What Every Multinational Should Know About…Managing the Aftermath of the Supreme Court’s IEEPA Tariff Decision (Part IV) - Foley & Lardner LLP

The Supreme Court recently declined to hear an appeal in the case of Transpacific Steel LLC v. United States, a decision with significant implications for importers. This action leaves in place a Federal Circuit ruling that clarifies the duration of tariffs imposed under Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974. Essentially, the Court's decision confirms that these specific tariffs are not subject to the same time limitations as those imposed under the International Emergency Economic Powers Act (IEEPA).

This ruling primarily affects importers who have been paying, or are currently paying, Section 232 national security tariffs on steel and aluminum products, as well as Section 301 tariffs on various goods from China. The core of the issue was whether the emergency powers used to impose these tariffs, particularly IEEPA, meant they should expire after a certain period, typically one year for IEEPA-based emergency measures. The Supreme Court's refusal to review the Federal Circuit's decision means that the legal argument for challenging these tariffs based on IEEPA's time limits is now effectively closed.

Specifically, the Section 232 tariffs, which include a 25% duty on steel and a 10% duty on aluminum, were initially imposed in March 2018. The Section 301 tariffs on Chinese goods began in July 2018, with rates varying (e.g., 7.5%, 25%) depending on the product list. The Federal Circuit's decision, now upheld by the Supreme Court's inaction, confirms that these tariffs are not time-limited by the provisions of IEEPA, meaning they can continue indefinitely unless otherwise modified or revoked by the Executive Branch.

What Importers Should Do Now

Given this clarity from the Supreme Court, importers and multinational companies should take several proactive steps:

• Assess Exposure: Thoroughly review your supply chains to identify all products currently subject to Section 232 and Section 301 tariffs. Understand the total financial impact these ongoing duties have on your operations.
• Review Mitigation Strategies: Re-evaluate any existing tariff mitigation strategies. This includes exploring options such as product exclusions, duty drawback programs, or First Sale for Export opportunities, where applicable.
• Consider Long-Term Planning: With the legal avenue of challenging these tariffs based on IEEPA time limits now closed, consider the long-term implications for your sourcing, manufacturing, and pricing strategies. This may involve exploring alternative sourcing locations or adjusting product lines.
• Consult Trade Counsel: Engage with experienced trade counsel to understand the specific impacts on your business and to explore all available options for managing these tariffs. Legal experts can provide guidance on compliance, potential refunds (if applicable for other reasons), and strategic planning.

The Supreme Court's decision reinforces the long-term nature of these tariffs, making it crucial for importers to adapt their strategies and ensure robust compliance programs are in place.