Businesses continue to face legal uncertainty despite court ruling on tariffs
When the US Supreme Court handed down a landmark judgment against President Donald Trump’s tariffs last week the ruling sent shockwaves across the world, raising questions about what is next for businesses.
On Friday, the Supreme Court, which has a 6-3 Conservative majority, struck down the tariffs, which could pose major financial consequences for the Trump administration.
The ruling centred on the 1977 International Emergency Economic Powers Act, which allowed Trump to regulate imports during a national emergency. But Chief Justice John Roberts, who led the decision, said: “The President asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope.”
But the top court did not address the issues of how the government should implement this decision and whether it should refund the over $200bn in tariffs the US has collected over the past year.
Right after the shock ruling, Trump warned of a 10 per cent across-the-board tariff for 150 days to replace the ones struck down by the Supreme Court. This was then raised to 15 per cent over the weekend.
What does this mean for businesses?
Alexis Early and Dan Mach, partners at BCLP, explained that the top court also remanded one of the cases back to the US Court of International Trade to address next steps, which are likely to include refunds.
“There is historical precedent for issuing refunds of fees unduly collected under a regulatory scheme, and US Customs and Border Protection has an existing standard administrative refund processes refunds,” they added.
This comes after Justice Kavanaugh noted that the justices anticipated during oral arguments that a refund process could be a “mess”.
If companies are allowed to seek legal action against the US government, Ian Hargreaves, partner at Quillon Law, told City PM that “a UK company that lost export business because tariffs made its products too expensive could argue that its losses were directly attributable to the unlawful tariffs.”
However, he noted that such a claim could be commercially unattractive to any business seeking a future trading relationship with the US.
Totis Kotsonis, partner at law firm Pinsent Masons, also added that while “businesses might in principle welcome the Supreme Court’s decision, at the same time they might consider less welcome the fact that the judgment provides for yet another layer of legal uncertainty.”
Trump’s new legislation, which he is now using, gives him 150 days to find another legal route to extend the tariff further, and with billions of dollars on the line, he will be calling in the lawyers to find one.
The US president has one of the biggest in-house legal teams in US political history, following several pledges of pro bono totallying $940m after his focus on Big Law.
“Donald still holds the trump card in that countries need to do business with the US,” Hargreaves added.