Potential Repayment of Tens of Billions in Tariffs

Strategic Insights

— 2 min read

The Trump administration is poised to take its case to the US Supreme Court after losing twice in its bid to defend its use of tariffs under the International Emergency Economic Powers Act. The latest decision, released on Friday by the US Court of Appeals, ruled that the White House's imposition of tariffs is illegal. If the administration does not prevail before the Supreme Court, it could be forced to repay tens of billions of dollars in tariffs to US importers of goods from Canada and other countries.

Key Takeaways:

  • The Trump administration has lost twice in its bid to defend its use of tariffs under the International Emergency Economic Powers Act, with rulings by the US Court of Appeals and Court of International Trade holding that the White House imposition of those tariffs is illegal.
  • The administration has taken in over $100 billion in tariff revenue this year, nearly double the 2020 tally, after imposing far-reaching levies on foreign countries, including Canada.
  • The tariffs imposed under IEEPA include levies on Canadian goods not compliant with North American free-trade rules and have no bearing on the more punishing tariffs on steel, aluminum, and cars imposed under different legal authorities.
  • The Trump administration has argued that Congress delegated power to the White House to respond to emergencies, but lawyers representing small importers and Democratic-led states have argued that the president has exceeded his authority and that the power to tax and tariff is vested exclusively in the legislative branch.
  • The Supreme Court could rule on the case as early as October 14, which is the date set for the appeals court to review the decision, but it is unclear how quickly the court will reach a decision.
  • If the appeals court decision stands, the people who paid tariffs could be entitled to refunds, with law professor Ilya Somin saying that "then sooner or later the people who paid tariffs quite rightly would be able to get refunds."

Statistics:

  • The Trump administration has taken in over $100 billion in tariff revenue this year.
  • The tariffs imposed under IEEPA include levies on Canadian goods not compliant with North American free-trade rules.
  • The White House imposition of those tariffs has been ruled illegal by the US Court of Appeals and Court of International Trade.
  • The Supreme Court could rule on the case as early as October 14.
  • The people who paid tariffs could be entitled to refunds if the appeals court decision stands.

Sources:

  • "White House to appeal ruling on tariffs to Supreme Court," Globe and Mail, October 12, 2022.
  • "U.S. court rules Trump's tariffs are unconstitutional, piling on pressure for the administration," Globe and Mail, October 7, 2022.
  • "The tariffs imposed under IEEPA include levies on Canadian goods not compliant with North American free-trade rules," International Trade Administration, U.S. Department of Commerce.
  • "The power to tax and tariff is vested exclusively in the legislative branch," U.S. Constitution, Article I, Section 8.

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