THE TRANSATLANTIC MAGAZINE
THE TRANSATLANTIC MAGAZINE
As the UK was winding down from Bonfire Night festivities, fireworks of a different kind were going off in Washington D.C.
On November 5, the US Supreme Court heard oral arguments concerning the legitimacy of the bulk of tariffs imposed by President Trump.
The basis for imposing the broad spectrum of US tariffs introduced this year has been emergency powers found in three separate pieces of legislation. These emergency powers allow the President to act without the need to receive approval from Congress.
The majority of tariffs imposed this year have been introduced under emergency powers contained in the International Emergency Economic Powers Act (IEEPA).
The case before the Supreme Court is restricted to these IEEPA tariffs. Tariffs introduced using the emergency powers authority in two other Acts are unaffected.
The Court heard oral arguments from both sides. There is no indication of when the Court will issue its binding opinion, but this case is known to be on the ‘fast track’.
What happens during an oral argument session can often provide a good pointer to what will be the Court’s final decision. That direction of travel can be discernible to seasoned Supreme Court ‘watchers’ from the degree of questioning and scepticism the Justices direct at the two sets of legal counsel making their arguments to the Court.
Two points of law appear to be involved; firstly, was what the President deemed to be an “emergency” actually a situation capable of triggering the IEEPA emergency powers? Secondly, if the answer to that question should be “Yes”, does the IEEPA contain the necessary powers to impose tariffs? Tariffs are not mentioned anywhere in the text of that Act? (This contrasts to two other Acts used by the President to impose some of his tariffs.)
Initial reports of yesterday’s proceedings indicate sceptical questioning of the government’s counsel about the President’s use of IEEPA powers. That is seen by some seasoned observers as an indication that the Court may be ready to intervene and declare the IEEPA tariffs to be illegal, as has been the result in all the lower courts. However, for the present it remains a case of ‘watch this space.’
Should the Court decide against the government and declare the IEEPA tariffs illegal, where does that leave those organisations which have paid these tariffs? Theoretically all IEEPA tariffs would be repayable and an enormous amount of money is therefore involved.
However, the procedure for making timely refund claims will be arduous. It appears that a separate claim will be required for each shipment of goods which suffered an IEEPA tariff. When processed, it appears that any refunds will be made by paper cheques, not electronically.
There is anecdotal evidence that some organisations consider the effort and resources required to pursue any possible refund claims to be too burdensome to bother. Such decisions may be influenced by factors such as how much of the tariff cost has been passed on to US domestic customers in higher prices.
Will a Court decision that the President wrongfully invoked IEEPA emergency powers mean an end to the President’s crusade on tariffs?
No it will not, as there will still be those tariffs imposed under non-IEEPA emergency powers, and it is clear from all his public utterances that President Trump loves tariffs.
Finally, if the IEEPA route to tariffs is closed off to him, will the President look to reintroduce the same tariffs under those other emergency powers?
John Havard is a US/UK Private Client Consultant at leading audit, tax and business advisory firm, Blick Rothenberg.
