US President Donald Trump’s new 10% temporary tariff is officially in effect, Kallanish confirms.
The latest tariff, under Section 122, entered force after midnight Tuesday morning, in accordance with the official presidential proclamation issued Friday (see Kallanish 23 February). Later in the weekend, Trump said he would raise the new levy to 15% but that remains unofficial.
The new tariff, in effect for no more than 150 days, follows the US Supreme Court decision striking down the tariffs that the president imposed last year under the International Emergency Economic Powers Act (IEEPA) of 1977.
A press release from US Customs and Border Protection confirms that the Section 122 levy is being collected.
The presidential proclamation offers exemptions, including items that are already subject to the Section 232 tariff on steel and aluminium (see Kallanish 23 February). Specifically, amongst the excluded goods are “articles of iron or steel, derivative articles of iron and steel, articles of aluminum, derivative articles of aluminum, passenger vehicles and light trucks and parts of passenger vehicles and light trucks…heavy duty vehicles and buses.” Imports in compliance with the United States-Mexico-Canada Agreement also are exempted.
A 15% rate under Section 122 would be in violation of some of the trade deals the US has finalised, including higher tariffs than negotiated in deals with the EU, UK, South Korea and Japan, according to a report by Reuters.
Some market participants say the 10% Section 122 duties are buying the administration time to research and determine opportunities to impose tariffs under Section 301. US trade officials have made public statements that Trump may be working on raising it to 15%, but no timelines are given. Some market participants are guessing that the administration may use 10% and 15% subsequently to extend the Section 122 time line.
Trump has made public statements that tariff refunds would be via litigation, meaning those seeking refunds will need to file a lawsuit. Trump suggests that the issue would be fought in courts “for the next five years”.
The Supreme Court ruled, in part, that the IEEPA tariffs would need congressional approval. Unilateral tariffs by the executive branch under IEEPA are unconstitutional, according to the high-court majority opinion.
“The tariff beatings will continue until Congress reclaims some of its constitutional authority over US trade policy and checks the administration’s worst tariff impulses,” says Scott Lincicome, vice president of general economics at Cato Institute.
“Pure tariff chaos from the US administration,” Bernard Lange, chair of the European Parliament’s Committee on International Trade and German member of the European Parliament, writes in a social media post.
