The Supreme Court weighed in on tariffs today, ruling 6-3 against President Trump’s use of IEEPA tariffs. What does that mean to the powersports industry? “That is the $130 billion question, and it will take time to figure out,” admits Scott Schloegel, Senior Vice President Government Relations for the Motorcycle Industry Council. Reuters reports that more than $175 billion in U.S. tariff collections may have to be refunded if the U.S. Supreme Court ruled against the Trump tariffs, according to Penn-Wharton Budget Model (PWBM) economists. The estimate, commissioned by Reuters.
At issue is a 1977 law that gives the President broad economic powers during a national emergency, known as the International Emergency Economic Powers Act, or IEEPA. President Trump has invoked the law to justify imposing new or larger import tariffs on dozens of trading partners. In its opinion, the Court said that “Based on two words separated by 16 others in Section 1702(a)(1)(B) of IEEPA — ‘regulate’ and ‘importation’ — the President asserts the independent power to impose tariffs on imports from any country, of any product, at any rate, for any amount of time. Those words cannot bear such weight.”
“…the Government reads IEEPA to give the President power to unilaterally impose unbounded tariffs and change them at will. That view would represent a transformative expansion of the President’s authority over tariff policy. It is also telling that in IEEPA’s half century of existence, no President has invoked the statute to impose any tariffs, let alone tariffs of this magnitude and scope. That ‘lack of historical precedent,’ coupled with the breadth of authority that the President now claims, suggests that the tariffs extend beyond the President’s ‘legitimate reach.’”
The case, which made its way through three lower courts before landing in the Supreme Court’s lap, was originally brought by wine and liquor importer V.O.S. Selections, Inc. and others joining the suit included Terry Precision Cycling LLC and a coalition of U.S. states led by Oregon. More than 700 lawsuits were reportedly filed by businesses, consumers, and state governments challenging the duties at the U.S. Court of International Trade. High-profile companies seeking refunds through litigation include Costco, Kawasaki and Goodyear Tires.
“The Supreme Court’s announcement today regarding tariffs provides much-needed certainty for U.S. businesses and manufacturers, enabling global supply chains to operate without ambiguity,” states David French, EVP of government relations, National Retail Federation. “Clear and consistent trade policy is essential for economic growth, creating jobs and opportunities for American families. We urge the lower court to ensure a seamless process to refund the tariffs to U.S. importers. The refunds will serve as an economic boost and allow companies to reinvest in their operations, their employees and their customers.”
Where do we go from here? “The Trump Administration previously indicated they have many other options available for imposing new tariffs if IEEPA were overruled… including the traditional Section 232 and Section 301 tariff processes,” concludes Schloegel. He notes other options Section 338 which would allow 50% tariffs (and has never been used), and the Section 122 tariffs which would allow 15% tariffs for up to 6 months (widely believed to be the next option they turn to).
Stay tuned!
