On March 5th, Eastern Standard Time, over 20 states in the United States announced the filing of a lawsuit to prevent the federal government from imposing a 15% tariff policy on most regions worldwide. According to U.S. Treasury Secretary Steven Mnuchin, the tariff will officially take effect at some point this week.
The lawsuit was led by Democratic attorneys general from Oregon, Arizona, California, and New York. The states argued that Section 122 of the Trade Act of 1974 is limited in scope and does not grant the president the authority to impose comprehensive import taxes; furthermore, these tariffs would increase costs for states, businesses, and consumers.
On February 20th, the United States Supreme Court ruled that the Trump administration’s implementation of large-scale tariff measures based on the International Emergency Economic Powers Act lacked clear legal authorization. The 9 justices upheld the lower court’s ruling by a vote of 6-3, determining that Trump’s actions exceeded his statutory authority.
The frequent changes in US trade measures will once again impact the domestic economy of the United States and the direction of global trade. Lipsky, the chairman of international economics at the Atlantic Council, a think tank, said that this once again reminds us that the market’s previous judgment that 2026 would see a stable period for tariffs was wrong.
Huaxi Securities pointed out that the reduction in tariff levels will bring about a window of opportunity for exports, which is conducive to the recovery of global trade: China’s direct export tariffs to the United States will decrease by 10%, and the export costs of Southeast Asian countries and other countries to the United States will also decrease by about 5% (assuming that the 122 tariff increases to 15%). At the same time, the uncertainty of future tariffs may bring about a new round of rush to export.
On the day when the Supreme Court made its ruling, he immediately announced the imposition of a “global import tariff” based on Article 122 of the Trade Act of 1974, with a tax rate of 10% for a period of 150 days. The next day, he announced that the tax rate would be raised to 15%.
Unlike the International Emergency Economic Powers Act, which does not explicitly state that the head of state can utilize “tariff tools”, Article 122 of the Trade Act authorizes the president to address international balance of payments deficits by imposing tariffs of up to 15%. Trump believes that the US trade deficit and the risk of a significant depreciation of the US dollar both meet the requirements of this law.
On the other hand, an increasing number of American enterprises and industry organizations are seeking full refunds of the tariffs they have paid through litigation and procedural filings.
Over 300,000 importers have paid these tariffs, and the related refund amount could potentially range from $130 billion to $175 billion. 2,000 companies, including global transportation giants FedEx, Costco, and Reebok, have joined the legal proceedings.
On March 2, an appeals court remanded multiple lawsuits that had previously led to the ruling of large-scale tariffs as invalid back to the International Trade Court. The latter has the authority to rule on the refund of relevant taxes paid by importers.
However, judging from the tough stances taken by Trump himself and Treasury Secretary Mnuchin, the core priority of the White House is not to expedite the refund of tariffs to various enterprises as soon as possible to eliminate their operational impacts, but to employ every means possible to introduce alternative tariff tools to recoup as much cash flow as possible, such as Section 232 of the Trade Expansion Act of 1962 and the aforementioned Section 122.
The tax refund process spans the entire trade chain and involves a vast array of customs declaration records, encompassing courts, customs, and administrative departments. Enterprises anticipate engaging in a protracted tug-of-war with the Ministry of Finance.
In addition, tax refunds may force the government to cut public expenditures such as healthcare and education. The already severe federal budget deficit will further deteriorate, triggering a debt and market chain reaction. The US Federal Budget Committee even warns that if new taxes or tariffs cannot be used to compensate, the national debt will increase by $2 trillion in the next decade.
Affected by the war in the Middle East, the average retail gasoline price in the United States has surpassed $3 per gallon, which is not good news for the Republican Party and Donald Trump, who are facing pressure from the midterm congressional elections. The elections will be held on November 3, during which all seats in the House of Representatives and one-third of the seats in the Senate will be up for re-election. Only if the Republican Party continues to maintain its majority in both houses of Congress can many of Trump’s proposals be enacted into law.
